The Strategic management process can be described in a sequence of five stages which can also be shown as a Framework of strategic management. These five stages are as follows:
Stage 1:
Strategic planning and situational analysis of the firm in the environmental context.
Here the firm must find out its relative market position, corporate image, its strength and weakness and also environmental threats and opportunities.
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This is also known as SWOT (Strength, Weakness, Opportunity, and Threat) analysis. It defines the vision and mission of the organization based on its SWOT analysis.
Stage 2:
Goal Setting: The objectives of an organization must be set after it has finalized its vision and mission. The long term corporate objectives must be translated into short term and functional goals which people in the organization have to achieve.
Stage 3:
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Strategic Choice: Here the organization deals with the various strategic choices or alternatives it has. There are many ways to reach goals e.g. diversification, expansion, retrenchment and so on.
Stage 4:
Strategy Implementation: Out of all the alternatives generated in the earlier stage, the organization selects the best suitable alternative in line with its SWOT analysis and implements it.
Stage 5:
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Strategy Evaluation: This is an evaluation and control stage. Here again the organization continuously performs a situational analysis and repeats the stages again.