Stages of strategic management

Strategic management consist of three stages are formulation, implementation and evaluation
of strategies. Each stage based upon set of activities performed by the individual working in
the organization.

Strategy formulation
Strategy formulation is the first stage of strategic management, this stage includes developing
vision and mission statement, identifying external opportunities and threats, evaluating
company internal strengths and weaknesses, developing alternative strategies, selection
strategies which benefits the business. Strategy formulation issues include deciding what new
business to enter, what business to abandon, how to allocate resources, whether to expand
operation or diversify, whether to enter international market. whether to merge or form a
joint venture.

No organization have unlimited resources, strategists must go with the strategies which are
most feasible and beneficial for the business.Strategy formulation commit an organization to
specific products,services, markets, resources and technologies over an extended period of
time. Strategies are developed for long term competitive advantage over its competitors.

Strategy implementation
Strategy implementation is the second stage of strategic management. Strategy
implementation can be only proceed after completion of strategy formulation stage, when
strategists are done with strategies selection. This stage includes number of activities such as
defining policies, building organizational structure, allocating resource to implementing
strategy, assigning tasks to each functional area employees and tracking the progress of
strategy implementation.

This stage is often referred as action stage because each individuals is looking to get the thing
implemented according to the strategy. To execute the strategy in a right way each individual
must ask himself or herself the following questions.

What are the objectives?

What must we do to implement out part of the organization’s strategy?

How best can we get the job done?

Strategy evaluation
Strategy evaluation is the last stage of strategic management, the purpose of this stage is to
monitor the implemented strategies and find out whether they are working or not to achieve
organization objectives. Strategy evaluation consist of three fundamental activities reviewing
external and internal factors that are bases for current strategies, measuring performance and
taking corrective action. Each implemented strategy is evaluated to determine the outcomes,
if the outcomes are meeting the expectation it means strategy is successfully otherwise
corrective action is required.

Types of strategies
There are four types of corporate strategies in strategic management

1. Integration Strategies 3. Diversification Strategies

2. Intensive Strategies 4. Defensive Strategies
Integration strategies those activities that are involved in forward, horizontal, vertical or
backward control of the operations of the competing organisation.

There are three types of integration strategies: forward integration, backward integration
and horizontal integration.

Forward integration means that the organisation is gaining control or ownership of the
distributors or retailers.

Backward integration means that the organisation is gaining control or ownership of the
organisation's suppliers.

Horizontal integration means that the organisation is seeking ownership or control over
the competing organisations in the industry

Intensive strategies refer to those strategies that require intensive efforts on the part of
the organisation to improve its competitive position in the industry.

Market Penetration refers to the strategy in which the organisation seeks to increase the
market share of the current product or services offered in the market through greater
marketing efforts.
 Market development refers to the strategy of introducing the current product or services
to a new market.

Diversification strategies refer to those activities in which an organisation gets involved

in areas of businesses which are related or unrelated to the original (core) business
activities of the organisation.

Defensive strategies refer to those activities that the organisation engages in to defend
its declining position.

 Mergers ( A + B = AB ‘have identity’)

 Acquisitions (A + B = A ‘One identity’)
 Joint Venture (Cupola int. ‘Foreign with local’,KFC)
 Diverstiture
 Liquidation (0 risk, dispose off)

Divestiture This strategy involves selling off a division or a part of the organisation. This
strategy is adopted to raise capital required for other potential businesses in the
organisation.

Liquidation This strategy means that the organisation plans to close down its operations
entirely. It is similar to going for bankruptcy.

Components of mission statement

1. Customers: Who are the enterprise's customers?
2. Products or services: What are the firm's major products or services?
3. Markets: Where does the firm compete?
4. Technology: What is the firm's basic technology?
5. Concern for survival, growth, and profitability: What is the firm's commitment
towardseconomic objectives?
6. Philosophy: What are the basic beliefs, core values, aspirations and philosophical
priorities of the firm?
7. Self-concept: What are the firm's major strengths and competitive advantages?
8. Concern for public image: What is the firm's public image?
9. Concern for employees: What is the firm's attitude/orientation towards employees?