4 Phases of Strategic Management
One can generally say that Strategic Management is all about the management of strategic decision-making, process implementation, and control. But this does not imply the complete meaning of strategic management as it fails to cover some of the important aspects of strategic management.
Strategic management is defined by William F. Glueck as “a stream of decisions and actions which leads to the development of an effective strategy to help achieve corporate objectives”. And Alfred D. Chandler defined it as “determination of the basic long-term goals and objectives of an enterprise and adoption of course of action and allocation of resources necessary to carry out these goals”.
Strategic management is a set of decisions and actions which result in the formulation and implementation of strategies that are designed to achieve an organization’s objective. It is all about making decisions about the long-term goals and analysis of the environment in which it operates. It also assesses the current status to assure its continued success making it secured from any risk. On a strategic level, it covers the entire cycle of planning & control.
Strategic planning is said to be a process by which an organization tries to:
- Analyse its position with its environment
- Generate & choose a set of options
- Implementation of strategies
- Compare organizational activities with their capabilities
- Make major decisions concerning the allocation of resources
- A long-term direction that is expected to be taken by the organization
Strategic management is the art & science of formulating, implementing, & evaluating cross-functional decisions that help an organization to achieve its goals. Through strategic management, an organization establishes purposes and pursues them by co-aligning the organizational resources with opportunities, environment, and constraints. Strategic management is also said to be visionary management because it describes the vision of how the business will look in a few years.
Importance of Strategic Management:
- It helps in long-term direction and guides for short & medium-term planning
- It helps to identify, prioritize, and exploit opportunities
- It minimizes the effects of adverse changes & conditions
- It clarifies individual responsibilities
- It helps the management to anticipate future problems & opportunities
- It primarily focuses on long-term issues which affect the business
- It helps in taking major decisions which supports established objectives
- Overall, it leads to a better quality of management
Let us discuss in detail the four stages of strategic management with examples:
1. Formulating a Plan
The formulation is said to be a process that involves choosing the most profitable action for success. In this phase, the process of setting objectives, identifying the ways & means of achieving the same is clearly defined.
For example, when a company’s objective is to expand sales into the online market and research shows that competitors in the online market are not making profits then the company’s decision-makers may opt for other alternatives. But on the other hand, if competitors are seeing a return on their investment then the business will proceed to launch its online store and also initiate social media campaigns to drive traffic to their website.
2. Implementation of Strategies
This phase includes the execution of required strategies to meet the set objectives. To achieve success, all employees should be well aware of their roles & responsibilities. Suitable activity measures provide required feedback along with facts that helps in identifying positive impacts & areas for change.
In this phase, businesses pay attention to details & monitor processes to implement the required quick changes. For eg: when a customer complains about receiving products late then analysis of the shipping process can initiate ways to expedite delivery such as utilizing pre-printed shipping levels to organize packaging & courier pick at the store.
3. Evaluating the Results
Evaluating strategies in the implementation phase serves as performance feedback. At times, a gap analysis is used to compare how the company has performed to set goals. By breaking down the present status contrasted with the ideal future, it recognizes the requirement for augmentations or new items to existing items.
For example, a company comparing its expected consumer purchase response with the actual sales or comparing old shipping methods to the timeframe after implementing the new procedures.
4. Modification & Amplification
The modification phase is crucial as it helps in correcting any failures or weaknesses found during the evaluation. The strengths that get identified can help in implementation in other areas. For example, a strategy to sell a selected quantity of products on the online market and sales data showing a good profit.
By deciding to add more products & streamlining the process can end up in a new lucrative endeavor. A good marketing plan which includes search engine ads can be examined to attract additional customers to the website.
1. What are the 4 phases in the strategic management process?
The 4 phases in the strategic management process include Formulation, Implementation, Evaluation, and Modification.