strategic management definition

strategic management definition

Exploring the Definition and Significance of Strategic Management

1. Introduction to Strategic Management

Strategic management can play a pivotal role in creating the need for a willingness to manage strategically, the knowledge and understanding required to manage strategically, and the organizational processes, structures, and systems that will ensure effective strategic management. Hence, strategic management is subject both to internal and external environmental constraints. From the latter perspective, for example, there is a case for arguing that it is globalization, technological innovations, economic instabilities, shifts in markets, customer expectations, regulatory changes, and socio-political developments. Each of these has implications for the management of business-government relations in general, and corporate perceptions of the concept of responsibility in particular.

Strategic management helps organizations to deal with issues like change, complexity, crises, and a number of emerging environmental changes. It involves defining the organization and its business, and thus the long-term objectives of that organization. The allocation of resources to the organization’s business activities is made on the basis of judgment of strategies that would make a substantial contribution to the achievement of long-term objectives. The strategies should, logically, also take into account the likely behavior of other businesses in any set of interlinked businesses in which the organization operates.

Exploring the definition and significance of strategic management

2. Key Concepts and Theoretical Foundations

Strategic Management: Defining Strategic Management and types of Strategy One of the most challenging problems facing management is the development of a strategic course of action that ensures a long-term sustainable competitive advantage. For these actions to be a source of superior performance, they must be directed at accepting or attracting some potential customers who see significant value or at being able to perform organizational activities more economically than its business rivals. In order for enterprises to achieve these performance objectives, resources must be made available to carry out specific actions by management. Some of these resources are human and physical capital; others, while not tangible, are things such as reputation, technology, and specific relationships possessed by the firm, or the brand equity that has been established by the company.

Various terms that we hear and use frequently in the management field will have different meanings, and different personnel might define them in various ways. Therefore, if we are to engage in successful study and application, a full understanding of terms, significance, and implications is necessary. An examination of key management terms helps lay the groundwork for a solid foundation.

3. Strategic Management Process and Models

The implementation phase of the strategizing process to which attention may properly now be turned primarily involves the design and execution of control systems through which managerial choices can be made more reality-based. Models are simplified representations of objects, systems, or phenomena, all of which often involve the use of symbolic systems and visualizing. Models operating on principles of economics place strategy squarely in the context of the multidimensional managerial task of guiding the industrial enterprise towards its long-term survivability within the limits imposed by macro-environmental forces and micro-environmental relationships of concern to decision-makers.

Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s managers in light of consideration of resources and an assessment of the internal and external environments in which the organization competes. The strategic management process is a consecutive flow for making strategy. Our discussion of the strategic management process has been divided into two main segments – steps involving environmental scanning and strategy formulation and the implementation steps. These segments can then further be divided into the sets of major activities described here. The first set of activities center on the “input” phase of strategic management.

4. The Importance and Benefits of Strategic Management

4.1 The Importance and Benefits of Strategic Management We have introduced strategic management by defining its meaning. It seems pretentious to promise untold success at this point by indicating the objectives of strategic management. However, the benefits referred to can be classified into several categories. The first set of benefits likely to be derived from strategic management practice is that senior management may have been given the tools that are necessary to evolve strategically related plans and have defined corporate targets for organizational achievement. This application will serve two purposes in a bid to meet the expectations of society: societal objectives and company commitments will match, and a mechanism for effecting that match will be established. Most importantly, the synergy of the organization and competitive environment will be guaranteed. Thirdly, strategic management facilitates capital refurbishment, plight, and flexibility while continuously reviewing progression towards long-term goals. The most significant point to observe in this context is that the flexibility and innovation will increase the share of the market and profits simultaneously, which is the point at which most corporations will eventually begin to stagnate.

This chapter has the following structure: firstly, definitions of the management concept are reviewed to capture its essence. It is, however, important to note at this stage that the modern concept of strategic management may disguise many misconceptions, over-expectations, and misunderstandings. Such problems arise mainly from long-term forecasting, a philosophical approach, and its relationship with other management concepts such as management by objectives and strategic planning.

It is the purpose of this chapter to define the concept of strategic management. This is because whenever management is the subject of discussion, it is important to have a clear understanding of the concept. Moreover, the importance of strategic management practice will be emphasized. The rest of the book is then devoted to the practical application of strategic management principles. It should also be mentioned at this stage that learning strategic management and obtaining practical implementation abilities should go together. The very important link between learning and the applications of strategic management principles should never be broken in order to increase the efficiency of this practice. In order to help the reader bridge the gap between theory (i.e. learning) and practice, real-life examples, in the form of cases, will be discussed throughout the book, emphasizing their implications for the decisions facing practicing managers.

5. Challenges and Future Trends in Strategic Management

Typically, at the theoretical level, evolutionary economics contributes to our understanding about the logic of the feedbacks among different layers in the process of industrial dynamics, i.e. the overall development of industries, which brought us to understand how sector reason changes in technological paradigms. What really distinguishes evolutionary economics from the microeconomic and sectoral tradition and theory is that in evolutionary concepts and reasoning play a notable role in conceptualizing technological change and industrial organization. Firstly, evolutionary economists add depth and substance to what is commonly called the Schumpeter-Metcalfe innovation process. Financial factors are also considered and problems relating to the financing of innovation are also covered. Secondly, evolutionary economists are at the driving forces of the location of innovative activities and industrial clusters debate, frequently discussing paths to the formation and functioning of systems of innovation. At the more specific level of cluster formation, the role of social costs and externalities plays a fundamental role. This is also a frequent issue in papers that try to reconcile the theory with empirical evidence. An evolutionary perspective is evident in a wide range of disciplines and interest areas. With its emphasis on innovation and technological change, the field is critical to policy makers interested in fostering growth and regional development.

The purpose of this book is to present some of the classic as well as the most recent theoretical and empirical evolutionary models available in the literature. To this end, each chapter presents several models designed to explore different channels and drivers of economic dynamics leading to industrial and technological change. These models are essential to our understanding of the long-term development of industries – and represent the cornerstone upon which much of evolutionary economics is based. Not presented in this book but conceptually important is the empirical case, which helps put theoretical models to the test and inspires further theoretical improvements and explorations. Overall, at both the theoretical and empirical level, a coherent body of public policies should be designed, effectively exploiting the pioneer work of evolutionary economists.