Definition: The term ‘strategic management’ is used to denote a branch of management that is concerned with the development of strategic vision, setting out objectives, formulating and implementing strategies and introducing corrective measures for the deviations (if any) to reach the organization’s strategic intent. It has two-fold objectives:
- To gain competitive advantage, with an aim of outperforming the competitors, to achieve dominance over the market.
- To act as a guide to the organization to help in surviving the changes in the business environment.
Here, changes refer to changes in the internal environment, i.e. within the organization, introduced by the managers such as the change in business policies, procedures etc. and changes in the external environment as in changes in the government rules that can affect business, competitors move, change in customer’s tastes and preferences and so forth.
Strategic Management Process
- Defining the levels of strategic intent of the business:
- Establishing vision
- Designing mission
- Setting objectives
- Formulation of strategy
- Performing environmental and organizational appraisal
- Considering strategies
- Carrying out strategic analysis
- Making strategies
- Preparing strategic plan
- Implementation of strategy
- Putting strategies into practice
- Developing structures and systems
- Managing behavioural and functional implementation
- Strategic Evaluation and Control
- Performing evaluation
- Exercising control
- Recreating strategies
Strategic Management is all about specifying organization’s vision, mission and objectives, environment scanning, crafting strategies, evaluation and control.
Importance of Strategic Management
- It guides the company to move in a specific direction. It defines organization’s goals and fixes realistic objectives, which are in alignment with the company’s vision.
- It assists the firm in becoming proactive, rather than reactive, to make it analyse the actions of the competitors and take necessary steps to compete in the market, instead of becoming spectators.
- It acts as a foundation for all key decisions of the firm.
- It attempts to prepare the organization for future challenges and play the role of pioneer in exploring opportunities and also helps in identifying ways to reach those opportunities.
- It ensures the long-term survival of the firm while coping with competition and surviving the dynamic environment.
- It assists in the development of core competencies and competitive advantage, that helps in the business survival and growth.
The basic purpose of strategic management is to gain sustained-strategic competitiveness of the firm. It is possible by developing and implementing such strategies that create value for the company. It focuses on assessing the opportunities and threats, keeping in mind firm’s strengths and weaknesses and developing strategies for its survival, growth and expansion.