Name : Syed Saad

Subject : SMA
Assaiugnment No : 01

Strategic Management Process

the process of strategic management, looking at it as a philosophical approach to business. This is a

general terminology that refers to the process by which managers devise and implement an operating
strategy that provides an organization with a competitive advantage. The top management of an
organization must first use data analysis to think strategically and then use the strategic management
process to put the idea into practice.

Steps of SMP
There are five strategic management process steps that must be followed in their chronological order.
1. Goal setting

This basically clarifies the vision of the organization. The vision will include short-term and long-term
goals, the processes by which they can be met, and the people responsible for carrying out each task
that culminates in the stated goals.

2. Analysis

Analysis includes the collection of data and information that is relevant to achieving the set goals. It also
includes understanding the needs of the business in the marketplace and examining any internal and
external data that may affect the organization's goals.

3. Strategy formulation

A business will only be successful if it has the resources needed to achieve the goals set in step one. The
process of formulating a strategy to achieve this may include identifying which external resources the
business needs to succeed and which goals must be prioritized.

4. Strategy implementation

Since the purpose of the strategic management process is to move the organization toward its goals, an
implementation plan must be in place before the process can be considered viable. Everyone in the
organization needs to understand the process and know what their duties and responsibilities are to
match the overall goal of the organization.

5. Evaluation and control

Evaluation and control measures for the strategic management process include performance evaluation
as well as continuous review of internal and external issues. If necessary, the management of the
organization can implement corrective actions to ensure the success of the SMP.
In order for business efforts to have the greatest impact on the bottom line of the business, a strategic
management process must be used. This will also greatly help the business to survive the tough
competition in the market.

Levels of strategy
It is usual to analyse strategy into a hierarchy of different levels. Generally, strategy is identified at
following levels:

 corporate strategy; also referred as “Corporate planning”

 business strategy; also referred as “Operational planning”
 functional strategy. also referred at “Tactical planning”

Corporate strategy

Corporate strategy deals with deciding what business or businesses an entity should operate in and
setting goals to achieve the entity's overall goals.

The elements of corporate strategy are as follows:

Deciding on the purpose of the accounting unit. Different people have different ideas about what the
purpose of an entity should be. For example, a company has shareholders, its legal owners, who believe
that the purpose of their company is to generate profits and pay dividends. However, a company has
other stakeholders, such as employees and customers, whose opinion of what the company's purpose
should be can be very different.

Deciding on the scope of activities of the accounting unit. Corporate strategy also includes deciding what
businesses the entity should operate in, including the scope of businesses. For example, the purpose of
a transport company is to provide transport services. Its corporate strategy must include decisions about
what transportation services it will provide (eg bus, train, air, space, etc.) as well as the geographic areas
in which it will operate.

Functional strategy

Functional strategy refers to specific functions within an organization such as manufacturing,

distribution, marketing and sales, research and development, accounting, IT, and so on.

The purpose of the functional strategy should be to support the business strategies and corporate
strategy of the organization.

Business strategy

Business strategy, also called competitive strategy, deals with how each business activity within an
entity contributes to the achievement of corporate strategy.

• A large group of companies may consist of many subsidiaries. Subsidiaries may be organized into
strategic business units (SBUs) or operating divisions. Each SBU is a different business and should have
its own business strategy.
• In a commercial entity, business strategy focuses on markets, and business strategy deals with how to
compete successfully in selected markets with selected products.

According to Porter, a successful competitive strategy must be based on either:

cost management,

Cost leadership means becoming the lowest cost producer on the market. A company that can produce
products or provide services at a lower cost than its competitors will succeed by selling at lower prices
and gaining the largest market share.

Differentiation means producing products or services that are perceived by customers to be different
from competitors' products or services, and because they are different, they are better. Thus, a
company that is not the lowest-cost producer can succeed by offering a product or service for which
customers will pay a higher price (than the lowest-cost producer).

Functional strategy

Functional strategy refers to specific functions within an organization such as manufacturing,

distribution, marketing and sales, research and development, accounting, IT, and so on.

The purpose of the functional strategy should be to support the business strategies and corporate
strategy of the organization.

planning levels

We have seen that strategy (including strategic planning) is a hierarchy of corporate strategy, business
strategies and functional strategies.

Planning is also a hierarchical activity that links strategic planning at the top with detailed operational
planning at the bottom. Strategic plans provide the framework and guidelines within which more
detailed plans and short-term planning decisions can be made.