Process and Level of Strategy

Process and Level of Strategy

Strategic management process has following five steps:

1. Mission and Goals

The first step in the strategic management begins with senior managers evaluating their position in relation to the organization’s current mission and goals. The mission describes the organization’s values and aspirations; and indicates the direction in which senior management is going. Goals are the desired ends sought through the actual operating procedures of the organization. It typically describe short-term measurable outcomes.

2. Environmental Scanning

Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes and helps in analyzing the internal and external factors influencing an organization. After executing the process, management should evaluate it on a continuous basis and strive to improve it.

3. Strategy Formulation

Strategy formulation is the process of deciding best course of action for achieving organizational objectives. After conducting environment scanning process, managers formulate corporate, business and functional strategies.

4. Strategy Implementation

Strategy implementation implies putting the organization’s chosen strategy in to action and making it work as intended. Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and effectively managing human resources.

5. Strategy Evaluation

Strategy evaluation which is the final step of strategy management process involves- appraising internal and external factors, measuring performance, and taking remedial/corrective actions. Evaluation assure the management that the organizational strategy as well as its implementation meets the organizational objectives.

These steps are carried by the businesses, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement, so as to make essential changes.

Strategy is at the heart of business. All businesses have competition, and it is strategy that allows one business to rise above the others to become successful. Even if you have a great idea for a business, and you have a great product, you are unlikely to go anywhere without strategy.

Many of the most successful business men and women throughout history have been great strategic thinkers, and that is no accident. If you wish to take your business to the top of the market as quickly as possible, it is going to be strategy that leads the way.

Of course, before you can get into the process of determining your own business strategies, you need to understand what the word ‘strategy’ really means in a business context. Does it involve long-term planning as to the general course of the business? Or is it related to the day-to-day operations and how they are designed in order to achieve success? Well, in practical application, strategy can refer to both of those things and more.

1. Corporate Strategy

In the business world, the first level of strategy is corporate strategy, which is at the “top of the heap.” Before you get into more detailed and specific plans, you need to make a general plan that will guide everything else you do. At its most basic, a corporate strategy will tell you what businesses you will be in and how you plan to get into those markets and win.

When starting a new business, it is easy to forget about this step of planning, but you will pay for it in the long run if you do. It is very important to have a big-picture strategy for your business, because that strategy will guide all of the smaller decisions you make.

Some companies will find it easy and quick to lay out their corporate strategy. For example, smaller businesses that only want to sell their products or services in one or two markets will find it easy to figure out what their overall corporate strategy is. If you run a company that bakes and sells cookies, for example, you already know what your corporate strategy will be: you will try to sell as many cookies as you can.

But when a business grows, things quickly get more complicated. Taking this example to a larger company, let’s say you run a business that will sell cookies and also sell the tools that are used to make cookies. Entering the market for kitchen equipment is a very different challenge than selling the cookies themselves, so your business plan will need to become much more complicated very quickly. Before you do any more strategic planning for your business, make sure you have a clear idea of what your corporate strategy is.

2. Business Strategy

It is best to think of this level of strategy as a ‘step down’ from the corporate strategy level. In other words, the strategies that you outline at this level are slightly more specific and they usually relate to the smaller businesses within the larger organization.

Carrying over our previous example, you would be outlining separate strategies for selling cookies and selling cookie-making equipment at this level. You may be going after convenience stores and grocery stores to sell your cookies, while you may be looking at department stores and the internet to sell your equipment. Those are dramatically different strategies, so they will be broken out at this level.

Even in smaller businesses, it is a good idea to pay attention to the business strategy level so you can decide on how you are going to handle each various part of your operation. The strategy that you highlighted at the corporate level should be broad in scope, so now is the time to boil it down into smaller parts which will enable you to take action.

3. Functional Strategy

This is the daily plan that will keep your business moving in the right direction. Some businesses don’t plan from the top down, and other businesses don’t plan from the bottom up. This level of strategy may be the most important of all, because if you don’t have a plan for each day, you’ll be stuck in neutral while your competitors keep moving forward. As you put together your functional strategies, don’t forget to keep your bigger goals in mind. This will make sure that everything fits together and works toward the same end.

At this level of strategy, you should start to think about how the different parts of your business will work together to reach its goals. Your marketing, finance, operations, IT, and other departments will all have tasks to do, and as an owner or manager, it’s your job to keep an eye on them all to make sure that everything works out well in the end. Again, the success or failure of the whole organisation may depend on how often your business meets its functional strategy goals. A journey of a million miles starts with a single step, as the saying goes. Take small steps in strategy every day, and your overall corporate strategy will soon be a success.

A good business strategy won’t guarantee you’ll be successful on its own, but it’s a good place to start. Once you have good plans in place, the focus of the organisation will be on making sure those plans are carried out well every day. Of course, you’ll need to keep an eye on and make changes to your strategies as you go along to make sure you stay on a path that fits with the business’s goals. As you lead your company, keep the three levels of strategy in mind at all times.