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.The strategic management process is typically brokendown into five events or steps:1. organization’s direction2. environmental analysis3. strategy formulation4. strategy implementation5. strategy evaluationSTRATEGIC MANAGEMENT PROCESS
Strategic formulationi) Strategic choice.The term ‘strategic choice’ raises the question of who makes decisionsand why they are madeii)Hierarchyofstrategy:Different levels of strategy:(1)Corporate level(2)Business level(3) functional level
Strategic Formulation (Cont)Corporate-level• Strategy describes a corporation’s overall direction in terms of itsgeneral philosophy towards growth and the management of its variousbusiness units.That strategy for a multidivisional company involves at least four types ofinitiatives:• Establishing investment priorities and steering corporate resources intothe most attractive business units.• Initiating actions to improve the combined performance of those businessunits that the corporation first got into.• Finding ways to improve the synergy among related business units in orderto increase performance.• Decisions dealing with diversification
Strategic Formulation (Cont)Business-level strategy• Business-level strategy deals with decisions and actionspertaining to each business unit.• The main objective of a business-level strategy being to makethe unit more competitive in its marketplace.• This level of strategy addresses the question, ‘How do wecompete?’
Strategic Formulation (Cont)• In the 1980s, Porter (1980, 1985) made a significant contribution toour understanding of business strategy by formulating a frameworkthat described three competitive strategies: costleadership, differentiation and focus.Business Level StrategyPorters Generic Strategies
Strategy Formulation (Cont)Functional-level strategy• Functional-level strategy pertains to the major functionaloperations within the business unit, including research anddevelopment, marketing, manufacturing, finance and HR.• ‘How do we support the business-level competitive strategy?’Consistent with this, at the functional level, HRM policies andpractices support the business strategy goals.
Strategy Implementation• Strategy implementation is an area of activity that focuses onthe techniques used by managers to implement theirstrategies.• In particular, it refers to activities that deal with leadershipstyle, the structure of the organization, the information andcontrol systems, and the management of human resources• Emphasize that leadership is the most important and difficultpart of the strategic implementation process.
Strategy Evaluation• Determines to what extent the actual change andperformance match the desired change and performance.• Operating Performance• Financial Performance