Strategic Management Process
Stage 1: Developing Vision, Mission, and Core Values
1. Vision
The vision answers the question: Where are we going?
It describes the future direction of the company.
A good vision should be distinctive and specific.
Dimensions to evaluate a good vision
1. Graphic – You can easily picture it in your mind.
2. Directional – It is forward-looking and shows the future path.
3. Focused – It is specific enough to guide decisions.
4. Flexible – It allows some adaptation to changes (but not too flexible).
5. Feasible – It must be realistic and achievable.
6. Desirable – It makes good business sense and motivates people.
7. Easy to communicate – It can often be expressed through a short slogan.
A vision does not need to respect all dimensions.
If it respects 4 or 5 dimensions, it can still be considered a good vision.
Examples
• Ford Motor Company:
“A car in every home.”
• Mayo Clinic:
“The best care of each patient every day.”
2. Mission Statement
The mission statement explains what the company does.
It is more descriptive than the vision and usually includes:
• The products or services
• The customers
• The purpose of the company
Examples
• Microsoft:
“To empower every person and every organization on the planet to achieve
more.”
• Twitter:
Mission focused on connecting people and sharing information globally.
3. Core Values
Core values represent the fundamental beliefs, traits, and norms that employees are
expected to follow inside the company.
They guide:
• Employee behavior
• Organizational culture
• Decision-making
The first source of values is usually the founder.
Example
[Link] founder stated:
“Sell good merchandise at a reasonable profit, treat customers like human beings,
and they will always come back.”
From this statement we can identify values such as:
• Customer respect
• Quality
• Fair pricing
Core values become more important as the company grows.
Stage 2: Setting Objectives
The vision must be converted into concrete objectives.
Objectives help measure performance and progress.
Characteristics of good objectives
A good objective must be:
• Q – Quantifiable
• M – Measurable
• D – Deadline specific
Objectives must also be stretching objectives:
Targets should be challenging but achievable.
Strategic Intent
Strategic intent means the company is fully committed to achieving its objectives.
Types of Objectives
1. Financial Objectives
Related to financial performance.
Examples:
• Increase annual revenue by X%
• Increase profit
• Improve return on investment
2. Strategic Objectives
Related to competitive position and long-term performance.
Examples:
• Gain X% market share
• Acquire X number of new customers
• Expand into new markets
Strategic objectives are often more important because achieving them improves
long-term competitiveness.
However, companies should maintain a balance between financial and strategic
objectives.
This balance creates organizational vitality.
Time Horizon of Objectives
Each objective can be:
• Short-term objectives
• Long-term objectives
Both exist for financial and strategic objectives.
Stage 3: Crafting Strategy
This stage answers many “How” questions.
Examples:
• How will we attract customers?
• How will we position the company?
• How will we manage operations?
Strategy development is a learning-by-doing process.
Companies improve their strategies through experience and adjustments.
Formulating strategy is a collaborative effort involving managers at different levels.
Levels of Strategy
1. Corporate Strategy
Concerned with the overall direction of the company.
Example:
• Which industries or markets should the company enter?
2. Business Strategy
Focuses on how to compete in a specific market.
Main goal:
• Build competitive advantage
3. Functional Strategy
Strategies developed by functional departments, such as:
• Marketing
• Finance
• HR
• Operations
These strategies support the business strategy.
4. Operating Strategy
Adds more detail and operational plans.
Often developed by:
• Brand managers
• Plant managers
• Frontline supervisors
If a company has only one business unit, it may not need a corporate strategy.
Stage 4: Implementing and Executing the Strategy
Strategy implementation transforms plans into actual actions.
Key dimensions for successful implementation include:
• Staffing – Recruiting and developing the right employees
• MIS (Management Information Systems) – Providing necessary information
• Resource allocation – Distributing budgets and assets effectively
• Reward systems – Encouraging success and performance
• Organizational culture – Supporting the strategy
• Leadership – Guiding and motivating employees
Stage 5: Evaluating Performance
This stage focuses on monitoring results and improving strategy.
Key questions:
• Should we continue the current strategy?
• Does the strategy need adjustment?
Managers analyze performance and look for ways to improve the process.