Question

Briefly discuss the three key activities in the strategic management process. Why is it important for managers to recognize the interdependent nature of these activities?

*Please use different asnwers from the chegg since my friends already using it.

Answer 1

The three key activities of strategic management are - Strategic Analysis, Strategic Formulation, and Strategic Implementation.

Strategic Analysis - Analysis starts before formulation or implementation. In fact, without proper analysis, formulation and implementation of the strategy are not possible. Under strategy analysis, a firm often analyzes its present goals and objectives, forces from the external environment (composed of the macro environment, business environment, and competitor environment), its internal environment, resources, capabilities, and intellectual capital. The idea is to check the sync of the goals an objectives with respect to the internal capability or forces from the external environment.

Strategy Formulation - Under this process, the firm formulates its strategy at different levels. The levels are generally defined as corporate level strategy, business level strategy, and functional strategy. The corporate level strategy is concerned about the existence of the firm and mix of the different business portfolios. A business-level strategy is about how to compete (e.g. using low cost or high value) in a particular business segment and how to create synergies among different SBUs. Finally, at the bottom, functional strategies are there to subordinate the business level strategy. With the emergence of globalization, two particular aspects of competitive strategy formulation are apparent - the international strategy and the digital business strategy.

Strategy Implementation - This is the final step of the strategic management process. in this step, a firm uses adequate organization design/ structure and organizational system/ process/ workflows in order to implement the formulated strategy over a period of time. In this phase, the entire focus is on how to create systems and processes in order to integrate the value chain members' efforts towards a single intended formulated strategy. Particular designs of organization structure, leadership, corporate governance structure are some of the crucial aspects to ensure proper implementation and realization of intended strategy.

It is important to understand that each of the above three processes is interdependent and one cannot be a success without a perfect prior. For example, the formulation can only be done correctly when the gaps of sync between internal capability, external environment, and existing goals are clear from the previous process of strategy analysis. If the formulation has not considered these aspects, the strategy can never be realized because either the capability or requirement from the environment or both will be missed. Similarly, it is impossible to implement a strategy which has not been formulated well. The business level strategies must be clear to all the partners of the value chain so that their effort can be unified in the implementation phase.