.

Strategic Management:
Concept and Process.
Dr Ekekezie Oyenike O. FMCPH
Definition
• Strategic Management refers to a branch of management that deals with an
organization’s strategic objectives. This may include the development of the
organization’s vision, outlining its operational objectives and coming up with and
implementing the organization’s strategies. It may also include the formulation and
application of deviation corrective measures where necessary.
• Strategic Management is a continuous process that appraises the business and
industries in which the organization is involved; appraises its competitors; and fixes goals
to meet all the present and future competitor's and then reassesses each strategy.
• Strategic Management is all about identification and description of the strategies that
managers can carry out so as to achieve better performance and a competitive
advantage for their organization. An organization is said to have competitive advantage if
its profitability is higher than the average profitability for all companies in its industry.
• The manager must have a thorough knowledge and analysis of the general and
competitive organizational environment so as to take right decisions. They
conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats),
i.e., they should make best possible utilization of strengths, minimize the
organizational weaknesses, make use of arising opportunities from the business
environment and shouldn’t ignore the threats.

• Strategic Management is nothing but planning for both predictable as well as

unfeasible contingencies. It is applicable to both small as well as large
organizations as even the smallest organization face competition and, by
formulating and implementing appropriate strategies, they can attain sustainable
competitive advantage.
Strategic Management Process
• The primary purpose of Strategic Management Process (SMP) is to help the organization
achieve a sustainable strategic competition in the market. When properly conceived and
implemented, it creates value for the organization by focusing on and assessing
opportunities and threats, then leveraging its strengths and weaknesses to help it survive,
grow, and expand as well as.

• The right SMP model depends on various factors including:

1. The existing culture of the organization.
2. Market dominance of the organization.
3. Leadership style.
4. The organization’s experience in creating and implementing SMPs.
5. Industry and competition.
Achieving Sustainable Strategic Competition
Strategic Management Process can help a business achieve this by:
1. Acting as the reference for any major decisions of the organization.
2. Guiding the business to chart its future and move in that direction. SMP involves formulating the
organization’s goals, fixing realistic and achievable objectives, and ensuring that they are all
aligned with the company’s vision.
3. Assisting the business to become proactive, not reactive. With the SMP, the business can analyze
the competitor’s actions vis-à-vis market trends and come up with the steps that must be taken
to compete and succeed in the market.
4. Preparing the organization for any potential challenges and explore possible opportunities that
the business must pioneer in. The strategic management process steps also involve identifying
the best ways to overcome the challenges and exploiting new opportunities.
5. Ensuring that the organization copes with the competition in a dynamic environment and
survives in an uncertain market.
6. Helping in the identification and maximization of the organization’s competitive advantages
and core competencies. These are responsible for the business’ survival and future growth.
7. Strategic management requires setting objectives for the company, analyzing the actions of
competitors, reviewing the organization's internal structure, evaluating current strategies and
confirming that strategies are implemented company-wide.
8. Strategic management can be either prescriptive or descriptive. Prescriptive strategic
management means developing strategies in advance of an organizational issue. Descriptive
strategic management means putting strategies into practice when needed. Both methods of
strategic management employ management theory and practices.
9. While upper management is responsible for implementing strategies, ideas, goals or
organizational challenges can come from any member of the company. Many companies
employ strategists whose job it is to think and plan strategically to improve company
function.
OVERVIEW OF STRATEGIC MANAGEMENT
Steps in Strategic Management Process

1. Developing a Strategic Vision and Business Mission

2. Setting Objectives
3. Crafting a Strategy
4. Environmental Scanning
5. Strategy Formulation
6. Strategy Implementation
7. Strategy Evaluation and Control
Process of Strategic Management

1. Defining the Mission Statement

2. Analyzing the Environment
3. Organizational Self-Assessment
4. Establishing Goals and Objectives
5. Formulating Strategy
Phases of Strategic Management Process

1. Establishing Strategic Intent

2. Formulation of Strategies
3. Implementation of Strategies
4. Evaluation of Strategies.
Steps in Strategic Management Process
1. Environmental Scanning
The process of collecting, scrutinizing and providing information for strategic purposes. It
helps in analyzing the internal and external factors influencing an organization. After
executing the environmental analysis process, management should evaluate it on a
continuous basis and strive to improve it.
2. Strategy Formulation
Is the process of deciding best course of action for accomplishing organizational objectives
and hence achieving organizational purpose. After conducting environment scanning,
managers formulate corporate, business and functional strategies.
Strategy formulation is the first phase in the strategic management process. It is concerned
with devising a suitable plan of action after studying the external business environment,
analyzing the industry and assessing the internal capabilities of the business concern.
Strategy Formulation involves 6 important steps:

i. Defining the Company Mission

ii. Analysis of the External business environment
iii. Industry analysis
iv. Internal Analysis of the firm
v. Strategic Alternatives. Each alternative should be examined to determine its:
a. Relevancy
b. Feasibility
c. Acceptability
vi. Strategic Choice
3. Strategy Implementation
Implies making the strategy work as intended or putting the
organization’s chosen strategy into action. Strategy implementation
includes designing the organization’s structure, distributing resources,
developing decision making process, and managing human resources.

It necessitates three interrelated activities of (i) Determination of annul

objectives, (ii) Development of specific functional strategies, and (iii)
Development of policies. For the successful implementation, the
strategy must be also institutionalized through structure, leadership,
and culture.
4. Strategy Evaluation
The key strategy evaluation activities are: appraising internal and external
factors that are the root of present strategies, measuring performance, and
taking remedial / corrective actions. Evaluation makes sure that the
organizational strategy as well as its implementation meets the
organizational objectives.

Strategy evaluation is concerned with examining whether the strategy

implemented is working or producing results or accomplishing its objectives
or not. Strategic control is concerned with continuous monitoring and
tracking the strategy— putting the strategy in the right path or direction.
Strategic Intent

• An organization’s strategic intent is the purpose that it exists and why it will
continue to exist, providing it maintains a competitive advantage. Strategic intent
gives a picture about what an organization must get into immediately in order to
achieve the company’s vision. It motivates the people. It clarifies the vision of the
vision of the company.
• Strategic intent helps management to emphasize and concentrate on the
priorities. Strategic intent is, nothing but, the influencing of an organization’s
resource potential and core competencies to achieve what at first may seem to
be unachievable goals in the competitive environment.
• A well-expressed strategic intent should guide/steer the development of strategic
intent or the setting of goals and objectives that require that all of organization’s
competencies be controlled to maximum value.
Mission Statement

Mission statement is the statement of the role by which an

organization intends to serve its stakeholders. It describes why
an organization is operating and thus provides a framework
within which strategies are formulated. It describes:
• What the organization does - present capabilities
• Who all it serves – stakeholders
• What makes an organization unique - reason for existence
Mission statements always exist at top level of an
organization, but may also be made for various organizational
levels.
• A mission statement differentiates an organization from others by
explaining its broad scope of activities, its products, and technologies
it uses to achieve its goals and objectives.
• It talks about an organization’s present - “about where we are”.
• For instance, Microsoft’s mission is to help people and businesses
throughout the world to realize their full potential.
• Wal-Mart’s mission is “To give ordinary folk the chance to buy the
same thing as rich people.”
Features of a Mission

1. Mission must be feasible and attainable. Should be possible to achieve it.

2. Mission should be clear enough so that any action can be taken.
3. It should be inspiring for the management, staff and society at large.
4. It should be precise enough, should be neither too broad nor too narrow.
5. It should be unique and distinctive to leave an impact in everyone’s mind.
6. It should be analytical, should analyze the key components of the strategy.
7. It should be credible, all stakeholders should be able to believe it.
Vision

• A vision statement identifies where the organization wants or intends

to be in future or where it should be to best meet the needs of the
stakeholders.
• It describes dreams and aspirations for future.
• For instance, Microsoft’s vision is “to empower people through great
software, any time, any place, or any device.”
• Wal-Mart’s vision is to become worldwide leader in retailing.
• A vision is the potential to view things ahead of themselves. It
answers the question “where we want to be”.
• Vision gives us a reminder about what we attempt to develop.
• A vision statement is for the organization and its members, unlike the
mission statement which is for the customers / clients.
• It contributes in effective decision making as well as effective business
planning. It incorporates a shared understanding about the nature
and aim of the organization and utilizes this understanding to direct
and guide the organization towards a better purpose.
• It describes that on achieving the mission, how the organizational
future would appear to be.
An effective vision statement must have following features-
1. It must be unambiguous.
2. It must be clear.
3. It must harmonize with organization’s culture and values.
4. The dreams and aspirations must be rational m/ realistic.
5. Vision statements should be shorter so that they are easier to memorize.

In order to realize the vision, it must be deeply instilled in the organization, being
owned and shared by everyone involved in the organization.
Goals and Objectives

• A goal is a desired future state or objective that an organization tries

to achieve. Goals specify in particular what must be done if an
organization is to attain mission or vision. Goals make mission more
prominent and concrete. They co-ordinate and integrate various
functional and departmental areas in an organization.

• Objectives are defined as goals that organization wants to achieve

over a period of time. These are the foundation of planning. Policies
are developed in an organization so as to achieve these objectives.
Formulation of objectives is the task of top level management.
Well made goals have following features:

1. These are precise and measurable.

2. These look after critical and significant issues.
3. These are realistic and challenging.
4. These must be achieved within a specific time frame.
5. These include both financial as well as non-financial
components.
Effective objectives have following features:

1. These are not single for an organization, but multiple.

2. Objectives should be both short-term as well as long-term.
3. Objectives must respond and react to changes in
environment, they must be flexible.
4. These must be feasible, realistic and operational.
STRATEGIC FRAMEWORK
Features of Strategy

1. Strategy is Significant because it is not possible to foresee the future. Without a perfect
foresight, the firms must be ready to deal with the uncertain events which constitute the
business environment.
2. Strategy deals with long term developments rather than routine operations, i.e. it deals
with probability of innovations or new products, new methods of productions, or new
markets to be developed in future.
3. Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee behavior.
4. Strategy is a well defined roadmap of an organization. It defines the overall mission,
vision and direction of an organization. The objective of a strategy is to maximize an
organization’s strengths and to minimize the strengths of the competitors.
5. Strategy, in short, bridges the gap between “where we are” and “where we want to be”.
Types of Strategic Management

Strategic Management as a concept can be approached in a variety of ways.

Popular types of Strategic Management include:
- SWOT Analysis
- Balanced Scorecard.

• SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
This analysis allows you to investigate internal and external factors.
Internal factors include positive (strengths) or negative (weaknesses) factors that exist within your
organization and are able to be changed or affected in some way.
External factors include positive (opportunities) or negative (threats) factors that exist outside of the
subject you are evaluating and cannot necessarily be changed or affected by you or your
organization in any way.
• Balanced scorecard
A balanced scorecard helps you find which facets of your business need
improvements by breaking down the performance evaluation process into four areas
known as legs. These legs are:
- Learning and growth
- Business processes
- Customer perspectives
- Financial data

The balanced scorecard method can generate timely reporting mechanisms that show
all statistics related to the growth of the company.
BALANCED SCORECARD
Benefits of Strategic Management
 Competitive advantage: Strategic management gives businesses an advantage over competitors
because its proactive nature means your company will always be aware of the changing market.
 Achieving goals: Strategic management helps keep goals achievable by using a clear and
dynamic process for formulating steps and implementation.
 Sustainable growth: Strategic management has been shown to lead to more efficient
organizational performance, which leads to manageable growth.
 Cohesive organization: Strategic management necessitates communication and goal
implementation company-wide. An organization that is working in unison towards a goal is more
likely to achieve that goal.
 Increased managerial awareness: Strategic management means looking toward the company's
future. If managers do this consistently, they will be more aware of industry trends and
challenges. By implementing strategic planning and thinking, they will be better prepared to face
future challenges.
Financial vs. Non-Financial Benefits

Financial Benefits
• It has been shown in many studies that firms that engage in strategic management are more
profitable and successful than those that do not have the benefit of strategic planning and
strategic management.
• When firms engage in forward looking planning and careful evaluation of their priorities, they
have control over the future, which is necessary in the fast changing business landscape of the
21st century.
• It has been estimated that more than 100,000 businesses fail in the US every year and most of
these failures are to do with a lack of strategic focus and strategic direction. Further, high
performing firms tend to make more informed decisions because they have considered both
the short term and long-term consequences and hence, have oriented their strategies
accordingly. In contrast, firms that do not engage themselves in meaningful strategic planning
are often bogged down by internal problems and lack of focus that leads to failure.
Non-Financial Benefits
• Firms that engage in strategic management are more aware of the external
threats, an improved understanding of competitor strengths and weaknesses and
increased employee productivity. They also have lesser resistance to change and
a clear understanding of the link between performance and rewards.
• The key aspect of strategic management is that the problem solving and problem
preventing capabilities of the firms are enhanced through strategic management.
Strategic management is essential as it helps firms to rationalize change and
actualize change and communicate the need to change better to its employees.
• Finally, strategic management helps in bringing order and discipline to the
activities of the firm in its both internal processes and external activities.
Conclusion

• In recent years, virtually all firms have realized the importance of

Strategic Management. However, the key difference between those
who succeed and those who fail is that the way in which strategic
management is done and strategic planning is carried out makes the
difference between success and failure.
• Of course, there are still firms that do not engage in strategic planning
or where the planners do not receive the support from management.
These firms ought to realize the benefits of strategic management
and ensure their longer-term viability and success in the marketplace.
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