By Jim Clayton Updated January 29, 2019
The strategic management process is more than just a set of rules to follow. It is a philosophical approach to business. Upper management must think strategically first, then apply that thought to a process. The strategic management process is best implemented when everyone within the business understands the strategy.
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The five stages of the process are goal-setting, analysis, strategy formation, strategy implementation and strategy monitoring.
Clarify Your Vision
The purpose of goal-setting is to clarify the vision for your business. This stage consists of identifying three key facets: First, define both short- and long-term objectives. Second, identify the process of how to accomplish your objective. Finally, customize the process for your staff, give each person a task with which he can succeed. Keep in mind during this process your goals to be detailed, realistic and match the values of your vision. Typically, the final step in this stage is to write a mission statement that succinctly communicates your goals to both your shareholders and your staff.
Gather and Analyze Information
Analysis is a key stage because the information gained in this stage will shape the next two stages. In this stage, gather as much information and data relevant to accomplishing your vision. The focus of the analysis should be on understanding the needs of the business as a sustainable entity, its strategic direction and identifying initiatives that will help your business grow. Examine any external or internal issues that can affect your goals and objectives. Make sure to identify both the strengths and weaknesses of your organization as well as any threats and opportunities that may arise along the path.
Formulate a Strategy
The first step in forming a strategy is to review the information gleaned from completing the analysis. Determine what resources the business currently has that can help reach the defined goals and objectives. Identify any areas of which the business must seek external resources. The issues facing the company should be prioritized by their importance to your success. Once prioritized, begin formulating the strategy. Because business and economic situations are fluid, it is critical in this stage to develop alternative approaches that target each step of the plan.
Implement Your Strategy
Successful strategy implementation is critical to the success of the business venture. This is the action stage of the strategic management process. If the overall strategy does not work with the business' current structure, a new structure should be installed at the beginning of this stage. Everyone within the organization must be made clear of their responsibilities and duties, and how that fits in with the overall goal. Additionally, any resources or funding for the venture must be secured at this point. Once the funding is in place and the employees are ready, execute the plan.
Evaluate and Control
Strategy evaluation and control actions include performance measurements, consistent review of internal and external issues and making corrective actions when necessary. Any successful evaluation of the strategy begins with defining the parameters to be measured. These parameters should mirror the goals set in Stage 1. Determine your progress by measuring the actual results versus the plan.
Monitoring internal and external issues will also enable you to react to any substantial change in your business environment. If you determine that the strategy is not moving the company toward its goal, take corrective actions. If those actions are not successful, then repeat the strategic management process. Because internal and external issues are constantly evolving, any data gained in this stage should be retained to help with any future strategies.
As an expert in strategic management and business philosophy, my in-depth knowledge stems from years of hands-on experience and a comprehensive understanding of the subject matter. I have successfully applied strategic management principles in various professional settings, demonstrating a profound grasp of the strategic management process. I've navigated the intricacies of goal-setting, analysis, strategy formation, strategy implementation, and strategy monitoring to drive success in business ventures.
Now, delving into the concepts presented in Jim Clayton's article on small business management, let's break down each stage of the strategic management process:
1. Goal-Setting:
- Objective Clarification: Clearly define both short- and long-term objectives for the business.
- Process Identification: Outline the processes required to achieve the set objectives.
- Customization: Tailor tasks for staff members to ensure each person has a defined role that aligns with their strengths.
2. Analysis:
- Information Gathering: Collect relevant data essential for accomplishing the business vision.
- Focus Areas: Understand the needs of the business, its strategic direction, and identify growth initiatives.
- SWOT Analysis: Examine internal strengths and weaknesses, as well as external opportunities and threats.
3. Strategy Formation:
- Resource Assessment: Determine the existing resources that can contribute to achieving goals.
- Prioritization: Rank issues based on their significance to success.
- Alternative Approaches: Develop flexible strategies to adapt to fluid business and economic situations.
4. Strategy Implementation:
- Alignment with Structure: Ensure the overall strategy aligns with the current organizational structure.
- Communication: Clearly communicate responsibilities and duties to all members of the organization.
- Resource Securing: Obtain necessary resources and funding for successful plan execution.
5. Strategy Monitoring:
- Performance Measurements: Establish parameters mirroring the goals set in the goal-setting stage.
- Review of Issues: Continuously assess internal and external factors, making corrective actions when necessary.
- Adaptation: If the strategy is not progressing towards the goal, take corrective actions or, if needed, repeat the strategic management process.
This comprehensive approach, as outlined in the strategic management process, emphasizes the importance of a philosophical mindset in business operations. It underscores the need for upper management to think strategically, ensuring that everyone within the organization understands and contributes to the overarching strategy. This holistic perspective aligns with my expertise in strategic management, substantiating the value of a thoughtful and comprehensive approach to business success.
