Major components of strategic management PDF

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Running head: MAJOR COMPONENTS OF STRATEGIC MANAGEMENT

Major components of strategic management

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STRATEGIC PLANNING REPORT

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Strategic management refers to the process of formulating and implementing key goals and targets by the top management of any organization with regard to the analysis of internal and external business environment as well as the available resources, in order to enable an organization to cope with existing competition or outdo its competitors in the long run. A strategic planning report is derived from the strategic planning process, which is the most vital section of strategic planning. Plans developed involve benchmarking, realigning or human and financial resources, and employing best leadership practice in place. Strategic management further encompasses adequate communication, feedback, and tracking plans to ensure they are in line with set targets. Major components of strategic management, and why each component is needed for success The main components of strategic management include environmental scanning, strategy formulation, strategy implementation, and strategy evaluation and control. Environmental scanning is very important because it provides a basis for the company to collect, scrutinize, and provide appropriate information needed for various strategic purposes. It enables a company to analyze various internal and external factors that will influence its operation. This component makes use of tools such as PEST (Political, Economic, Socio-cultural, and Political) and SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. After environmental analysis, the management evaluates the information on a continuous basis in a bid to improve it. Thus, strategy evaluation becomes the second component. Strategy evaluation involves the determination of the best course of action which is meant to accomplish

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organizational goals and objectives. Immediately after environmental analysis, the top management formulates corporate, functional, and business strategies (Juneja, 2018). Strategy implementation is the next task after strategy evaluation. This component is important because it puts a given strategy into action. It involves designing an appropriate structure for an organization, allocation of resources, developing appropriate decision-making systems and processes, and managing various resources. Strategy evaluation and control follows strategy implementation process. The importance of this component is grounded in its activities which include measuring performance, taking corrective actions, appraising various internal and external factors that are the basis of the current strategy. Strategy evaluation and control prevents errors from occurring during implementation which can be costly to an organization. Tools used in strategy evaluation and control include the Strategy Evaluation Framework, Balanced Scorecard, and benchmarking. Importance of mission and values to an organization's strategy formulation An organization’s mission and values are critical components during strategy implementation because they serve as the foundations of guidelines and objectives. The mission statement describes the purpose of an organization. Therefore, the implementation process keeps in mind the ultimate purpose of an organization and ensures that whatever strategy that is being implemented should yield results that adhere to quality standards. The company values ensure that company employees and other stakeholders adhere to ethics and organizational policies. Benefits of strategic management process to a health care organization

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According to the European Heart Journal Supplements (2015), healthcare organizations are nowadays facing challenges in their operations because of two factors which include difficulty in satisfying increasingly “aware” and demanding users, and the need to change their internal organizations to be at par with the dynamic technology. This is where strategic management in health care organizations becomes very important. Strategic management in healthcare organizations brings about strategic transformation which prompts organizations to clarify their mission, vision, and goals. By clarifying its mission, vision, and goals, a healthcare organization will seek to continuously improve its service delivery approach, quality of its services, streamlined operations, and removal of complex processes in healthcare deliveries. How strategic management affects organizational decision making and financial performance According to Hasmi, Asaari, and Razak (2007), strategic decision making determines the direction of an organization and its viability in line with the dynamic business environment. Strategic management does not employ decision making in its literal nature but rather incorporates the strategic approach. This means that managers must clearly identify organizational problems, and come up with the best alternative to solving the problems permanently. Profitability is one of the most important aspects of measuring an organization’s financial performance. No organization wants to make losses on during their operations. As a result, profit achievement is given a great deal of concern by the top management. The board and other top management managers usually benchmark on how to increase profitability.

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Strategic Management employs the use of financial indicators such as return on equity (ROE), return on investment (ROI), and growth of net assets. This helps to determine the profitability of projects. How strategic management affects the way an organization responds to its environment Environmental concerns are increasingly becoming significant in recent years. Strategic management calls for designing strategies meant to minimize the degree of environmental impact of an organization’s operations. For instance, a strategy can be designed by an organization to lower its rate non-renewable energy consumption. Today’s move for environmental conservation by governments and environmental agencies has called production of eco-friendly products. The positive consequence of an environmentally responsible organization is that it attracts new customers who prefer eco-friendly products. In conclusion, strategic management is a paramount constituent in the success of an organization. Strategic management process takes into consideration all critical factors that will impact on an organization. The components of strategic management ensure that an organization uses a particular strategy to achieve its goals and objectives. Strategic management is applicable in virtually all industry sectors, making it a critical consideration for success-oriented companies.

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References European Heart Journal Supplements. (2015). Strategic management of a healthcare organization: engagement, behavioral indicators, and clinical performance. European Society of Cardiology. Volume 17 Issue suppl_A Juneja, P. (2018). Strategic Management Process - Meaning, Steps and Components. Management Study Guide. Hasmi, M., Asaari, A.H. & Razak, R.C. (2007). Strategic Decision Making Practices and Organization Performance: A Conceptual Perspective of Malaysian Organizations. Oxford Business & Economics Conference. ISBN : 978-0-9742114-7-3...