Strategic Management Process

Strategic Management Process

Jonda Barraza

September 7, 2015

MGT/498

Professor Amy Novoa

Introduction

        Wheelen and Hunger (2010, pg. 5, para. 1) explain strategic management as “a set of managerial decisions and actions that determines the long-run performance of a corporation.”  Strategic management involves four elements: environmental scanning, strategy formulation, strategy implementation, and evaluation and control.  This paper will describe these primary components.  It will also explain why strategic management is necessary in a company.  Lastly, I will look at the Audi company, and explain the strategic management process used in the organization.

Components of strategic management process

        Environmental scanning is the observation, evaluation, and distribution of information to the key employees in the company.  The reason for the environmental scan is to help identify internal and external elements that will help to determine the company’s prospective future.  This can be done using a SWOT analysis, which is a chart showing an organization’s strengths, weaknesses, threats, and opportunities.  Opportunities and threats are part of external environment elements, whereas the internal environment includes strengths and weaknesses.  Strategy formation is “the development of long-range plans for the effective management of environmental opportunities and threats, in light of corporate strengths and weaknesses” (Wheelen & Hunger 2010, pg. 17, para. 1).  Strategy formation determines the company’s mission, specifies its objectives, develops strategies, and establishes guidelines.  By a company fulfilling the mission, corporate objectives are achieved as an end result.  

        Strategy implementation, also known as operational planning, involves daily decisions about resource distribution.  It is the process of developing budgets, programs, and procedures to maintain policies within the corporation.  Budgets are used to determine return on investment, as well as building shareholder values.  Programs include statements of the steps necessary to achieve a certain plan, such as “restructuring the corporation, changing the company’s internal culture, or beginning a new research effort” (Wheelen & Hunger 2010, pg. 21, para. 3).  Procedures (known as Standard Operating Procedures) are the ordered steps that describe how jobs or tasks are going to be completed.  This can include changing the order in which certain tasks are done, to help fix a potential issue or problem with employee output.    The final component, evaluation and control, is the course of monitoring organizational performance so it can be compared with performance objectives and results the company is striving for.