Strategic Management Process

Basic Management Process

A five-step process consisting of (1) Setting objectives, (2) Making basic planning forecasts, (3) Reviewing alternative courses of action, (4) Evaluating which options are best, and (5) Choosing and implementing your plan.

Hierarchy of Goals

A chain-like view of goals from the top of the firm down to frontline employees, where each level sets their goals in alignment with the goals set above them.

Policies

Broad guidelines delineating how employees should act.

Procedures

Rules that spell out what to do in a specific situation.

Strategic Plan

A company's overall plan for matching its internal strengths and weaknesses with external opportunities and threats to maintain a competitive position (answering: "What are we now as a business and where do we want to be?").

Strategy

A specific course of action contained within a strategic plan to reach the end goal.

Strategic Management

The process of identifying and executing the strategic plan by matching a company's capabilities with the demands of the environment.

Environmental Scan Worksheet

An external analysis method that includes economic, competitive, and political trends to gather information about the company's environment.

SWOT Analysis

An analysis framework studying internal strengths and weaknesses, and external opportunities and threats.

PEST Analysis

An analysis framework examining external factors including Political, Economic, Social, and Technological trends.

Vision Statement

A future-oriented, general statement of a firm's intended direction and what the company wants to become.

Mission Statement

A present-oriented statement defining what the company's main tasks are today.

Strategic Goals

Goals created by translating the broader mission statement into specific objectives for each department.

Corporate Strategy

Identifies the portfolio of businesses that comprise the company and how these businesses relate to each other.

Concentration Strategy

A single-business corporate strategy focusing on one product line in one market.

Diversification Strategy

Corporate expansion achieved by adding new product lines (e.g., Apple introducing self-driving cars).

Vertical Integration Strategy

Expansion achieved by producing your own raw materials or directly selling your products (e.g., Apple stores).

Consolidation Strategy

Reducing company size by merging with other business units or companies into a larger organization for operational efficiency and market access (e.g., Disney acquiring Marvel and Fox).

Geographic Expansion

Entering new territorial markets (e.g., Jollibee opening in the USA and UAE).

Competitive Strategy

Identifies how to build and strengthen a business's competitive position and how it competes against other companies in the marketplace.

Competitive Advantage

Factors that allow a company to differentiate its products/services from competitors to increase market share and outperform them.

Cost Leadership Strategy

A standard competitive strategy focused on becoming the low-cost leader in the industry based on prices.

Differentiation Strategy

A standard competitive strategy that seeks to be unique along dimensions valued by buyers, typically through innovation.

Focus Strategy

A competitive strategy targeting a specific market niche (often minority groups).

Functional Strategy

Outlines what each individual department must do to help the business accomplish its strategic goals.

Strategic Human Resource Management (SHRM)

Formulating and executing dynamic HR policies and practices that produce the employee competencies and behaviors a company needs to achieve its goals.

Strategy Map

A tool that visually summarizes the role of each department in achieving company strategic goals and clarifies employee "line of sight".

HR Scorecard

A "balanced scorecard" planning approach that assigns financial (hard) and nonfinancial (soft) metrics to activities in the strategy map to measure overall performance.

Digital Dashboards

Desktop graphs and charts providing a specific measurement of performance for activities in the strategy map according to HR scorecard metrics.

Human Resource Metrics

A quantitative gauge of a human resource management activity.

Benchmarking

Comparing the results and practices of high-performing companies to the current company to understand what makes them better.

Strategy-Based Metrics

Measures tracking internal performance activities that directly contribute to achieving a company's strategic goals.

HR Audit

An analysis of the completeness, efficiency, and effectiveness of HR functions using a checklist to ensure adherence to laws and company policies.

High Performance Work Systems

A set of HRM policies and practices (such as validated testing and extensive training) designed to produce superior employee performance, encourage self-management, and nurture a motivated workforce.

Employee Engagement

Being psychologically involved in, connected to, and committed to getting one's job done, leading to higher connectivity and effort toward task goals.