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The four essential phases of strategic management include: 1. Defining the mission, vision, and goals, 2. Formulation of strategies (planning), 3. Implementation of strategies (action stage), and 4. Analysis and evaluation of strategies. The change from one phase to another is gradual and sometimes a phase may evolve into the next phase.
The functional areas (such as finance, accounting, legal, marketing, business administration) are vitally important to these four phases of strategic management because they help to form the framework on which the company's strategies are formulated. Without knowledge of the firm and its competing industry (through industry analysis), it would be very difficult to define objectives, formulate strategies, and then implement the strategies to achieve those goals. These are also important factors to consider when developing a SWOT analysis (strengths, weaknesses, opportunities, and threats.) Resources (including finances) must be allocated appropriately in order for the formulated strategies to be carried out. Organizations must continually monitor their internal and external factors (conduct environmental scanning) to make timely changes to strategies as needed. It is important for an organization to realize its own capabilities and limitations, in order to select the opportunities it can pursue with a strong likelihood for growth and success.
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