Core Components of Strategic Management

2021-06-18 19:53:09
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George Washington University
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Strategic management is all about being able to define strategies of an organization. It also entails stating the choice made by managers in setting strategies straight for their organizations. Such policies are geared towards enabling the organizations to realize better performance. Also, strategic management can be described as a process that is continuous and has the capability of appraising industries and businesses that are involved in trade activities with the organization in question. Strategic management has four main steps:

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Environmental Scanning

Environmental scanning is all about collecting and scrutinizing the pieces of information that are used in the strategic purposes. This stage is crucial in analyzing both the internal and the external organizational factors of influence within an organization. Once execution of the process of analysis is done, evaluation by the management should, therefore, be done.

Strategy Formulation

Policy formulation entails deciding what course of action is suitable for achieving objectives of an organization. The step is, therefore, important for achieving purposes of an organization.

Strategy Implementation

Policy implementation entails the process of making plans or ensuring that an organization's policies are put into action. The stage includes structural design of the organization, resource distribution, decision making process development, and human resources management.

Strategy Evaluation

Policy evaluation happens to be the final stage of strategic management. In this stage, the core assessment activities include:

Internal and external factors appraisal

Measuring performance

Taking remedial and corrective actions.

Evaluation ensures that the strategies of organizations and implementation hit the requirements and objectives of the organization. All the steps highlighted above are performed in a sequential manner.

Internal and External Strategic Analysis

Internal analysis entails processes that identify and evaluate the organization's resources and core competencies. Under this process, issues about the organization's mission, strategic objectives, and strategies are discussed. Internal analyses are geared towards identifying an organizations strengths and weaknesses.

To ensure a proper internal analysis of an organization, the analyzers need to gather and analysis relevant data concerning the organization. The data should include the organizations environment, its staff, and operations. With the obtained pieces of information, conclusions regarding the environment of the body need to be formulated. Also, feasible alternatives need to be determined and appraised. The next step is to weigh risks and then perform the selection of the most viable alternative. Last, implementation of the appropriate option is done. The results are then monitored. External Analysis, on the contrary, involves studies performed on the threats and opportunities within the environment of an organization. O of the essential tasks in this process is to differentiate strengths and weaknesses from opportunities and threats. Opportunities in external analysis happen to be conditions that favor the environment of an organization. Such an environment can produce good rewards if properly leveraged. Threats should, therefore, be eliminated since they are barriers which prevent organizations from achieving their desired objectives.

Duties of Strategic Management

Strategic management is used as an organizations planning platform. Organizations may also use the opportunities presented by strategic management to offers support and resources. Strategic management is also a platform that enables decision-making and priority setting. This management process also helps in:

Focusing energy

Availing resources

Encouraging staff members

Helps organizations in establishing objectives

Such duties make strategic management an essential element in any society. The process enables sustainability and maintenance of business smooth.

Why do Companies Need Strategic Management Planning?

For Corporate Governance

An organization is termed as adequate if it has initiated particular services and programs that ensure secure communication and effective leadership in all the departments. Another important aspect of corporate governance is setting up mechanism of control. Such will allow the organization be able to ensure that changes are made whenever necessary and also permit the monitoring of progress.

Core Competencies

Strategic management is very vital in ensuring that your business would help you identify core competence and be able to capitalize on it. There are, however, many factors of core competency. One is that it ensures that duplication of your business by competitors is made difficult. It also ensures that the firm has an array of products that benefit customers. In some instances, core competency might be recognized as the production cost.

Setting Goals

Strategic management happens to be crucial for both small scale and large businesses. On the contrary, strategic management happens to be tough to achieve if there are no set goals for the organization. Understanding what core competencies mean is a proper standpoint in which organizational strengths and weaknesses are recognized. Such is also important in ensuring that areas that require improvement are identified. The identification is to make sure that set goals and objectives are strategically placed to tackle the organizations weaknesses.

Conclusion

Strategic management is all about being able to define strategies of an organization. It also entails stating the choice made by managers in setting strategies straight for their organizations. Strategic management has four main steps:

Environmental Scanning

Policy Formulation

Policy Implementation

Plan Evaluation

Strategic management is also a platform that enables decision-making and priority setting. This management process also helps in:

Focusing energy

Availing resources

Encouraging staff members Helps organizations in establishing objectives

Reference

Pirtea, M., Nicolescu, C., & Botoc, C. (2009). THE ROLE OF STRATEGIC PLANNING IN MODERN ORGANIZATIONS. Annales Universitatis Apulensis, Series Oeconomica, 11(2).

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