The Nature of Strategic Management

To define strategic management is very easy. It is an art and science of formulating implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives. As this definition implies, strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and computer information systems to achieve organizational success. The strategic-management process consists of tree stages: strategy formulation, strategy implementation, and strategy evaluation. Strategy formulation includes developing a vision and mission, identifying an organization’s external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue. Strategy implementation requires a firm to establish annual objectives, device policies, motivate employees, and allocate resources so that formulated strategies can be executed. Strategy evaluation is the final stage in strategic management. Managers desperately need to know when particular strategies are not working well, strategy evaluation is the primary means for obtaining this information. The strategic-management process is dynamic and continuous. A change in any of the major components in the model can necessitate in any or all of the other components. International operations can be as simple as exporting a product to a single foreign country or as complex as operating manufacturing, distribution, and marketing facilitates in many countries. Firms are acquiring foreign companies and forming joint ventures with them and vice versa. This trend is accelerating dramatically. International expansion is no guarantee of success, however.