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The strategic management process includes formulating, implementing, and evaluating the strategy, with a possible situation analysis beforehand. Strategy formulation involves planning, while implementation involves putting the plan into action. Evaluation assesses success and allows for improvements. It’s a continuous cycle for optimal performance.
Generally, there are three to four components of the strategic management process, depending on how the system is used. The process always includes formulating, implementing, and evaluating the strategy. In many cases, an environment or situation analysis is performed before the other steps.
If used, situation analysis is the first of the strategic management components. This review can be carried out in several ways. One of the most common is the analysis of strengths, weaknesses, opportunities and threats (SWOT). Another is the political, economic, sociocultural and technological review (PEST). Methods like these and many others can be used to determine the type of environment in which the strategy will execute.
The next component of the strategic management process is strategy formulation. This is the planning stage, in which the tasks associated with implementing the strategy are described. At this stage, it is also usually determined what resources, such as funding, tools and skills, are needed to achieve the goal. It can be helpful to imagine the completed organizational objective and then step back, imagining what specific steps would lead to success.
Strategy implementation is the next component of the strategic management process. It’s essentially putting the plan into action. This includes educating the workforce on what needs to be done, delegating tasks and completing the work. Once the plan has been put in place, it will often be necessary to make some adjustments to the strategy. For the most part, the process should follow the steps determined during strategy formulation.
After the strategy has been executed, the next step is to evaluate the process to determine whether organizational objectives have been achieved. This step includes assessing the success of the strategic plan, including the quality of the end results. If results are not satisfactory, corrections will usually be made where possible. The assessment may also include an analysis of the way the organization has executed its strategy so that improvements can be made in future endeavors.
At its most effective, the strategic management process is a continuous cycle. It provides a strong opportunity for an organization to reassess itself and take action to correct areas in which it is not performing optimally. While the steps are best done in order, if it is a regular part of the organizational culture, the components can be reorganized into smaller areas.
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