what is strategic management

what is strategic management

The Comprehensive Guide to Strategic Management

1. Introduction to Strategic Management

Business success with international dimensions compels U.S. organizations to expand academically beyond timeworn principles and new but slowly developing behavioral strategies. Senior managers understand many of these theories instinctively because those people have, for their own reasons, successfully climbed the corporate ladder. Nonetheless, an out-of-date approach will not work successfully with companies or corporations, especially if those organizations suffer from general strategic resistance. Sometimes tentatively and sometimes explicitly broad and narrow-minded critiques against active participation. Megacorporations lament their role in agricultural and industrial markets. Conglomerates feel estranged from societal groups whose cooperation would be valuable. Yet, even with this louder expression and a changing demographic of overlords of the economy, well-paid representatives remain vulnerable to arguments that individuals should absorb more information and contribute more effectively to the strategic quest, especially the quest for corporate competitiveness.

Understanding concepts in business strategy is critical because individual managers use these concepts daily to develop strategy. Managers use strategic planning, tactical and operational planning, articulation of vision, allocation of corporate resources, analysis of SWOT, competitive advantage, and direction of forays into new and created markets. Strategic management is currently a fashionable concept. It touches over seventy-five thousand organizations and dominates many curriculums in business schools. Animated and lively discussion occurs in both doctoral and masters courses. For many practitioners and of course, for some educators, we have left the 1950s and 1960s behind. Our focus on strategic management makes sense for many reasons. Product life cycles are short. Industries have become extremely dynamic. Although interest groups and publics push for the survival of less effective organizations, thriving benefits in many ways by encouragement of competence. Public policies become more precise as they blend free enterprise thought with honest realism about our organizational capabilities. Our work during the undergraduate years is a prelude to what the senior manager will experience because that individual will confront many actual events at a moderate or a high rate of speed and respond to those events should be based on a clearly-stated and significantly-perceived mission. Strategy makes the difference between routine and creative success.

2. Key Concepts and Theories in Strategic Management

In our communities and in daily life, many resources and individuals interact and act together. How do we explain these resources, individuals, and organizations? Our explanation of resources, individuals, and organizations is possible through the theory of management. Changes in attitudes to management, the emergence of strategic management, and changes in global conditions led to a more inclusive examination of management theories and techniques and to the development of strategic management. Many theories and techniques have been put forward in management studies. While the theory of management is a set of the principles and practices of management, the theory of strategic management is about the capability of an individual or a group at an executive level in an organization.

After reading the introduction to this book and recognizing the importance of strategic management in organizations, you might ask: What is strategic management, and what do I need to know in order to implement strategic management in my organization? This chapter, entitled “Key Concepts and Theories in Strategic Management,” addresses these questions and establishes an overview of strategic management concepts. This introduction provides insight into the state-of-the-art research in the strategic management field. The overview, following the introduction, takes a sociological approach, one of the important approaches in strategic management, on the grounds that a true understanding of strategic management necessitates an understanding beyond managerial, organizational behavior, economic, and resource-based theories.

3. The Process of Strategic Management

Planning and executing a business strategy is a relaxing, straightforward process, according to the experts. Just conduct a SWOT (strengths, weaknesses, opportunities, threats) analysis and then decide how to develop a company’s strengths, shore up weaknesses, exploit opportunities, and avoid or cast off threats. Those steps will reveal strategic alternatives, and then decisions, objectives, and budgets need to be drawn up. Cross-functional teams need to be established to overcome barriers to strategy implementation. Lighting a fire under unwieldy organizations, selling results that are going to take a longer time to materialize, fending off hostiles, and rewarding accountability should also be part of this comprehensive and logical process. If all goes according to plan, if everyone pulls in the same direction, and if everything is coordinated, then a firm has a strategy, or should it be strategies, most probably a mix of both. And, feasibility and adaptability having been considered, everything will be red-tied and annually reviewed and renewed.

The three stages are part of the strategic management process, which itself involves four steps. These four are all interconnected (Figure 3-1). For that reason, they will be discussed as part of an integrated whole. The strategic management process is much more than drawing up long-range plans. In a constantly changing business environment, the only way for managers to ensure that their organizations perform effectively is to engage in strategic management. And following a simple recipe is not enough: firms must ensure that the entire process is well-coordinated and that it is correct in all of its phases and steps.

4. Strategic Analysis and Formulation

The role of strategic analysis is helping the organization formulate strategic intent and strategic action. The write-up stage looks at both aspects in a little more detail. Formulation is at a high conceptual level; implementation has greater emphasis on involving and managing the organization’s stakeholders. Formulation provides the strategic position the business wishes to develop for its current and future operating environment. It sets out the long-term direction the business is seeking and the strategic guidelines or boundaries within which the business operates. It is the foundation on which implementation will occur.

One objective of conducting a strategic analysis is to help you develop a business model. Is the model conducive to a competitive advantage? You’ve even had the first inklings of the answers during the strategy-making stage. If you can get the development process right, the organization’s attempts to successfully implement its strategic choices are given a huge boost. If you are going to look to the future and back again, you need, as far as possible, to make sure that things are under control at the front end.

5. Implementation and Evaluation of Strategic Plans

Quarterly reviews are generally carried out to compare actual with projected results. A review generally consists of projections of expected results at a point in time (the beginning of the period) and an examination of what actually happened sometime later. Develop written guidelines for reviews that broaden the vision of top-level managers to consider long-run and short-run, as well as internal and external company perspectives. Use both quantitative and qualitative projections and actual results. Do not produce excessive amounts of data. Each operating level of the firm should review only a few key results. Everyone should use performance data as a basis for future planning with the goal of continuous improvement in mind.

After a strategic plan has been formulated, adopted, and announced to employees, the execution and control process must ensure that the plan is being executed properly. This process is sometimes called the “management process,” and it is a central part of the skills every manager must develop. The strategic management process, as it is implemented in a small firm, must be simple, flexible, and formal. Top management must be inflexible, however, in adopting a set of objectives, in providing the means for measuring them, in conducting quarterly reviews of the data, and in reacting to them promptly and effectively.