Strategic management: A Model of the Rational Strategy process

The traditional approach to strategic management is often termed the formal or rational approach, and can described as a series of logical steps including:

·                The determination of an organization’s mission;

·                The setting of goals and objectives;

·                The understanding of the organization’s strategic position;

·                The formulation of specific strategies;

·                The commitment of resources.

A continuous analysis of the external environment and the organization’s internal resources is needed in order to plan for the future development and survival of the business. This is often conceived as consisting of four major steps:

1.     Analysis                                                     2.     Formulation

3.     Implementation                                           4.     Monitor, review and evaluation.

This process seeks to answer questions concerning where the organization is now, where it should go in the future, and how it should get there. The rational model therefore involves a number of interrelated stages. These are illustrated in Figure below, which shows the various stages which management may take to develop a strategy for their organization.

The basic idea from the model is that we start with the existing strategy of the organization and evaluate it using information collected from internal and external analysis. Form this we can determine if the organization should continue with its existing strategy or formulate a new strategy that will enable the organization to compete more effectively. Having made a choice on the strategic direction, the next stage involves implementing the Strategy and then evaluating performance to determine whether or not goals have been achieved.

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