The strategic management process is more than just a set of rules to follow. Everyone within the business needs to understand the strategy.
Basically the process of strategy making consists of two main parts: Formulation and Implementation. The five sub-stages of the process are analysis, strategy formation, goal-setting, strategy implementation (structure) and strategy monitoring (control & feedback).
Analysis is a key stage because the information gained in this stage will shape the next two stages. In this stage as much information and data relevant to accomplish the vision is collected involving comprehensive market research as well as conducting Porter's Five Forces, SWOT, PESTEL and value chain analyses and gathering experts. 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 business grow. It is crucial to examine any external or internal issues that can affect the goals and objectives and to identify both the strengths and weaknesses of the organization as well as any threats and opportunities that may arise along the path.
The first step in forming a strategy is to review the information gleaned from completing the analysis. Resources the business currently has that can help reach the defined goals and objectives need to be determined and any areas of which the business must seek external resources must be identified. Once prioritized, strategy formulating can begin.
A generic strategy must be selected, for example, low-cost, differentiation etc. based upon the value-chain implications for core competence and potential competitive advantage. Risk assessments and contingency plans need to be developed based upon external forecasting. Brand positioning and image should be solidified.
To clarify the vision for the business is the most important purpose of the goal-setting stage by identifying three key facets:
define both short- and long-term objectives
identify the process of how to accomplish your objective
customize the process for your staff, give each person a task with which he can succeed
During this process one have to keep in mind to keep the goals detailed, realistic and match the values of the vision. Usually this stage closes with writing a mission statement communicating the goals to shareholders and employees.
INTEL’s transformation from a memory company, founded in 1968, into a microprocessor company during the early 1980s is a good example to show how Goal-Setting helped INTEL to re-clarify their vision and to re-position themselves and capitalise of the phenomenal growth of the PC industry during the 1980s.
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, the plan can be executed.
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. Progress has to be determined by measuring the actual results versus the plan. Internal and external issues have to be monitored to react to any substantial change in the business environment. If the strategy is not moving the company toward its goal, corrective actions need to be taken. If those actions are not successful, the strategic management process must be repeated. Because internal and external issues are constantly evolving, any data gained in this stage should be retained to help with any future strategies.