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management process

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Wednesday, September 24, 2008

Strategic Management

Strategic management is closely related to planning function because it is one specific type of planning. Managers will use the strategic management process to create plans and strategies that will enable the organization to achieve its short-run and long-run goals. There are six processes in strategic management process, they are;

1. Identified organization’s mission
2. External analysis
3. Internal analysis
4. Formulate the strategy
5. Implementation of strategy
6. Evaluate the strategy

Company’s mission is a statement of the purpose of an organization. Once the organization identified the mission, it must be communicated to the organizational members and must be understood. Having the mission writing is the simplest way of making employees know and understood it.

External analysis is the second process in strategic management processes. The easiest way of getting the external information is from the internet or World Wide Web, trade association publications, government publications, competitor intelligence, business periodicals, and general news periodicals.

Doing internal analysis you must know the difference between core competencies and competitive advantage. An organization’s core competencies are its major value those things that it has or it does particularly well, such as skills, capabilities and resources. But not all the core competencies are going to be significant sources of competitive advantage. If the organization is not good enough of doing something, so it is not a competitive advantage. Whereas competitive advantage is something that sets us apart from our competitors; something that makes customers go for our product and not the competitor’s product.

In internal analysis, organization’s culture plays an important role in its strategy. The culture will affect what strategies are formulated and how they’re formulated. It is also affected how the chosen strategy is implemented.

External and internal analysis also known as SWOT analysis. SWOT – strengths, weaknesses, opportunities and threats. By analysing the organization’s internal functional areas, the managers will be able to identify where the organization has strengths and where it has weaknesses. And, once the external environment has been analyzed, managers can locate the opportunities and the threats facing the organization. In other words, we wouldn’t know what strategies were appropriate unless we had information from SWOT analysis.

We understand how strategies are formulated, but how are they implemented? A strategy has to be implemented depending on the type of strategy and what level the organization in. For corporate level, there 3 types of strategies which are growth, stability and retrenchment. Growth strategy is implemented through internally increasing the levels of business operations, through creating new business, and through merging with or acquiring other businesses. A stability strategy is implemented simply by keeping everything at the current level of operations. Retrenchment strategies are implemented by two methods:

(1) Cutting cost
(2) Restructuring the organization through divesting, liquidating, reengineering, downsizing or filing for bankruptcy.

At the business level, the competitive strategies are implemented through the competencies, skills, and resources found in organization’s various functions: marketing, production/operations, research and development, and so forth.

Changing the organization’s strategy is a compulsory if the organization is not meeting its goals. Corporate strategies unlikely to change its strategies continually and frequently. It will change the strategy if there is a change in external and internal circumstances.

At the business level, changes are common and frequently because the competitors change what they do and the market place change what it values.
Posted by rahma at 11:38 PM
Labels: management process, Notes

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