Businesses and companies use strategic management approaches for managing organizational resources in order to achieve their goals and objectives. It involves the company’s internal and external evaluation of the processes and factors that are impacting its functions and operations. In fact, strategic management helps all types of companies regardless of their size. Today, we’ll discuss what is strategic, how strategic management works, types, processes, importance, and benefits of strategic management.
What is Strategic Management?
Strategic management is the process of managing a company’s resources in order to achieve its goals and objectives. It comprises evaluating a company’s strategies, internal analysis, studying the competitive environment, and setting up goals and objectives. However, it makes sure that the management applies the strategies across the organization.
How Strategic Management Works
Various schools of thoughts approach strategic management differently. For instance, the focus of the descriptive approach is how the company implements the strategy in practice. The focus of the prescriptive approach on strategic management is how the company develops its strategies.
However, various schools of thought differ on the development of strategies. Whether you follow the analytic approach which accounts for all the opportunities and threats, or you simply follow the general guidelines.
When it comes to achieving the goals and objectives of the company, the organizational structure, competencies of employees, and business culture all are important. It’s difficult for fixed companies to grow in the changing business world. However, when you put barriers between implementation and development of strategies, then it would be difficult for managers to check whether they have achieved their objectives or not.
The responsibility of the top management in an organization is to develop strategy, and it’s the lower management who spark the ideas for strategies. In fact, many devoted employees play an active role in the development of the strategy, instead of relying on the CEO for ideas and guidance.
Process of Strategic Management/What is strategic management?
Strategic management involves various frameworks and approaches in order to implement strategies. Some of the general steps in the process of strategic management are as follows;
Identification means assessing the direction of the company in the first stage of strategic management. It also comprises assessing the company’s strategic direction, mission, vision, and overall goals. However, you analyze the company’s current functions, processes, and operations, and then it helps the company to achieve its goals.
While evaluating the company’s current processes, then you should check what things are working, and whatnot. What types of information you’re getting from the company’s stakeholders. You should find the answer to all the questions that would help you to cement various elements of the strategic plan. Swot analysis is a very good tool to recognize the strengths, weaknesses, opportunities, and threats of the company.
You should develop an action plan to achieve your goals after collecting the needed information. You should make sure that your steps are clearly focused and relevant to the goals. Therefore, you should create implementation guidelines, if the process would affect many people in the company.
You should implement the steps that you have created in the formation stage. While doing so, you should ensure that the team is applying it in such a way to produce maximum efficiency.
You should evaluate and assess the final product with the following questions; have you achieved your objectives and the team implemented the strategy appropriately? Answer to these questions would tell whether you should revise the strategy or not.
Types of Strategic Management
As we know that you can approach SM differently, some of its main types are as follows;
Swot analysis comprises four elements; strengths, weaknesses, opportunities, and threats. It provides you an opportunity to analyze a company internally and externally. However, strengths and weaknesses are the internal factors, and opportunities and threats are external factors outside the control of the company.
While conducting swat analysis, you should keep in mind that the strengths and opportunities are the positive factors, and weaknesses and threats are the negative factors.
A balanced scorecard strategy allows you to focus on those parts of the business that needs improvement by dividing the performance assessment into four areas. We can call those areas legs, and they’re as follows;
- Financial Data
- Perspective of Customers
- Business Processes
- Growth & Learning
The strategy allows you to generate reports timely and it comprises all the statistics relevant to the growth of the company.
Benefits of Strategic Management
Some of the main benefits of SM are as follows;
Strategic management allows you to perceive the future of the company. If the management uses SM techniques consistently, then it would give them an insight into the trends and challenges. However, when they follow strategic thinking and planning, then they can face future challenges.
SM makes it necessary for the entire organization to communicate and achieves goals. When every employee of the company is on the same page, then they can achieve goals.
SM increases the efficiency, growth, and performance of the company which you can manage.
Strategic management allows you to develop such goals that you can easily achieve them. It requires you to develop clear steps, follow the process, and execute the strategy.
SM offers you a competitive edge over competitors by giving you an insight into the changing market conditions.
What is the example of strategic management?
For instance, a big company wants to achieve its goal of increasing online sales. In order to reach its objectives, it develops a SM strategy, shares it across the organization, and apply it in different units and department of the company. Most importantly, it links the company’s goals with the employees’ goals. If the company executes the strategy across the organization by following all the steps, then it would reach its goals.
Why strategic management is significant?
SM is important because of the following reasons;
- It helps to specify the operational areas of the company that needs improvement
- You can either follow an analytical process or general guidelines,
- It also allows companies to follow the description approach or descriptive approach
What is strategic management?
SM is the process when you set up a company’s objectives, procedures, and goals so that the company could be competitive. It allows you to manage resources and deploying staff, and it comprises the company’s internal analysis, strategic evaluation, and execution of the plan across the company.
Conclusion: What is Strategic Management?
After an in-depth study of what is strategic management, types, process, significance, and benefits, we’ve realized SM is applicable to all types of businesses and companies. if you want to apply it in your organization, then keep in mind its types, approaches, and evaluation system and implement it according to your company’s needs.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.