Strategic management essentially means the implementation and formulation of various strategies in order to achieve the goals of the company.This is the detailed initiative which is taken by the top management – these strategic decisions are taken on the basis of available resources – they also take into consideration the effects of the external and internal environment on their decisions.
Strategic management is when the company’s management defines goals and initiatives that consider available resources as well as existing and impending environmental factors, both internal and external, that can impact or influence success in achieving those goals and initiatives.
The steps of strategic management
Formulation
During the formulation of strategies to beat the competition and successfully survive environmental analysis will be carried out. This includes assessment of economic, political, social and legal aspects. Clear internal analysis should also be made on resources, processes, and employees.
Implementation
Decisions now have to be taken on how resources will be used in order to achieve set goals, and checks made on how these resources have been structured. Putting strategies into practice whilst developing structures and systems will help manage the behavioural and functional implementation.
Evaluation and control
Performing evaluation and exercising control will ensure the right direction and guide the business to prepare for future challenges, making long-term survival assurance. Strategic management helps in overall business development and success.
The Advantages of Strategic Management include:
1. Discharges Board Responsibility
The first reason that most organizations state for having a strategic management process is that it discharges the responsibility of the Board of Directors.
2. Forces An Objective Assessment
Strategic management provides a discipline that enables the board and senior management to actually take a step back from the day-to-day business to think about the future of the organization. Without this discipline, the organization can become solely consumed with working through the next issue or problem without consideration of the larger picture.
3. Provides a Framework For Decision-Making
Strategy provides a framework within which all staff can make day-to-day operational decisions and understand that those decisions are all moving the organization in a single direction. It is not possible (nor realistic or appropriate) for the board to know all the decisions the executive director will have to make, nor is it possible (nor realistic or practical) for the executive director to know all the decisions the staff will make. Strategy provides a vision of the future, confirms the purpose and values of an organization, sets objectives, clarifies threats and opportunities, determines methods to leverage strengths, and mitigate weaknesses (at a minimum). As such, it sets a framework and clear boundaries within which decisions can be made. The cumulative effect of these decisions (which can add up to thousands over the year) can have a significant impact on the success of the organization. Providing a framework within which the executive director and staff can make these decisions helps them better focus their efforts on those things that will best support the organization’s success.
4. Supports Understanding & Buy-In
Allowing the board and staff participation in the strategic discussion enables them to better understand the direction, why that direction was chosen, and the associated benefits. For some people simply knowing is enough; for many people, to gain their full support requires them to understand.
5. Enables Measurement of Progress
A strategic management process forces an organization to set objectives and measures of success. The setting of measures of success requires that the organization first determine what is critical to its ongoing success and then forces the establishment of objectives and keeps these critical measures in front of the board and senior management.
6. Provides an Organizational Perspective
Addressing operational issues rarely looks at the whole organization and the interrelatedness of its varying components. Strategic management takes an organizational perspective and looks at all the components and the interrelationship between those components in order to develop a strategy that is optimal for the whole organization and not a single component.
7. Creates a sound future
When a business practices strategic management it enables measurement of progress and of success. The establishment of objectives keeps these critical measures visible to guarantee that the business will at least break even, but better still continue to be profitable.
8. Increases market share
With a focused plan strategic management can help to increase market share and with it the profitability of the business. Understanding industry market conditions will help with the right approach, resulting in better network distribution and higher profits.
To summarise it, it shows the right direction to the organization, helps companies or organizations to turn proactive rather than reactive, guides the companies to prepare and face the challenges which may occur in future, plays an important factor in decision making, enables a fight the competitions and have long term survival assurance, helps have a competitive edge over the market.
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