Editing Strategic management (section)

==Application==
[[File:Strategic Management Framework.png|thumb|300px|Strategic management processes and activities]]

Strategy is defined as "the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals".<ref name="Chandler, Alfred 1962">Chandler, Alfred, ''Strategy and Structure: Chapters in the history of industrial enterprise'', Doubleday, New York, 1962.</ref> Strategies are established to set direction, focus effort, define or clarify the organization, and provide consistency or guidance in response to the environment.<ref name="Mintzberg, Henry 1987">{{cite journal |journal= [[California Management Review]] |year=1987 |issue=Fall 1987 |title= Why Organizations Need Strategy |author= Mintzberg, Henry|volume=30| doi=10.2307/41165264 |jstor=41165264 |s2cid=17975339 }}</ref>

Strategic management involves the related concepts of [[strategic planning]] and [[strategic thinking]]. Strategic planning is analytical in nature and refers to formalized procedures to produce the data and analyses used as inputs for strategic thinking, which synthesizes the data resulting in the strategy. Strategic planning may also refer to control mechanisms used to implement the strategy once it is determined. In other words, strategic planning happens ''around'' the strategic thinking or strategy making activity.<ref name="MintzbergQuinn1996">{{cite book
| last1 = Mintzberg
| first1 = Henry
| last2 = Quinn
| first2 = James Brian
| year = 1996
| title = The Strategy Process: Concepts, Contexts, Cases
| publisher = Prentice Hall
| isbn = 978-0-13-234030-4
}}</ref>

Strategic management is often described as involving two major processes: ''formulation'' and ''implementation'' of strategy. While described sequentially below, in practice the two processes are [[Iterative design|iterative]] and each provides input for the other.<ref name="MintzbergQuinn1996">{{cite book
| last1 = Mintzberg
| first1 = Henry
| last2 = Quinn
| first2 = James Brian
| year = 1996
| title = The Strategy Process: Concepts, Contexts, Cases
| publisher = Prentice Hall
| isbn = 978-0-13-234030-4
}}</ref>

===Formulation===
''Formulation'' of strategy involves analyzing the environment in which the organization operates, then making a series of strategic decisions about how the organization will fulfill its mission. Formulation ends with a series of goals or objectives and measures for the organization to pursue. Environmental analysis includes the:
*Remote external environment, including the political, economic, social, technological, legal and environmental landscape ([[PEST analysis|PESTLE]]);
*Industry environment, such as the competitive behavior of rival organizations, the bargaining power of buyers/customers and suppliers, threats from new entrants to the industry, and the ability of buyers to substitute products ([[Porter five forces analysis|Porter's 5 forces]]); and 
*Internal environment, regarding the strengths and weaknesses of the organization's resources (i.e., its people, processes and IT systems).

''Strategic decisions'' are based on insight from the environmental assessment and are responses to strategic questions about how the organization will compete, such as:
*What is the organization's business?
*Who is the target customer for the organization's products and services? 
*Where are the customers and how do they buy? What is considered "value" to the customer?
*Which businesses, products and services should be included or excluded from the portfolio of offerings?
*What is the geographic scope of the business?
*What differentiates the company from its competitors in the eyes of customers and other stakeholders?
*Which resources, skills and capabilities should be developed within the firm?
*What are the important opportunities and risks for the organization?
*How can the firm grow, through both its base business and new business?
*How can the firm generate more [[Shareholder value|value]] for investors?<ref name="Drucker1954">{{cite book
| last = Drucker
| first = Peter
| author-link = Peter Drucker
| year = 1954
| title = The Practice of Management
| publisher = Harper & Row
| isbn = 978-0-06-091316-8
}}</ref>

The answers to these and many other strategic questions result in the organization's strategy and a series of specific short-term and long-term goals or objectives and related measures.<ref name="MintzbergQuinn1996">{{cite book
| last1 = Mintzberg
| first1 = Henry
| last2 = Quinn
| first2 = James Brian
| year = 1996
| title = The Strategy Process: Concepts, Contexts, Cases
| publisher = Prentice Hall
| isbn = 978-0-13-234030-4
}}</ref>

===Implementation===
The second major process of strategic management is ''implementation'', which involves decisions regarding how the organization's resources (i.e., people, process and IT systems) will be aligned and mobilized towards the objectives. Implementation results in how the organization's resources are structured (such as by product or service or geography), leadership arrangements, communication, incentives, and monitoring mechanisms to track progress towards objectives, among others.<ref name="MintzbergQuinn1996">{{cite book
| last1 = Mintzberg
| first1 = Henry
| last2 = Quinn
| first2 = James Brian
| year = 1996
| title = The Strategy Process: Concepts, Contexts, Cases
| publisher = Prentice Hall
| isbn = 978-0-13-234030-4
}}</ref>

Running the day-to-day operations of the business is often referred to as "operations management" or specific terms for key departments or functions, such as "logistics management" or "[[marketing management]]", which take over once strategic management decisions are implemented.<ref name="MintzbergQuinn1996">{{cite book
| last1 = Mintzberg
| first1 = Henry
| last2 = Quinn
| first2 = James Brian
| year = 1996
| title = The Strategy Process: Concepts, Contexts, Cases
| publisher = Prentice Hall
| isbn = 978-0-13-234030-4
}}</ref>