Strategic management is a process that assesses the business areas that an organization operates. The process scrutinizes the organization’s competitors, both current and future, and comes up with its goals and objectives. Strategic management process has several components, including the vision, environmental scanning, strategy formulation, strategy implementation, and strategy evaluation (Moore, 2000).
The vision formulation directs the company into its mission. A mission statement states how the management plans to offer products and services to its customers. Johnson and Whittington (2008) affirm that environmental scanning entails the process of analyzing the companies’ processes and coming up with detailed information about its strategic needs: It examines both the internal and external issues that control the organization.
Environmental assessment is important because continuous evaluation of the organization’s environment helps the management to identify areas that require improvement.
After analysis of the environment, strategy formulation is the next step, which involves making decisions on the best actions to take to achieve the organization’s goals and objectives while considering the political and society factors, opportunities and threats and the potential strengths and weaknesses. The company then formulates its business and corporate strategies (Moore, 2000).
Strategy implementation is the next step, and it entails putting the chosen strategy into work. This is where the company’s structure is designed: allocation of human resources and issuing resources in all the sections involved with change. The last component is strategy evaluation, which implies evaluating the performance of the implemented strategies and taking the best action in case it diverts from the set objectives (Moore, 2000).
Liebeskind (2002) conforms that strategic management process is important in an organization because it helps in planning the steps and procedures to follow for the processes to work according to the set goals and objectives. Additionally, strategic management helps the company to carry out its procedures using a systematic method in a smooth flow to achieve corporate goals.
In this regard, The Ford Company is a typical company that uses the components strategic management process. The company has many plans, which are operational for a given period to check on performance. The management implements the plans if there is improvement in the company’s processes. Thus, Ford assesses each process to make sure that they are working according to the set plans and objectives (Johnson & Whittington, 2008).
Ford Company has faced big losses, while its competitors like Toyota and Nissan are making a lot of profits. This was due to the fact that Ford’s costs were higher as compared to both Toyota and Nissan. The Ford Company has had a new strategic plan, which involves closing some of its plants and cutting-off some of the workers to maintain its competitive advantage.
Ford’s strategic plans entail defining the existing business’s mission and vision. The management has planned on how to produce its products and services for differentiation purposes. Likewise, the company also performs weekly internal and external audits. After evaluation of the current business operations, it formulates new business strategies and mission statements. The missions are then transformed into company’s goals.
Plans are then formulated to attain the strategic goals. The ford Company then implements the strategies and evaluates its performance (Johnson & Whittington, 2008). Therefore, strategic management is essential for both small and big companies, especially those whose main aim is to stay at the competitive edge.
Johnson, G. & Whittington, R. (2008). Exploring Corporate Strategy. Essex: FT Hall.
Liebeskind, J. P. (2002). Knowledge, Strategy, and the Theory Firm. Strategic Management Journal, 17, 93-108.
Moore, M. H. (2000). Creating Public Value: Strategic Management in Government. Cambridge: Harvard University Press.