The upcoming discussion will update you about the difference between strategy and strategic management.
Changes in one stage of the strategic management process will inevitably affect other stages as well. After a planned strategy is implemented, for example, it often requires modification as environmental or organizational conditions change, or as top management’s ability to interpret these changes improves. Hence, because these steps are interrelated, they should be treated as an integrated, ongoing process.
Consider the strategic management process at a fast-food restaurant chain. At any given time, top managers are likely assessing changes in consumer taste preferences and food preparation, analyzing the activities of competitors, working to overcome firm weaknesses, controlling remnants of a strategy implemented several years ago, implementing a strategy formulated several months ago, and formulating’ strategic plans for the future. Although each of these activities can be linked to a distinct stage in the strategic management process, they typically occur simultaneously.
Top managers make quality strategic decisions when they remain current on issues that affect their industries, as well as the business world in general. Information vital to effective strategic decision-making can be found in a variety of publications. In addition to the business sections of most major newspapers, publications such as Fortune, Business Week, The Economist, The Industry Standard, and The Wall Street Journal report, on a wide variety of strategic management topics (see Table 1). Not only are these concepts of interest to top managers, but they are also a concern for employees, supervisors, and middle managers of all organizations. An appreciation of the organization’s strategy helps all of its members relate their work assignments more closely to the direction of the organization. Although the strategic management model presented herein references profit-seeking firms, the process can be applied effectively to non-profit enterprises, both in the public and private sectors. Top managers of any organization, regardless of profit or non-profit status, must understand the organization’s environment and its capabilities and develop strategies to assist the enterprise in attaining its goals.
Unfortunately, strategies are not always implemented as originally planned. Henry Mintzberg, introduced two terms to help clarify the shift that often occurs between the time a strategy is formulated and the time it is implemented. An intended strategy (i.e., what management originally planned) may be realized just as it was planned, in a modified form, or even in an entirely different form.
Occasionally, the strategy that management intends is actually realized, but the intended strategy and the realized strategy (i.e., what management actually implements) usually differ. Hence, the original strategy may be realized with desirable or undesirable results, or it may be modified as change in the firm or the environment become known.
The gap between the intended and realized strategies usually results from unforeseen environmental or organizational events, better information that was not available when the strategy was formulated: or improvement in top management’s ability to assess its environment.
Although it is important for managers to formulate responsible strategies based on a realistic and thorough assessment of the firm and its environment, things invariably change along the way. Hence, it is not uncommon for such a gap to exist, creating the need for constant strategic action if a firm is to stay on course. Instead of resisting modest strategic changes when new information is discovered, managers should search for new information and be willing to make such changes when necessary.
Developing a winning strategy for the firm is not an easy task.
Practically speaking, a number of factors are typically associated with successful strategies:
1. Strategic managers thoroughly understand the competitive environment in which the organization competes.
2. The mission and goals of the organization are simple and consistent with the strategy.
3. Strategic managers understand the organization’s resources and how they translate into strengths and weaknesses.
4. Plans for putting the strategy into action are designed with specificity before it is implemented.
5. Possible future changes in the proposed strategy (i.e., strategic control) is evaluated before the strategy is adopted.
These factors are more likely to be attained when top executives engage in an analytical, comprehensive approach to formulating and implementing strategy. However, the type of formal, systematic strategic planning proposed in this text is not without its critics. Some charge that such models are too complex to apply, or that they apply only to businesses in highly certain environments.
Others emphasize that the stages in the process are interrelated and that considering them as independent steps may be counterproductive. Still others, such as Henry Mintzberg, argue that planning models stifle the creativity and imagination that is central to formulating an effective strategy. Although these views have merit, the comprehensive, systematic model proposed herein is presented as a starting point for understanding the strategic management process and does not preclude the application of other approaches.