Strategic Management

Strategic management is a process which should be utilized by all managers, in order to ensure successful operations for the organization. According to Fred David, "Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives" (David, 2005). Strategic management allows a company to create vision and mission and creates ways for them to be achieved.

There are three phases involved in the strategic management process. The first phase is strategy formulation. This phase involves many steps. The first step is creating a vision and a mission. The vision is what the company would like to achieve or accomplish and the mission is what the company represents. The second step is evaluating the external opportunities and threats. These opportunities and threats are forces that are not within the company and are beyond its control, e.g. economic or social forces. When dealing with these, the company would need to do an environmental scan, which involves finding information about these external forces. The next step would be to analyze the internal strengths and weaknesses. Fred David stated that, "These are controllable activities performed especially well or poor" (David, 2005). These are found and controlled within the company. The fourth step is the long term objectives. These are goals the company would set, which it would aim to achieve for its future operations. The next step is creating alternative strategies. These are the company's back-up strategies for achieving its long term objectives. The final step is strategy selection, which involves selecting the strategies that are most suitable for the business.

The second phase is strategy implementation. The first step in this phase is creating annual objectives. These annual objectives are short term objectives that the company would set and must achieve in order to succeed in reaching its long term objectives. The second step is creating policies, which are what would allow the company to achieve its annual objectives. Resource allocation is the next step, which involves managing the company's resources. The final step is employee motivation, which involves things such as employee incentives.

The final stage is strategy evaluation. The first and second steps in this phase are the internal review, which deals with the reviewing of the finances and the external review, which deals with finding the opportunities and threats. The third step is the performance metrics. This is evaluating the performance of the business by focusing on specific targets. The final step is taking corrective action, which involves finding solutions for any problems encountered.

The use of strategic management could allow a team of managers to gain a sustainable competitive advantage. Sustainable competitive advantage is an advantage a particular firm has