Strategic Management Process Essay
In a competitive business environment and volatile economic conditions, it is a prerequisite that organizations execute due diligence in preparing for the future. Businesses are not only challenged with attracting new consumers but also faced with retaining existing clients. The requirement to know principal drivers in specific marketplaces to develop and position products and services to remain a viable customer focused establishment is crucial in maintaining customer bases. These factors are an indispensable part of understanding strategic management and are considered fundamental essentials.
Strategic management is a set of managerial decisions and actions that determine long-run performance of an organization (Wheelen, 2010). The study of strategic management emphasizes the monitoring and evaluating opportunities and threats in light of the corporation’s strengths and weaknesses (Wheelen, 2010). Additionally, strategic management is the ability of a firm to formulate, implement, and evaluate cross-functional decisions that will enable the business to achieve its objectives.
The purpose of this paper describes the primary components of a strategic management process and why the process is needed in an organization. Primary Components Strategic management embodies concepts and techniques that are relevant components to ensuring that the planning and execution strategies are accomplished. The primary models of strategic management are environmental scanning, strategy formulation, strategy implementation, and strategy evaluation.
These components detail and explain the company’s mission, internal and external analysis, comparing the environment to internal capabilities, and implementing processes that will assist in achieving organizational objectives. Environmental Scanning The Starbucks organization is regarded as a cutting edge business in the global marketplace. Starbuck’s strategic architecture encompasses the firm’s management decisions, tangible resources, and external factors. The establishment’s environmental scanning involves completing a SWOT analysis hat gathers external and internal factors that influence the future performance of the organization. For example, Starbucks’ executives had to evaluate the external threats through environment scanning and concluded that a major contributor was from rapid company expansion. The organization’s store and revenue growth slowed down in 2008 after a 10-year high growing period. Other external threats the business was confronted by were increased competition from companies like Dunkin Donuts and McDonald’s in the coffee-house environment and the economy.
The internal trials included employee turn-over and how constant staff changes would affect the product quality that customers received. Gathering information from all resources is a necessary element in environmental scanning to determine external threats and identify internal opportunities. Strategy Formulation Strategy formulation comprises of the organization’s mission, objectives, policy guidelines, and developing strategies. The purpose is for the firm to develop long-range plans for environmental opportunities and threats.
Starbucks’ mission is “To inspire and nurture the human spirit one person, one cup, and one neighborhood at a time. ” From that mission, organizational objectives are created, development of policies are formed, and guidelines help aid the company in defining their strategic management process and identify their position in the marketplace. If a business is unaware of their current position there is no way they will be able to properly project strategically where they want to be in the future.
The formulation is clearly outlined after internal and external factors have been assessed and the company can see what is required to formulate its next set of strategies. Strategy Implementation Strategic implementation is often times led by the CEO of an organization who communicates the vision, direction, and requirements necessary to achieve the company’s goals. Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals. Implementing a strategic plan is as important, or even more important, than the strategy.
The implementation portion demands time and money to successfully implement. Sadly, this section of strategic management is frequently neglected by not managing a budget, lack of communicating the strategy throughout the company, and employees understanding the strategy and its connection to organizational goals. Starbuck’s principle objective is to increase profits over a long period of time and with the decrease profits in 2008, the company did not appropriately implement strategies that captured profits and losses. Strategy Evaluation
As a final phase in the management process, the strategic evaluation is the appraisal of the health and productivity of the business. Companies assess trends to forecast future success or potential failure based on past performance indicators. It is beneficial when organizations can accurately analyze into the future to customize current policies to ensure success. Strategic evaluation is vital to the organization’s existence, it alerts management to potential problems, and erroneous strategic decisions can have a negative impact on the organization.