Stages
- Strategy Formulation
- Strategy Implementation
- Strategy Evaluation
Steps
- Develop vision and mission
- External environment analysis
- Internal environment analysis
- Establish long-term objectives
- Generate, evaluate and choose strategies
- Implement strategies
- Measure and evaluate performance
Benefits
- Indicates all the major steps that have to be met during the process.
- Illustrates that the process is a continuous activity.
- Arrows show the two way process. This means that companies may sometimes go a step or two back in the process rather than having to complete the process and start it all over from the beginning. For example, if in the implementation stage the company finds out that the strategy it chose is not viable, it can simply go back to the strategy selection point instead of continuing to the monitoring stage and starting the process from the beginning.
Drawbacks
- Represents only strategy formulation stage and does separate situation analysis from strategy selection stages.
- Confuses strategy evaluation with strategy monitoring stage.
Figure 2. Rothaermel’s The Analysis-Formulation-Implementation (AFI) Strategy Framework
Source: Rothaermel (p. 20)
Stages
- Analysis
- Formulation
- Implementation
Steps
- Initial analysis
- External and internal analysis
- Business or corporate strategy formulation
- Implementation
Benefits
- Shows that the process is a continuous activity.
- Separates initial analysis (in this articles it’s called initial assessment) from internal/external analysis.
- Emphasizes the main focus of strategic management: “Gain and sustain competitive advantage”.
Drawbacks
- Does not include strategy monitoring stage.
- Arrows indicate only one way process. For example, after the strategy formulation the process continues to the implementation stage while this is not always the truth. Companies may go back and reassess their environments if some conditions had changed.
Figure 3. Thompson’s and Martin’s Strategic Management Framework
Source: Thompson and Martin (p.36)
Stages
- Where are we?
- Where are we going?
- How are we getting there?
- How are we doing?
Steps
- Situation appraisal: review of corporate objectives
- Situation assessment
- Clarification of objectives
- Corporate and competitive strategies
- Strategic decisions
- Implementation
- Monitor progress
Benefits
- Indicates all the major steps that have to be met during the process.
- Shows that the process is a continuous activity.
- The model is supplemented by 4 fundamental strategic management questions.
Drawbacks
- Arrows indicate only one way process.
Limitations
It is rare that the company will be able to follow the process from the first to the last step. Producing a quality strategic plan requires time, during which many external and even internal conditions may change. This results in the flawed strategic plan which has to be revised, hence requiring even more time to finish.
On the other hand, when implementing the strategic plan, the actual results do not meet the requirements of the strategic plan so the plan has to be altered or better methods for the implementation have to be discovered. This means that some parts of strategic management process have to be done simultaneously, which makes the whole process more complex.
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