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16 PART 1 • OVERVIEW OF STRATEGIC MANAGEMENT

could require a change in the firm’s mission. Therefore, strategy formulation, implementa-
tion, and evaluation activities should be performed on a continual basis, not just at the end
of the year or semiannually. The strategic-management process never really ends.
Note in the strategic-management model that business ethics/social responsibility/
environmental sustainability issues impact all activities in the model as described in full in
Chapter 10. Also, note in the model that global/international issues also impact virtually all
strategic decisions today, even for small firms, as described in detail in Chapter 11. (Both
Chapter 10 and Chapter 11 are new to this edition.)
The strategic-management process is not as cleanly divided and neatly performed in
practice as the strategic-management model suggests. Strategists do not go through the
process in lockstep fashion. Generally, there is give-and-take among hierarchical levels of an
organization. Many organizations semiannually conduct formal meetings to discuss and
update the firm’s vision/mission, opportunities/threats, strengths/weaknesses, strategies,
objectives, policies, and performance. These meetings are commonly held off-premises and
are called retreats. The rationale for periodically conducting strategic-management meetings
away from the work site is to encourage more creativity and candor from participants. Good
communication and feedback are needed throughout the strategic-management process.
Application of the strategic-management process is typically more formal in larger
and well-established organizations. Formality refers to the extent that participants, respon-
sibilities, authority, duties, and approach are specified. Smaller businesses tend to be less
formal. Firms that compete in complex, rapidly changing environments, such as technol-
ogy companies, tend to be more formal in strategic planning. Firms that have many
divisions, products, markets, and technologies also tend to be more formal in applying
strategic-management concepts. Greater formality in applying the strategic-management
process is usually positively associated with the cost, comprehensiveness, accuracy, and
success of planning across all types and sizes of organizations. 14

Benefits of Strategic Management

Strategic management allows an organization to be more proactive than reactive in shaping
its own future; it allows an organization to initiate and influence (rather than just respond
to) activities—and thus to exert control over its own destiny. Small business owners, chief
executive officers, presidents, and managers of many for-profit and nonprofit organizations
have recognized and realized the benefits of strategic management.
Historically, the principal benefit of strategic management has been to help organi-
zations formulate better strategies through the use of a more systematic, logical, and
rational approach to strategic choice. This certainly continues to be a major benefit of
strategic management, but research studies now indicate that the process, rather than the
decision or document, is the more important contribution of strategic management. 15
Communication is a key to successful strategic management. Through involvement in
the process, in other words, through dialogue and participation, managers and employ-
ees become committed to supporting the organization. Figure 1-2 illustrates this intrinsic

FIGURE 1-2
Benefits to a Firm That Does Strategic Planning

Greater
Deeper/Improved
Enhanced Understanding Commitment THE RESULT
Communication a. To achieve All Managers and
a. Of others’ views
a. Dialogue b. Of what the firm objectives Employees on a
Mission to Help the
b. To implement
b. Participation is doing/planning
and why strategies Firm Succeed
c. To work hard