The components of strategic management are:
- Strategic capabilities.
- Environment.
- Expectations and intentions.
- Strategic levers.
- Organization.
- Change management.
- Guidance - Development.
- Business strategy.
- Goal Setting. ...
- Strategy Formulation. ...
- Strategy Implementation. ...
- Strategy Evaluation. ...
- The Start. ...
- Analyzing. ...
- Forming the Strategy. ...
- Implement the Strategy.
How to define the components of Strategic Management?
What is Strategic Management?
- Components of Strategic Management. Formulation includes an assessment of the environment in which the organization operates and then creating a strategy on how the organization will operate and compete.
- Frameworks for Strategic Management. ...
- Generic Competitive Strategies. ...
- Industry Structure and Profitability. ...
- SWOT Analysis. ...
- Value Chain. ...
- Related Readings. ...
What are the fundamentals of Strategic Management?
Strategic management is essential for all leaders and managers to accomplish their goals. Fundamentals of Strategic Management is designed to update your understanding of what is important in strategic thinking.
What are the essentials of Strategic Management?
What you'll learn
- Differentiate between the myths and realities of management
- Recognize the advantages of taking a “process perspective” towards managerial work
- Influence the context and environment in which decisions get made
- Implement strategies, plans, projects, and initiatives more effectively; manage and lead change in your organization
What are the components of strategic management process?
Strategic management is the process of employing that kind of large-scale, objective-oriented approach through the use of three major components: environmental scanning, strategy formulation and implementation and strategy evaluation.
What are the three major components of strategic management?
Strategic management has three major elements, which include strategic analysis, strategic choice, and strategy implementation.
What are the five major components of the strategic management process?
The five stages of the process are: setting goals or objectives, analysis, strategy formation, strategy implementation, and strategy monitoring.
What are the six major components of strategic management process?
The strategic management process has six major components:Establishment of mission, vision, and goals.Analysis of external opportunities and threats.Analysis of internal strengths and weaknesses.SWOT (strengths, weaknesses, opportunities, and threats) analysis and strategy formulation.Strategy implementation.More items...
What are the four basic components of strategic management?
After goal setting, strategic management includes four basic elements:Environmental Scanning.Strategy Formulation.Strategy Implementation and.Evaluation and control.
What are the components of management?
At the most fundamental level, management is a discipline that consists of a set of five general functions: planning, organizing, staffing, leading and controlling.
What is strategic management?
Strategic management is the formulation and implementation of major objectives and projects, by an organization’s management on behalf of its shareholders (or owners). Shareholder A shareholder can be a person, company, or organization that holds stock (s) in a given company. A shareholder must own a minimum of one share in a company’s stock ...
What should companies focus on in their strategy?
Companies should concentrate their strategy on either cost leadership, focus, or differentiation . According to famed business strategist Michael Porter, if a company does not place focus on a singular factor, it risks wasting its resources. Such a strategy places emphasis on either specializing in a product or service by creating a unique selling proposition or creating economies of scale#N#Economies of Scale Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output.The advantage arises due to the#N#to achieve low costs of production.
What is the competitive advantage of a company?
Competitive Advantage A competitive advantage is an attribute that enables a company to outperform its competitors. It allows a company to achieve superior margins. the company has over its competitors. #2.
What is the competitive force model?
The Competitive Forces Model (Porters 5 Forces)#N#Competitive Forces Model The competitive forces model is an important tool used in strategic analysis to analyze the competitiveness in an industry. This model is more commonly#N#is a framework used to assess the competitiveness of the industry.
What is organizational analysis?
Organizational Analysis Organizational analysis is the process of appraising the growth, personnel, operations, and work environment of an entity.
What is strategic management?
Strategic management is the process of employing that kind of large-scale, objective-oriented approach through the use of three major components: environmental scanning, ...
What are some examples of internal factors?
For example, if your company is experiencing an unusually high rate of employee turnover, it's an issue management needs to address.
Is smart strategy sufficient?
Implementing a smart strategy isn’t sufficient by itself to meet goals. Once the company’s employees are carrying out the planned actions, the company must also periodically assess the results of those actions.
What are the challenges of strategic management?
Strategic management faces different kinds of challenges viz., technological advancement and obsolescence, product or service innovations and development, etc. The recent additions to the challenges are- global issues consequent upon economic liberalization, quality issues consequent upon the total quality management concept of the Japanese firms and social issues.
What is strategic planning?
Strategic planning helps to formulate strategy. It is a part of the wider process of strategic management that deals with aspects of formulation, implementation and control of a strategy. Hofer refers to evolution of strategic management in terms of four-paradigm shift.
Why is evaluation important in strategic planning?
Although evaluation is the final major element of strategic management, it also can pinpoint weaknesses in previously implemented strategic plans and thus stimulate the entire process to begin again.
How does top management take control of the planning process?
Frustrated with highly political, yet ineffectual five year plan, top management begins to involve and takes control of the planning process by initiating strategic planning. The company seeks to increase its responsiveness to changing markets and competition by thinking strategically.
How is strategy implementation effected?
Strategy implementation is effected through the people in the organization, and the way in which they are organized. The allocation of various roles and responsibilities relating to different aspects of the strategy to different managers and subunits is necessary for the implementation of the selected strategy.
What are the issues that managers deal with?
These issues and problems include procuring raw materials, scheduling production process, inventory control, producing goods, procuring finances, investing, capital budgeting, working capital management, procuring human resources, settling their problems, ...
Why is it so difficult for managers to coordinate operations?
However, as businesses expanded the managers found it difficult to coordinate operations due to increased complexity and the changes taking place in the business environment.
What are the features of strategic management?
On the basis of the definition, the following are features of strategic management: 1. The various processes of strategic management may be – . (a) Evaluation and monitoring of the outcome of these strategies to ensure that organisational objectives are being achieved.
What is the role of stakeholder in strategic management?
Strategic Management – Role of Stakeholders in Strategic Management. A stakeholder is an individual or group that has a legitimate interest in a company. A corporate stakeholder is an individual or group who can affect or be affected by the actions of a business.
What is stakeholder management?
Stakeholder Management is the process by which the key stakeholders are identified and their support can be sought the best.
Why are formulators of strategy not intimately involved in its implementation?
If formulators of strategy are not intimately involved in its implementation, they may shirk their individual responsibility for the decisions reached. Due to laziness, people may not want to put forth the effort needed to formulate a strategic plan.
What is a strategic decision?
Strategic decisions are ones that are of fundamental importance. They are normally such that they are irreversible or at least can only be reversed at considerable cost. Grand strategy indicates how the objectives are to be achieved.
Why is it so difficult to present a conceptual framework of strategic management?
Presenting conceptual; framework of strategic management in a precise way is quite difficult because different management thinkers have defined strategy and strategic management in different ways. Reconciling these ways is a tedious task because each way is contradictory to other ways.
Why is the process of decision making considered strategic?
The process is strategic because it involves preparing the best way to respond to the circumstances of the organization’s environment. It is strategic, because it is clear about the organization objectives and resources. It involves anticipating the future environment of decisions that are made in the present.
What is strategic management?
Strategic management in essence is a fancy name given to the planning process in action. It involves the creation and execution of the major goals agreed upon by the top-level management of a business. Strategic management can also be observed as the set of decisions undertaken by a manager impacting the results of the organization’s competitive ...
What is the purpose of a strategic plan?
Every successful organization must have a clear strategy in place. A strategy determines the basic short/long-term goals and objectives of an organization, the course of action to achieve the goals, and the resources necessary for carrying out those goals. By following the strategic management process an enterprise can easily plan for its success.
What is strategy implementation?
Strategy Implementation. once you’re done with the strategy formulation it is now time for action. A strategy must be put into action for it to deliver results otherwise it will be just another document. Implementation happens to be a more challenging and delicate task than strategy formulation.
What are the strengths and weaknesses of a company?
Strengths – These are things a company is good at doing or characteristics that give it enhanced competitiveness e.g., physical assets, intangible assets, etc. Weaknesses – These are what a company lacks, does poorly or a condition that puts it at a disadvantage. A weakness represents a company’s competitive liability.
What are rewards in strategy?
Rewards can take various forms such as promotions, salary increments, bonuses, awards, and so on. Actions that are consistent with strategy implementation should be rewarded. Such actions could include attitudes, behavior, or performance that fosters the accomplishment of strategic objectives. 5. Strategy Evaluation.
What is strategic management?
Strategic Management: Definition, Purpose and Example. Strategic management is the planned use of a business' resources to reach company goals and objectives. Strategic management requires ongoing evaluation of the processes and procedures within an organization and external factors that may impact how the company functions.
Why is strategic management important?
Strategic management offers many benefits to companies that use it, including: 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.
What is descriptive strategic management?
Descriptive strategic management means putting strategies into practice when needed. Both methods of strategic management employ management theory and practices. While upper management is responsible for implementing strategies, ideas, goals or organizational challenges can come from any member of the company.
How does strategic management help achieve goals?
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 ...
How to create an action plan for a goal?
Once you have the information you need, it is time to create an action plan for reaching the goal. Make sure the steps are clear, focused and directly related to the goal. Prepare easy-to-understand implementation guidelines if the process or procedure will impact many people within the organization.
Benefits of strategic management
Strategic management is generally thought to have financial and nonfinancial benefits. A strategic management process helps an organization and its leadership to think about and plan for its future existence, fulfilling a chief responsibility of a board of directors. Strategic management sets a direction for the organization and its employees.
Strategic management concepts
Strategic management is based around an organization's clear understanding of its mission; its vision for where it wants to be in the future; and the values that will guide its actions.
Five stages of strategic management process
There are many schools of thought on how to do strategic management, and academics and managers have developed numerous frameworks to guide the strategic management process. In general, the process typically includes five phases:
Types of strategic management strategies
The types of strategic management strategies have changed over time. The modern discipline of strategic management traces its roots to the 1950s and 1960s. Prominent thinkers in the field include the Peter Drucker, sometimes referred to as the founding father of management studies.
SWOT analysis
A SWOT analysis is one of the types of strategic management frameworks used by organizations to build and test their business strategies. A SWOT analysis identifies and compares the s trengths and w eaknesses of an organization with the external o pportunities and t hreats of its environment.
Balanced scorecard in strategic management
The balanced scorecard is a management system that turns strategic goals into a set of performance objectives that are measured, monitored and changed, if necessary, to ensure the strategic goals are met.
Value of organizational culture
Organizational culture can determine the success and failure of a business and is a key component that strategic leaders must consider in the strategic management process. Culture is a major factor in the way people in an organization outline objectives, execute tasks and organize resources.
Goal Setting
Gathering Information
- The next component of strategic management pertains to collecting information about all those internal and external factors that could influence the implementation and hence, the achievement of goals. For example, 1. Are there enough resources in terms of finances and manpower to execute a process? 2. Are there any laws or regulations to be taken care of? 3. What are competi…
Strategy Implementation
- Well, you have the strategy ready in the written format. The next component is to execute it seamlessly. This is the practical and most rigorous part of strategic management. Whatever you have planned is converted into actual activities and actions geared towards the delivery of goals. Also Read: Executive Development Program In Transformational Leadership
Strategy Evaluation
- A strategy on paper may look perfect and doable. But, implementation can prove otherwise. There can be certain loopholes or deviations from the original planning which may render the strategy futile. In order to ensure that this doesn’t happen, the implementation has to monitor and evaluate at regular intervals. If there are any issues, they should be plugged immediately. Predicting the f…
The Start
- The most essential element of strategic management revolves around the concept of identifying and understanding specific organization goals. Setting short term goals is an ideal way to start, as they act as a direct blueprint in achieving long term objectives. Segregating roles and responsibilities to individuals and team management should be carried out in this initial stage. T…
Analyzing
- To build an efficient strategic management module, thorough marketresearch must be conducted. The data collected from within the organization and the market help in formulating a productive plan that acts as a foundation for strategic management. This process allows the company to identify internal loopholes that have been affecting the operations of the firm.
Forming The Strategy
- Here, all the data and information collected are utilized to form a unique strategy that fulfills all the needs and requirements of the company. Based on the manpower available, the firm has to decide and control the asset purchase and recruitment of professionals. Knowing the potential of your resources becomes important in strategic management.
Implement The Strategy
- Planning is only one side of the coin as it needs to be effectively backed by the implementation. During this stage, all the employees and team involved should have a clear idea of the organization’s goal and the plan formulated such that the execution can be completed with perfection. IIM Kozhikode strategic managementcourses are ideal that train individuals about th…
Monitoring
- This stage involves managing, analyzing, tracking, and evaluating all the steps that were incorporated into the strategic management plan. By this time you will be able to measure the desired results with the current outcome. Likewise, a new plan must be enforced along with certain adjustments. To learn more about the art of strategic management be sure to get in touc…
Components of Strategic Management
- #1 Formulation
Formulation includes an assessment of the environment in which the organization operates and then creating a strategy on how the organization will operate and compete. This is similar to the first step of the budgetingprocess. - #2 Implementation
Implementation includes the deployment of an organization’s resources to meet the desired objectives.
Frameworks For Strategic Management
- #1. Competitive Advantage
An organization may achieve either lower cost of production or product differentiation as an advantage against its rivals. It is important to look at the market positioning of the brand and company and also to pinpoint all the competitive advantagesthe company has over its competit… - #2. Corporate Strategy and Portfolio Theory
The Modern Portfolio Theory provides a framework for allocating assets so that, for a given level of risk, the expected returnis maximized. Portfolio Theory allows corporations to perform a cost-benefit analysis on the deployment of resources and view the merit of individual resource place…
Generic Competitive Strategies
- Companies should concentrate their strategy on either cost leadership, focus, or differentiation. According to famed business strategist Michael Porter, if a company does not place focus on a singular factor, it risks wasting its resources. Such a strategy places emphasis on either specializing in a product or service by creating a unique selling proposition or creating economie…
Industry Structure and Profitability
- The Competitive Forces Model (Porters 5 Forces) is a framework used to assess the competitiveness of the industry.
SWOT Analysis
- SWOTis an acronym for Strengths, Weaknesses, Opportunities, Threats. This framework is employed to assess internal strengths and weaknesses, to explore the external scope of opportunities available for the business to exploit, and to confront threats presented by opponents or policies.
Value Chain
- The value chain consists of a list of processes or activities that a company performs to bring a product or service into the market. The activities are divided into two functions:
Related Readings
- Thank you for reading CFI’s guide to Strategic Management. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional CFI resources below: 1. Corporate Strategy 2. CVP Analysis 3. Management Theories 4. Organizational Analysis