Strategic Management: Formulation and Implementation

The Strategic Management Process

There probably is general acceptance of the idea that strategic management is concerned with the strategic processes that produce desired responses to an organization's changing environment.

The strategic management process is concerned with a long-run perspective. The time horizon involved often is at least 3 years and normally may be 5 or 10 years into the future. However, in certain extremely dynamic industries, the strategic management process could be concerned with much shorter time frames.

Strategic management is the management of change. This involves the system of corporate values, the corporate culture, and all managerial process of change, such as leadership, planning, control, and human resources management.

Hence, strategic management can be viewed as a series of steps in which top management should accomplish at least five tasks that C. West Churchman suggested in The Systems Approach (1968):

  1. Identify the business's fundamental values and the goals and objectives that arise from them.
  2. Assess the business's environment - forces outside the business itself that may be opportunities or threats.
  3. Assess the business' resources and capabilities - those things within the control of the business, such as people, machinery, facilities, contracts, image, and goodwill - that can be allocated to achieve goals and objectives.
  4. Identify or form the organization's component's (a) internal units that receive allocated resources and carry out the business's work and (b) an organizational structure that includes the units themselves and the relationships of authority, responsibility, and communication that they have with one another.
  5. Develop the management and decision-making structure: the process used to allocate the business's resources to its components so as to realize goals and sustain values within constraints of environment.

At the center of the model is embedded Churchman's first imperative: to identify the organization's values. Without knowledge of its values, an organization cannot develop a mission, goals, and objectives. Churchman's remaining four imperatives can be found within the four boxes in the circle. The arrows in Figure 2-3 shows important interdependency among the four factors of strategic management: strategic planning, resource requirements, organizational structure, and strategic control.

Strategic planning is the key link between strategic management and the organization's external environment. Resource requirement is the factor that links strategic management to the organizations's resources, including finances, facilities and equipment, land, access to information, goodwill, and personnel.

Strategic control relates to the implementation of a strategy.

Organizational structure links strategic management to organizational realities.

According to this model, environmental demands are met through a strategic planning process, involving the formulation of missions, goals, and objectives.

Strategic management can thus be seen as a "total" system perspective and not merely as the process of choosing from among alternative long-range plans. It reflects the organization's "strategic capability" to balance the demands imposed by external and internal forces and to integrate the overall functioning of the organization so as to allocate resources in a manner best designed to meet goals and objectives (Alan Rowe, Richard O. Mason, and Karl E. Dickel).

Today's manager is faced with an accelerating rate of change in technical, social, political, and economic forces. As a result of these changing forces, the management process has become more difficult, requiring greater skills in planning, analysis, and control. Thus, the concept of strategic management is still involving and will continue to undergo change.