Strategic Management: Formulation and Implementation

Strategic-planning Process

The strategic planning process is made up of two basic activities: (1) strategy formulation (developing the strategy), and (2) strategy implementation (putting the strategy into action).

The elements involved in both strategy formulation and strategy implementation can be described in schematic model. Although the general strategic management model can be applied to strategic planning, it is more beneficial to use a model exclusively designed for strategic planning.

A number of essentially similar model of systematic planning have been developed by such authors as Argenti (1980), Hussey (1976), Coehn and Cyert (1973) and Glueck and Jauch (1988).

The description of the strategic planning process combines the planning steps suggested by several writers. This model consists of the following nine steps:

  1. Define the organization's mission. A mission defines organization's purpose and that essentially seeks to answer the question: What business are we in?
  2. Establish objectives. Objectives translate the mission into concrete terms. Setting the objectives of the organization is the most essential step in the strategic planning process.
  3. Analyzing the organization's resources. This analysis is necessary to identify the organization's competitive advantages and disadvantages.
  4. Scan the environment. Management will want to scan its environment to identify various political, social, economic, and market factors that could impact on the organization.
  5. Make forecasts. The fifth step is a more detailed effort to forecast the possible occurrence of future events.
  6. Asses Opportunities and threats. Opportunities and threats may arise from many factors. Thus, the same environment that posed a threat to some organizations offered opportunities to others.
  7. Identify and evaluate alternative strategies. In a given instance, a variety of alternatives exist. Management should seek a set of alternatives that can exploit the situation.
  8. Select strategy. Once the alternative strategies have been enumerated and appraised, one will be selected.
  9. Implement strategy. Once the strategy has been determined, its must be incorporated into the daily operations of the organization. The best of strategies can go awry if management fails to translate the strategy chosen into programs, policies, budgets, and other long-term and short-term plans necessary to carry it out.

Each of these steps are described in the detail in the next chapters.