The Strategic Management Process: An Overview Basic Concepts A company's strategy consists of the combination of competitive moves and business approaches that managers employ to please customers, compete successfully, and achieve organizational objectives. A company's business model deals with whether the revenue-cost-profit economics of its strategy demonstrate the viability of the enterprise as a whole. Excellent execution of an excellent strategy is the best test of managerial excellence- and the most reliable recipe for organizational success. The term strategic management refers to the managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then over time initiating whatever corrective adjustments in the vision, objectives, strategy, and execution are deemed appropriate. A strategic vision is a roadmap of a company's future-providing specifics about technology and customer focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create. A company's mission statement is typically focused on its present business scope- "who we are and what we do"; mission statements broadly describe an organization's present capabilities, customer focus, activities, and business makeup. Objectives are an organization's performance targets-the results and outcomes it wants to achieve. They function as yardsticks for tracking an organization's performance and progress. Strategic objectives relate to outcomes that strengthen an organization's overall business position and competitive vitality; Financial objectives relate to the financial performance targets management has established for the organization to achieve. A company's strategy consists of the competitive efforts and business approaches that managers employ to please customers, compete successfully, and achieve organizational objectives. Strategy is both proactive (intended and deliberate) and reactive (adaptive). Company strategies are partly visible and partly hidden to outside view. Strategy making is fundamentally a market-driven and customer-driven entrepreneurial activity-the essential qualities are a talent for capitalizing on emerging market opportunities and evolving customer needs, a bias for innovation and creativity, an appetite for prudent risk taking, and a strong sense of what needs to be done to grow and strengthen the business. The march of external and internal developments dictate that a company's strategy change and evolve over time-a condition that makes strategy making an ongoing process, not a one-time event. A strategic plan consists of an organization's mission and future direction, near-term and long-term performance targets, and strategy. The faster a company's external and internal environment changes, the more frequently that its short-run and long-run strategic plans have to be revised and updated-annual changes may not be adequate. In today's world strategy life cycles are growing shorter, not longer. Strategy implementation concerns the managerial exercise of putting a freshly chosen strategy into place. Strategy execution deals with the managerial exercise of supervising the ongoing pursuit of strategy, making it work, improving the competence with which it is executed, and showing measurable progress in achieving the targeted results. Strategy execution is fundamentally an action-oriented, make-it-happen process-the key tasks are developing competencies and capabilities, budgeting, policy making, motivating, culture-building, and leadership. A company's vision, objectives, strategy, and approach to implementation are never final; evaluating performance, reviewing changes in the surrounding environment, and making adjustments are normal and necessary parts of the strategic management process. Strategic management is a tightly-knit process; the boundaries between the five tasks are conceptual, not fences that prevent some or all of them being done together. Every company manager has a strategy-making/strategy-implementing role-it is flawed thinking to view strategic management as solely the province of senior executives. Broad participation in a company's strategy-creating exercises is usually a strong plus. Corporate intrapreneuring relies upon middle and lower-level managers and teams to spot new business opportunities, develop strategic plans to pursue them, and create new businesses. Each of the four basic strategy-making approaches has strengths and weaknesses, and each is workable in the "right" situation. Strategic Management Principle The central role of the board of directors in the strategic management process is (1) to critically appraise and ultimately approve strategic action plans and (2) to evaluate the strategic leadership skills of the CEO and others in line to succeed the incumbent CEO.
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