What is Strategic Management?

Strategic Management

Strategic Management has become one of the most important topics in the business industry. All the organizations are operating to attain a specific goal that is decided by the management. To achieve these goals, there should be a proper link between organizational activities and the organizational environment. Strategic management is creating and managing the link between the said parties to get a benefit for the organization.

Organizational strategic management concepts can differ from one organization to another. But there are several common facts any organization should consider when creating their strategic management objectives.

Strategy

A strategy is the long term direction of the organization to achieve advantages in the rapidly changing environment and configure the organizational resources and adjust their policies and procedures to fulfill the expectations of the organizational stakeholders. This can be considered as the game plan to win a better market share in the market.

This can be done by,

  1. Improving the business.
  2. Attracting new customers and create customer satisfaction.
  3. Facing the competition successfully.
  4. Achieving the organizations targets and objectives.

When implementing organizational strategies, there are three questions that every manager should answer.

  1. Where do we compete?
    an organization should identify its current position in the market and the nature of the competitor’s capabilities. It should have a proper understanding of the industry type and the nature of the business.
  2. How do we compete?
    The organization should have a proper plan in launching the product to the market and to face growing competition. They should have an understanding of achieving competitive advantage and growing the market share. A proper marketing plan should be implemented to expand the potential target market.
  3. How do we execute
    The organization should always have a proper execution plan for the product. They should know when to give discounts and other benefits and when to keep the prices in fixed status. The organization should be aware of what they are doing and what they are gaining out of that.

When creating various strategies for organizations, the management should be thoroughly educated about the internal and external environment of the organization. They should be capable of identifying the current situation of the environment and should be able to predict future changes that can happen to the organizational environment. Internal analysis can be done through SWOT analysis and the external analysis can be done through PESTLE analysis and Porter’s five forces analysis.

The organization’s vision, mission, strategic objectives and strategies can be used to conduct the internal analysis. These will provide a better and in-depth understanding of the reason for the existence of the organization and what the organization is trying to achieve throughout the time of existence.

External information can be obtained through the stakeholder reports, news and other sources related to the business. The internal environment and the external environment analysis is helpful for the organization in achieving a competitive advantage.

Three levels of strategy

1. Corporate-level strategy – this is concerned about the overall capacity or the organization and how the business is adding value to the organization as a whole. This included product or service diversity, geographical scope and how the resources are allocated between the different components of the organization.

2. Business-level strategy – This is concerned with how individual businesses should operate in their markets. Business-level strategies are mostly concerned about the issues in innovation, the necessary number of competitor moves.

3. Operational Strategy – This is about how the organization delivers effective and efficient business-oriented strategies. In many successful organizations, operational strategies carry out an important task in creating organizational strategies as they work more closely with the worker level employees. They are more knowledgeable and practical about the real business process.

Organizations should have a properly created strategy to identify possible risks. Strategic management helps the organizations to drive their organizations towards success.

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