A Review of the Elements of the Strategic Management Process
The strategic management process is the systematic approach to making decisions and implementing plans that organizations use to guide their direction and succeed in the marketplace. This process involves five major decision categories, including corporate-level strategy, business-level strategy, functional-level strategy, operational-level strategy, and growth strategies. Each of these categories have distinct goals and processes that must be taken into consideration when making decisions.
Corporate-level strategy focuses on determining the objectives of an organization and developing a plan for achieving those objectives. This includes analyzing the external environment where the company operates as well as internal operations for possible sources of competitive advantage. Corporate-level strategies can involve mergers and acquisitions or diversification initiatives to strengthen core competencies or even divestitures to eliminate weaker parts of the business. Additionally, corporate-level strategies are used to establish long-term goals such as international expansion or increased market share.
Business-level strategy focuses on how a single business unit should compete given its competitive environment. This involves examining competitors’ products and services, pricing models, technological advancements, market positioning strategies, and marketing tactics to determine what will give an organization a competitive edge over others with similar offerings. Businesses must also consider if they want to pursue cost leadership or differentiation strategies; each has its own set of advantages and disadvantages that need to be weighed in order to make the best decision for the organization's success.
Functional-level strategy comprises activities that allow businesses to create value through their core products or services. These may include product design processes, R&D initiatives, logistics operations such as sourcing materials from suppliers at low costs, manufacturing techniques designed for efficiency, marketing campaigns designed for maximum exposure among target markets, customer service initiatives meant to foster customer loyalty ,and training programs aimed at improving employee performance across all organizational levels.
Operational-level strategies involve decisions about day-to-day activities within a company’s operations such as staffing levels needed in order to meet production demands or how many hours are needed per day in order to achieve quality standards in manufacturing processes. Additionally they involve decisions regarding capital investments in equipment necessary for efficient production of goods and services as well as decisions on how much inventory should be held by a company so it can efficiently meet customer demand without having excessive amounts of idle stock. Operational level strategies are important determinants when it comes deciding if a company can sustain profitability while meeting customers’ needs effectively without sacrificing quality standards across its entire range of offerings.
Growth strategies refer to initiatives implemented by companies who wish expand their operations either domestically or internationally . Growth could come from increasing sales through existing clients by introducing new products or entering new markets with established products . It could also come from expanding into new geographies either organically through launching new branches or acquiring existing entities who already have a significant presence in certain regions . Growth strategies involve careful examination of potential opportunities , assessing associated risks , planning entry points into foreign markets , calculating projected profits , managing compliance requirements , choosing appropriate partners for collaborations , etc . All these factors must be considered before any decision is taken .
In conclusion , strategic management process involves making informed decisions based on five major categories : corporate - level strategy , business - level strategy , functional - level strategy operational - level strategy & growth strategies . Understanding how each category works & weighing options carefully will help businesses increase their chances of success & sustained profitability over time .