Basic Elements of Strategic Management

The first step in strategic management procedure is goal setting. After goal setting, strategic
management includes four basic elements:
• environmental scanning
• strategy formulation
• strategy implementation
• evaluation and control
1. Environmental scanning includes the comparison of the threats and opportunities of the
organization in the external business environment. Environmental scanning can be affected by
factors like government rules and regulations, the economy, social changes, change in customer
preferences, technological advancement, competition, and other environmental factors. At this
stage, a SWOT (that stands for Strengths, Weaknesses, Opportunities, and Threats) analysis is
performed to contrast the internal assets and flaws of the trade with the external prospects and
dangers.
2. Strategy Formulation is the generation of long-term plans for the proper management of
environmental openings and fears considering the fortes and faintness of the business or the
company. It consists of defining the mission, attainable objectives, forming strategies, and setting
policies.
▪ Mission: An organization's purpose or the reason for its survival is called mission. It mentions
how it is serving the society. An ideal mission statement specifies the unique purpose that
differs the company from other similar companies and defines the scope of its functions in
the form of the products and services served to the market.
▪ Objectives: The outcomes of the planned functions are called objectives. Objectives mention
what is to be attained by when. The attainment of the objectives should lead to the fulfillment
of the company's mission.
▪ Strategies: A strategy is a broad master plan expressing how a company will accomplish its
mission and objectives, maximizing competitive advantages and minimizing competitive
disadvantages. Generally, a company or business takes into consideration three kinds of
strategy: corporate, business and functional.
▪ Policies: A policy is a comprehensive guideline for making decisions linking the formation
and implementation of a strategy. Companies set policies to ensure that its employees’
decisions and actions support the company’s mission, its objectives, and strategies.
3. Strategy Implementation:
is taking action in order to attain the goals of the organization. It requires organizing all the available
and necessary resources to put the strategy into action. The higher management will pass the
strategy to the managers and they will communicate the roles and responsibilities of their team
members to implement the strategy. There are contributions of different members of different
departments in the implementation of a strategy. A perfect coordination and cooperation between
the management and other departments are absolutely necessary to implement a strategy
successfully.
4. Evaluation and control:
It requires an evaluation of the strategy to ascertain whether the actual outcome matches the
expected outcome of the organizational goals. At this stage, the organization decides which area of
planning should be evaluated and the method of evaluation to be used and after the evaluation
makes a comparison between the expected result and the existing result. Through this evaluation,
the company can decide to take different corrective actions to control the shortcomings (if any) and
help the strategy to meet the desired organizational goals and objectives. For example, if a company
fails to achieve the desired sales target, it can take many corrective actions such as providing
discounts, adding extra attractive features to the product or service, giving attractive gifts with the
product or service, etc.
Managers should have a complete understanding of strategic management to set the organizational
goals properly and develop and implement effective strategies to achieve those goals increasing
profitability and competitive advantage of the business or organization.
The strategic management model emphasizes the value and process of internal and external evaluation
before strategies are formulated and implemented. It emphasizes the strategic management design that
begins with the exploration of an organization's vision and mission and examining its values and principles.
The organizational vision and mission would then be translated into the organizational goals. It also includes
a thorough environmental analysis that would allow for the formulation and implementation of strategies that
underscores corporate governance and business ethics.
Developing the strategic management model is important because it provides the basic framework for
understanding how strategic management can be operationalized at the company level. The strategic
management model provides managers and strategists a greater comprehension of the iterative approach in
conducting real strategic management in the organizational setting. These elements show the direction and
the areas of concern to be attained by an organization. Once these elements have been determined, the role
of the manager or strategist is to perform an analysis of the organization. This involves external, internal, and
industry analysis.
Strategic management is also the process of developing a game plan to guide a company as it
strives to accomplish its vision, mission, goals, and objectives and to keep it from straying off course.
It gives business owners a blueprint for matching their companies' strengths and weaknesses to the
opportunities and threats in the environment.
Identifying the Competitive Advantage
The goal of developing a strategic plan is to create a competitive advantage for the company, which
is the aggregation of factors that sets a small business apart from its competitors and gives it a
unique position in the market. Every firm must establish a way to create a distinct image in the minds
of its potential customers. There is no business that can be anything or everything to everyone. One
of the biggest mistakes many entrepreneurs do is not be able to differentiate their companies from
their competitors.
Strategic management can increase a company's effectiveness, but owners first must have a
procedure designed to meet their needs and their businesses unique characteristics. It is a mistake
to attempt to apply a big business' strategic development techniques to a small business because
it is not right for the business itself. They should look for an appropriate strategic management fit for
the company itself and its financial resources.
The strategic management should include the following features:
▪ Use a relatively short planning horizon fit for small companies.
▪ Be informal and not overly structured.
▪ Encourage the participation of employees and external parties to discuss the improvement, reliability, and creativity of the
resulting plan.
▪ Focus on the needs and wants of customers
▪ Do not begin with setting objectives ahead of time because it might interfere with the creative process of strategic
management.
▪ Focus on strategic thinking, not just planning, by joining long-range goals to daily operations.
▪ Strategic thinking encourages creativity, innovation, and employee participation in the entire process.

The Strategic Management Process

Strategic planning is not just a result or product of an outcome, but this is an ongoing process. The
strategic management process consists of ten steps.
1) Develop a clear vision and change it into a meaningful mission statement.
2) Define the firm's core competencies and target market segment and position the business to
compete effectively.
3) Assess the company's strength and weaknesses.
4) Scan the environment for significant opportunities and threats facing the business.
5) Identify the key factors for success in the business.
6) Analyze the competition.
7) Create company goals and objectives.
8.) Formulate strategic options and select the appropriate strategies.
9) Translate strategic plans into action plans.
10) Establish accurate controls.
1. Visioning

2. Positioning

3. Internal Analysis

4. External Analysis

5. Defining Competitive Advantage

6. Competitor Analysis

7. Strategy Formulation

8. Strategic Action

9. Strategic Control

Benefits of Strategic Planning

Strategic planning is the methodological form of planning and therefore it is simple to grasp the
methods, procedures, and rituals programmed to implement the strategies.
Strategic planning provides a structured way to analyze and think about complex strategic problems,
requiring management to question and challenge what they take for granted. Strategic planning can
be used to involve people in strategy development. Strategic planning is an effective way to
communicate the aim of management to members of the organization. Strategic planning can be
used as a means of control by regularly reviewing performance and progress against agreed
objectives.
Drawbacks of Strategic Planning
▪ Besides several advantages, strategic planning has the following pitfalls:
▪ Strategic planning is difficult and time consuming.
▪ In strategic planning, immediate results are rarely obtained.
▪ Strategic planning, quite often, limits the organization and executives to the more rational and
risk-free options.
It can be established that strategic planning is a process that brings life to the mission and vision of
the enterprise. A well-crafted strategic plan is determined from the top down and considers the
internal and external environment around the business. It is the work of the managers of the
business and is communicated to all the business stakeholders, both internal and external to the
company.