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There are usually three to four strategic management process components, depending on the way the system is used. The process always includes the formulation, implementation, and evaluation of the strategy. In many cases an environment or situation analysis is performed before the other steps.
If it is used, the situation analysis is the first of the strategic management components. This review can be performed in a variety of ways. One of the most common is the strengths, weaknesses, opportunities, and threats (SWOT) analysis. Another is the political, economic, sociocultural, and technological (PEST) review. Methods like these and many others can be used to determine the kind of environment in which the strategy will be executed.
The next of the strategic management process components is strategy formulation. This is the planning stage, in which the tasks associated with implementing the strategy are outlined. In this step it is also usually determined what resources, such as financing, tools, and skills, are need to achieve the goal. It can be helpful to picture the completed organizational goal and then work backward, envisioning which specific steps would lead to success.
Strategy implementation is the next of the strategic management process components. It is essentially putting the plan into action. This includes educating the workforce on what needs to be done, delegating tasks, and completing the work. Once the plan has been put into motion, it will often be necessary to make some adjustments to the strategy. For the most part, the process should follow the steps determined during strategy formulation.
Once the strategy has been executed, the next step is to evaluate the process in order to determine if organizational goals have been achieved. This step includes evaluating the success of the strategic plan including the quality of the final results. If the results are not satisfactory, then corrections will usually be made where possible. Evaluation may also include an analysis of the way the organization executed its strategy so that improvements may be made on future ventures.
At its most effective, the strategic management process is a continuous cycle. It provides a strong opportunity for an organization to both reassess itself and take action to fix the areas in which it is not achieving optimum performance. While the steps are best performed in order, if it is a regular part of the organizational culture, components may be rearranged in minor areas.