Lesson 2: Strategic Management Model
Lesson Outcomes
Demonstrate an understanding of, and ability to assess the
complexities of strategic decision making.
Understand functional areas and appreciate the role of func-
tional areas in both the formulation and the implementation
of a firm's vision, mission, and strategy.
Integrate strategic thinking into the holistic management
of an organization.
Lesson Introduction
The strategic management model emphasizes the value and process of
internal and external evaluation before strategies are formulated and im-
plemented. It emphasizes the strategic management design that begins
with the exploration of an organization's vision and mission and exam-
ining 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 pro-
vides 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 or-
ganizational 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 indus-
try analysis.
Lesson Objectives
After this lesson, students are expected to:
analyze the internal' and external environment where a
business operates and the significance of these factors for
future initiatives,
determine the theories, concepts, and tools that support
strategic management in organizations;
synthesize information and existing knowledge from nu-
merous sources and experiences;
apply appropriate tools, theories, and concepts to analyze
strategically; and
participate constructively in team situations to complete
shared tasks and meet agreed deadlines.
Lesson Presentation
Developing the strategic management model is important because it pro-
vides 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 or-
ganizational setting. The strategic management model begins with the
development of the organization's mission and vision, which can be
translated to organizational goals. 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 the major types
of analysis, external analysis of the environment, internal analysis of the
organization, and industry analysis.
Each of these analyses will provide information on strengths and weak-
nesses and opportunities and threats. The results of these analyses could
help managers and strategists to match the niche areas to be focused,
identify distinctive competence of the organization, and determine the
company's competitive position. Strateaic management is the art and
science of formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve its objectives.
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 weak-
nesses to the opportunities and threats in the environment.
Identifying the Competitive Advantage
The goal of developing a strategic plan is to create a competitive ad-
vantage 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 own-
ers 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 be-
cause it is not right for the business itself. They should look for an ap-
propriate strategic management fit for the company itself and its finan-
cial resources.
The strategic management should include the following features:
Use a relatively short planning horizon fit for small compa-
nies.
Be informal and not overly structured.
Encourage the participation of employees and external par-
ties 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 man-
agement.
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 mis-
sion statement.
2. Define the firm's core competencies and target market seg-
ment 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 strat-
egies.
9. Translate strategic plans into action plans.
10. Establish accurate controls.
Visioning
Positionig
Internal Analysis
External Analysis
Defining Competitive Advantage
Competitor Analysis
Strategy Formulation
Strategic Action
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 effec-
tive way to communicate the aim of management to members of the or-
ganization. Strategic planning can be used as a means of control by reg-
ularly 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 ob-
tained.
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 in-
ternal and external to the company.
Chapter Summary
Strategy is the long-term goals and objectives of an enterprise and the
adoption of the courses of action and the allocation of resources neces-
sary for carrying out these goals. It is management's game plan for
strengthening the organization's position, pleasing customers, and
achieving performance targets. It can be formulated on three different
levels, corporate unit business unit, and functional or departmental unit.
Strategy management explores the organization's mission and vision,
examines principles, technigues, and models of organizational and envi-
ronmental analysis, and discuss the theory and practice of strategy for-
mulation and implementation including corporate governance and busi-
ness ethics toward effective strategic leadership.
Strategic management is the procedure where an organization sets goals
and objectives and starts planning and implementing the planning which
helps to achieve these goals and objectives. This procedure changes with
the growth of the organizational goals and objectives as business gets
involved in new strategic directions to cope with various advancements
and in the nuances of globalization.
