BASIC MODEL OF STRATEGIC MANAGEMENT They include the corporation’s structure, culture,
capabilities, and resources
Strategic management consists of four basic elements:
STRATEGY FORMULATION
■ Environmental scanning
Strategy formulation is the process of
■ Strategy formulation
investigation, analysis, and decision making that
■ Strategy implementation provides the company with the criteria for
attaining a competitive advantage. It includes
■ Evaluation and control. defining the competitive advantages of the
business, identifying weaknesses that are
impacting the company’s ability to grow, crafting
ENVIRONMENTAL SCANNING the corporate mission, specifying achievable
objectives, and setting policy guidelines
Environmental scanning is the monitoring,
evaluating, and disseminating of information from Mission: Stating Purpose
the external and internal environments to key
people within the corporation. Its purpose is to
identify strategic factors—those external and
internal elements that will assist in the analysis of
the strategic decisions of the corporation.
The internal environment of a corporation consists
of variables (strengths and weaknesses) that are
within the organization itself and are within the
short-run control of top management. These
variables form the context in which work is done.
CBME1 Strategic Management
An organization’s mission is the purpose or reason A program or a tactic is a statement of the
for the organization’s existence. activities or steps needed to support a strategy.
Objectives: Listing Expected Results Budgets: Costing Programs
Objectives are the end results of planned activity. A budget is a statement of a corporation’s
programs in terms of dollars.
Strategy: Defining the Competitive Advantages
Procedures: Detailing Activities
A strategy of a business forms a comprehensive
master approach that states how the business will Procedures, sometimes termed Standard Operating
achieve its mission and objectives. Procedures (SOP), are a system of sequential steps or
techniques that describe in detail how a particular task or
Policies: Setting Guidelines job is to be done.
A policy is a broad guideline for decision making
that links the formulation of a strategy with its
implementation. EVALUATION AND CONTROL
Evaluation and control is a process in which
STRATEGY IMPLEMENTATION corporate activities and performance results are
monitored so that actual performance can be
Strategy implementation is a process by which compared with desired performance.
strategies and policies are put into action through Performance is the end result of activities. It
the development of programs, budgets, and includes the actual outcomes of the strategic
procedures. This process might involve changes management process.
within the overall culture, structure, and/or
management system of the entire organization.
Programs and Tactics: Defining Actions FEEDBACK / LEARNING PROCESS
CBME1 Strategic Management
As a firm or business unit develops strategies,
programs, and the like, it often must go back to
revise or correct decisions made earlier in the
process.
INITIATION OF STRATEGY: TRIGGERING EVENTS
A triggering event is something that acts as a
stimulus for a change in strategy. Some possible
triggering events are:
o NEW CEO
o EXTERNAL INTERVENTION
o THREAT OF A CHANGE IN OWNERSHIP
o PERFORMANCE GAP
o STRATEGIC INFLECTION POINT
CBME1 Strategic Management
