Evolution of Strategic Management: Models and Elements

COURSE : STRATEGY MANAGEMENT AND POLICY LECTURER : MALVIN PAGE SEMESTER/SESSION : 1st SEMESTER, 2021/2022 SESSION PREPARED BY : LAVINIA CONNELLY STUDENT ID : 5009258132 LECTURE NOTES • DEVELOPMENT OF STRATEGIC MANAGEMENT THEORY Strategic Management as it is known today did not appear suddenly, but it underwent a very important stage. The main themes in the early 1950s still revolved around the budget and financial control (Budgeting and Financial Controlling). The company's management at that time used the budget as a planning and control tool through defined financial targets. Towards the end of the 1950s strategic management theory then developed with an emphasis on functional integration or the combination of functions of production, marketing, finance and human resources to achieve the goals that have been set. Gordon Howell recommends business education or business policy courses, which are mandatory courses for business education. In the 1960s, the dominant theme in strategy shifted towards corporate planning, which was an elaborate plan with detailed forecasts of the state of the economy and specific markets. This view was supported by Alfred Sloan in his book My Years with General Motors and Albert Chandler in a book published by entitled Strategy and Structure. In the 1970s, corporate strategic planning developed which focused on a combination of management functions which were then formulated in corporate strategic planning and policies. In the 1980s, the concept of Strategic Management emerged which focused on developing the company's internal expertise by using core competencies and being reactive to changes in the external environment. • STRATEGIC MANAGEMENT MODEL The basic elements of strategic management according to Wheelen and Hunger are (Wheelen and Hunger, 2003: 8): 1) “Environmental scanning” Environmental scanning is monitoring, evaluating, and seeking information from the external and internal environment for important people in the company. The aim is to identify the external and internal strategic factors that will determine the future of the company. Strategy formulation, especially strategic planning or long-term planning is usually related to the vision, mission and policies of an agency. Usually strategy formulation begins with conducting a situation analysis to obtain compatibility between external opportunities and internal strengths with external threats and internal weaknesses. 2) “Strategy formulation” Strategy formulation is the development of plans long term for the effective management of opportunities and environmental threats, seen from the strengths and weaknesses of the company. After knowing who the threat is faced by the company, opportunities or opportunities that are owned, and the strengths and weaknesses of the company, then we can determine or formulate corporate strategy 3) "Strategy implementation" Strategy implementation is the process by which management embodies its strategies and policies in action through the development of programs, budgets, and procedure. The process may include changes culture as a whole, structure and or system management of the organization as a whole. 4) “Evaluation and control” Evaluation and control measures what can generated or earned by the company. This is meaningful compare between the company's performance with the results the company expects. Performance is the end result of a activity. What measure to choose to measure performance depending on the organizational unit to be assessed and the objectives to be achieved. Predetermined goals in the strategy formulation part of the management process strategic (such as profitability, market share, reduction costs and so on) must be used properly for measure the company's performance if the strategy has been implemented. The basic elements above can be translated so that the model of strategic management can be seen in the image below: