What is Strategic Management?
Do you know what strategic management is? The strategic approach of a company can be defined in general terms as the “art and form” of specifying the path (less harmful) to follow, in the medium and long time, taking into account the external environment (risks and opportunities) and the capabilities and possibilities available internally to create sustainable value.
Definition of Strategic Management
The term “Strategic Management” denotes a branch of management concerned with developing a strategic vision, setting objectives, formulating and implementing strategies, and introducing corrective measures for deviations (if any) to achieve the organization’s strategic intent.
Objectives of Strategic Management
It has two objectives:
- Obtain competitive advantage, surpass competitors, to achieve market dominance.
- Act as a guide for the organization to help survive changes in the business environment.
Here, changes refer to the internal environment, that is, within the organization, introduced by managers, such as changes in business policies, procedures, etc., and changes in the external environment such as government regulations. That can affect companies, competitor movements, changes in customer tastes and preferences, etc.
The Strategic Management Process
It is the process that you must carry out for strategic management:
Define the levels of the strategic intention of the business :
- Set the vision
- Design the mission
- To establish objectives
- Formulate the strategy
Conduct an environmental and organizational assessment
- Considering the strategies
- Conduct a strategic analysis
- Create strategies
- Prepare the strategic plan
- Put the strategy into practice
- Develop structures and systems
Manage behavioral and functional implementation
- Strategic evaluation and control
- Conduct assessment
- Exercise control
- Recreate strategies
Strategic Management is about specifying the organization’s vision, mission, and objectives, evaluating the environment, designing strategies, evaluating, and controlling.
Benefits of Strategic Management
Strategic management offers many benefits, including identifying, prioritizing, and exploring opportunities. For example, The latest products, markets, and forays into lines of business are only possible if companies indulge in strategic planning.
After this, it allows companies to have an objective view of the activities they carry out. In addition, to do a cost-benefit analysis to determine if the company is profitable.
Strategic Management: Financial Benefits
It has remain exposed in many studies that companies that participate in strategic management are more profitable and successful than those that do not. When companies engage in forward-looking planning and careful evaluation of their priorities, they control the future. It is necessary for the changing business landscape of the 21st century.
It has been likely that more than 100,000 companies fail in the United States each year, and most of these failures have to do with a lack of focus and strategic direction. Additionally, high-performing companies tend to make more informed decisions because they have considered the short-term and long-term consequences. Therefore, they have oriented their strategies for these purposes.
In contrast, companies that do not engage in meaningful strategic planning are often stuck with internal problems and lack focus, leading to failure.
In addition to these benefits, companies that participate in this are more aware of external threats, better understand the strengths and weaknesses of the competition, and increase employee productivity.
They also have lower resistance to change and explicit consideration of the link between performance and rewards. However, The critical feature of it is that companies’ problem-solving and prevention capabilities enhance through it.
It is essential, as it helps companies to systematize and update change, better communicating the need to change to their employees. Finally, it helps bring order and discipline to the company’s activities in its internal processes and external activities.