Strategic Management according to Jasper and Crossan (2012) is the “essential process for coping with external change” (p. 838). Strategic Management is the linking of strategic thinking and analysis to organizational action. Strategies are initiatives taken by leaders on behalf of an organization involving the use of resources to improve their performance and external environment. Three elements are involved in strategic management, the first is to knowing where the organization is strategically through a strategic analysis, a strategic choice is the understanding of what guides strategic decisions. The last one is strategy implementation referring to the translation of the strategies into action plans. Strategic Management “ties the organization with a shared sense of purpose, improves financial performance, improves overall coordination within the organization, and encourages innovation” (Swayne, Duncan, & Ginter, 2008, p. 20). Strategic Management Components
Strategic Management consists of four components environmental scanning, strategy formulation, strategy implementation, and evaluation and control. Environmental Scanning – consists of monitoring the internal and external environment, evaluating the information gathered, and disseminating this information to key individuals within the firm. The external scanning looks at opportunities and threats outside of the organization. The internal scanning looks at the strengths and weaknesses of the organization and includes the structure, culture, and resources. Strategic Formulation refers to the development of long-range plans to manage the opportunities and threats in the firm’s strengths and weaknesses. Strategic formulation includes the definition of the firm’s mission, achievable goals, development of strategies, and developing policy guidelines.
Strategy Implementation is the process to put in action the policies and strategies through programs, budgets, and procedures (Hunger, 2011, p. 9). This process includes the change in culture, structure, and possibly the need to change the management system. Most times middle-level management is the ones responsible for implementing the strategies and allocating resources. Evaluation and Control involve the monitoring firm’s activities and performances to measure the results with the desired outcome and managers use these results to make corrective actions. The final step can show areas of weaknesses in previously implemented strategies and stimulate the process to begin again. Mission and Values in Strategic Management
The mission of an organization is its unique purpose; it tells what the firm is providing to society. Hunger (2011) states, “a well-conceived mission statement promotes a sense of shared expectations in employees and communicates a public image to important stakeholder groups in the company’s task environment” (p. 6). Articulating the strategic planning through the mission and vision of the organization and highlighting the positives of the changes will maintain the employees engaged. Some changes require the revision of the vision statement to reflect the position the organization is heading for future years. Decision Making and Financial Performance
Financial Performance is one of the purposes of strategic management; return on investment is the decision maker of organizations that care for the stakeholders. Budgets are assigned to every program of the strategy, and a certain percentage is expected in return of the investment before the approval of any program. Hunger (2011) states “the budget thus not only serves as a detailed plan of the new strategy in action, it also specifies through pro forma financial statements the expected impact on the firm’s financial future” (p. 10). Organization’s Environment
Strategic management processes have a positive effect and improve the manner the organization responds to its environment. The environment might be a change of structure, changes in the market, or competition – these are triggering events. According to Hunger (2011), “a “triggering event” is something that stimulates a change in strategy such as a new CEO, external intervention, threat of a change in ownership, performance gap, and strategic inflection point” (p. 5). Competitive shifts in an organization that might take generations to evolve, with a strategic plan in place will be possible to achieve in a few years. A change of CEO in an organization brings a sense of despair at times because the employees fear at times the approaches this individual will bring to the organization. Richardson (1994) states, “each leader type brings a style, skill-base, and perspective to his or her job” (p. 27) Conclusion
Strategic Management is an improvement process that helps organizations address challenges and changes. Strategic management includes the performance of an environmental scanning, a strategy formulation to address the changes necessary, strategy implementation where managers will present the new changes to employees through education highlighting the benefits, lastly evaluation and control to measure the results against the desired outcomes. Budgets are assigned to each program with the expectation that a positive return on investment will be the outcome. Incorporating the mission and the vision in the development process of strategies will align these with the action plans and assist the firm in achieving its goals.
Hunger, J. D., & Wheelen, T. L. (2011). Essentials of strategic management (5th ed.). Upper Saddle River, NJ: Pearson Education.
Jasper, M., & Crossan, F. (2012). What is strategic management? Journal of Nursing
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Richardson, B. (1994). Comprehensive Approach to Strategic Management: Leading across the Strategic Management Domain. Management Decision, Vol. 32 (8). p. 27 – 41 Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2008). Strategic Management of Health Care Organizations (6 ed.). Hoboken, NJ: Wiley