## Strategic Management Process
Framework: Fred R. David's Strategic Management Model
### Key Features of the Process
- Not a guarantee: Does not ensure success, but provides a clear and practical approach
- Not lockstep: Strategists do not go through stages sequentially — the process is iterative with back-and-forth across stages
- Dynamic and continuous: Never really ends; activities performed continually, not just at year-end or semi-annually
> The strategic management process is a continuous loop: Formulation → Implementation → Evaluation → (feeds back to) Formulation
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## Stage 1: Strategic Vision, Mission, and Objectives
| Component | Definition | Purpose |
|---|---|---|
| Strategic Vision | Management's aspirations for the organisation; highlights a particular direction or strategic path | Molds organizational identity and prepares for the future |
| Mission Statement | Clarifies what the organisation seeks to achieve and in broad terms how | Important for both external stakeholders and internal managers |
| Corporate Goals & Objectives | Flow from mission and growth ambition; represent quantum of growth sought | Specific performance targets that convert strategic vision into measurable outcomes |
> Vision → Mission → Goals/Objectives: Each level becomes more specific and measurable.
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## Stage 2: Environmental and Organisational Analysis
### External Environment Analysis
- Covers: economic, social, technological, market, and other forces affecting functioning
- Nature: Dynamic and uncertain
### Organisational Analysis
- Reviews: financial resources, technological resources, productive capacity, marketing and distribution effectiveness, R&D, human resource skills
### Outcome
- Provides framework for SWOT Analysis
- Reveals organisational strengths and weaknesses → matched with external threats and opportunities
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## Stage 3: Formulating Strategy
1. Develop strategic alternatives in light of SWOT (organizational strengths/weaknesses + environmental opportunities/threats)
2. Deep analysis of alternatives to choose the most appropriate strategy
3. Types of strategic alternatives:
- Stability Strategy
- Growth/Expansion Strategy
- Retrenchment Strategy
- Combination Strategy (any combination of the above)
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## Stage 4: Implementation of Strategy
Nature: Operations-oriented activity aimed at shaping the performance of core business activities in a strategy-supportive manner.
> Implementation is the most demanding and time-consuming part of the strategic management process.
### Principal Aspects of Strategy Execution
- Developing budgets
- Staffing the organisation
- Using best-known practices to perform core business activities
- Motivating people
- Creating a work culture
### Good Strategy Execution Requires Four "Fits"
1. Strategy ↔ Organisational capabilities
2. Strategy ↔ Reward structure
3. Strategy ↔ Internal operating systems
4. Strategy ↔ Organisation's work climate and culture