Strategic management is an ongoing process that allows an organization to balance the internal organizational culture with the external environment (Hunger & Wheelen, 2007; Ginter, 2004). This process is an essential management tool that allows organizations to respond to external changes as well as to position themselves within the environment in order to gain a competitive edge. Strategic management includes analyzing the internal strengths and weaknesses of an organization while simultaneously assessing the opportunities and threats from the external environment (Hunger & Wheelen, 2007; Preble, 1997; Fottler, Ford & Heaton, 2010).
The basic process of strategic management involves formulating a strategy, implementing the strategy, and then continuing evaluation and control (Hunger & Wheelen, 2007; Preble, 1997). The first step, strategy formulation, is the most important and most involved because it requires gathering information on current internal strengths and weaknesses, including performance, objectives and culture, as well as identifying external influences, threats and opportunities. This SWOT (Hunger & Wheelen, 2007; Preble, 1997) analysis helps the organization to identify where they are currently within the industry, and pushes the development of strategies to achieve goals of where the organization wants to be within the industry (Ginter, 2004). The next step, the strategy implementation, is the action step that addresses the actual process of making the strategy a reality. This step formulates and employs the policies and procedures, programs and necessary budgeting in order to fulfill the formulated strategy (Hunger & Wheelen, 2007). The final step of the strategic management process is the continued evaluation and control of the implemented strategy (Hunger & Wheelen, 2007; Preble, 1997) Since the internal and external environments are likely to change with sociopolitical and economic influences, it is important to maintain a flexible strategy that is regularly reevaluated in order to ensure that it maintains its efficacy within the market and organization.
An example of strategic management within the healthcare industry would be as follows: a healthcare organization has the mission to provide the best patient care possible to their local community. The hospital completes a SWOT analysis, identifying that they have outstanding clinical and customer service (strengths), however they have a lengthy wait time in the emergency department due to overutilization secondary to long delays in accessing primary care providers (Arnst, 2007); this weakness causes financial hardship on the organization because of the higher operating costs and reduced control. On analyzing the external opportunities, the hospital recognizes a community need for an after-hours clinic that would allow for better patient service as well as reduced emergency department utilization. Threats to the organization include the current sociopolitical environment and the instability of the healthcare insurance base within the patient population. Upon completion of the SWOT analysis, the hospital reviews their mission to serve patients by providing the best care possible. This in turn leads them to conclude that they have various alternatives, including making no change, implementing an after-hours clinic, or expanding the emergency department. After considering the resources and costs involved, as well as the internal and external impact, the hospital decides that the best alternative is to provide an after-hours clinic. Next, the technical details of budgeting, developing policies and procedures, and establishing a community recognized program. Finally, the hospital must continue to reevaluate and control the implementation of the strategy, continuously evaluating whether the alternative is actually beneficial to the organization and the community and helping to provide a competitive edge within the healthcare industry.
Arnst, C. (2007). The doctor will see you in three months. Retrieved 6 February 2010 from http://www.businessweek.com/magazine/content/07_28/b4042072.htm.
Fottler, M., Ford, R., & Heaton, C. (2010). Achieving service excellence: strategies for healthcare (2nd ed.). Chicago, IL: Health Administration Press.
Ginter, P. (2004). Strategic management. Retrieved 13 February 2010 from http://www.credoreference.com/entry/sageeohcm/strategic_management.
Hunger, J.D. & Wheelen, T. (2007). Essentials of strategic management; (4th ed). Upper Saddle River, New Jersey. Prentice Hall.
Preble, J. (1997). INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE INTO THE STRATEGIC MANAGEMENT PROCESS. Journal of Management Studies, 34(5), 769-791. Retrieved from Business Source Premier database.