Strategic Management Process and Its Components

Strategic management is a process that determines the fundamental aims and goals of the organization. Strategic management plays a critical role as far as making decisions are concerned. Moreover, it entails following up the accomplishment of the aims and goals. These decisions are both long-term and short-term. The top management directs the process in the organization by engaging all the junior staff, including those with the duty of satisfying customers. The process entails strategic planning, management of change, and capacity building. The process is concerned with the relationship between the company and the environment within which it operates. The primary components of strategic management process include environmental scanning, strategy formulation, strategy implementation, evaluation, and control.

Environmental scanning in an organization precedes strategic formulation. It examines the external environment to identify available opportunities and threats. This includes the strengths and weaknesses of the organization (Werbech 2009). The external variables affect the long-run decisions directly, without influencing the short-run variables. They include economic forces, which regulate the exchange of materials, information, and money. Technological forces generate mechanisms that help in formulating solutions to problems. Another external variable is the political force that puts forward laws and regulations, which guide operations of the firm. The socio-cultural forces regulate morals and customs in the organization.

Strategy pertains to formulating long-term plans for efficient administration of the identified problems. This process explains the business mission of the organization. Moreover, it spells out the objectives, develops policies, and puts in place guidelines. A mission explains the fundamental and distinct function of the organization, which distinguishes the company from other similar organizations. Moreover, it classifies its scope of operation. In fact, this is the main function of the organization. The mission carries the organization’s philosophy as regards to employee relations. Putting the policies into action through budgets, programs, and procedures covers the process of strategic implementation.

Scrutinizing the outcomes, by contrasting the actual performance with preferred performance, is under control and assessment. In other words, this is the process of strategic management. The strategic management process is important to a firm because of various reasons. This process is the only way the firm can forecast problems and prepare amicably. (Morden 2007) By making long-range decisions, the company averts the scenario whereby the management formulates decisions based on the crisis. The process gives direction and controls the business. It improves corporate communication within the firm.

Wal-Mart remains the market leader in the industry because of its strategic management process. The company has adopted a three-tier strategic process. Save and live better is the first strategy. Wal-Mart ensures that its prices are low in order to obtain a large share of the market. Its consumables are advertised at the head office to reduce expenditure. To help consumers save their money, the company introduced private labels. The second strategy is the win, play, and show policy. This optimizes the company products in various stores. It also strikes a balance between growth and profit. This policy includes reducing the number of stock in its outlets, even though it does not present it to market. The fast, friendly, and clean policy is the third strategy. In this case, the company takes forty-eight hours to replenish its merchandise. It pursues the zero wastes policy by maximizing the efficiency from the manufacturing phase to the consumption phase. The company has also improved its supply chain to almost perfection. Emphasis is on transportation. These strategies have helped Wal-Mart to control its market share, acquire new customers, and block other competitors from dominating the industry.

References

Morden, T. (2007). Principles of Strategic Management. New York: Ashgate Publishing Ltd.

Werbech, A. (2009). Strategy for Sustainability. New York: Harvard Press.