Strategic management is an organization’s way of managing its available resources to achieve its set goals and objectives. It involves a process of setting objectives according to the vision and mission of the organization, analyzing the market and competitor environment, evaluating the internal and external business environment, deciding the strategies that should be used, and ensuring that the successful execution of strategies across all the functions of the organization.
Strategic management can be divided into two elements.
Prescriptive approach – Prescriptive approach is a strategic management method that outlines how the management strategies should be developed. This is described as doing the things ‘by the book’. In simple terms, the prescriptive management approach is about facing the challenges according to the strategies recommended by experts.
Descriptive approach – This strategic management approach focuses on how the strategies should be put into practice. It can be explained as learning by experience. The business can use its past experiences to make strategic decisions under this approach.
In the business culture, the employees’ skills ad competencies along with the organizational structure take high importance as features that can create an influence in achieving the set goals and objectives of the organization.
When making strategic management decisions, it is disadvantageous for organizations with inflexible management structures as the business environment is often changing and developing. Inflexible management structures can act as a barrier between strategic development and implementation along with the changes in the business environment. It can make it difficult for the manager of the business to efficiently take actions to meet organizational objectives as well as to survive in the changing business environment while facing increasing competition. This can be a threat for the business in achieving a competitive advantage in the market.
Strategic management is considered a process of taking stable and efficient steps to achieve organizational goals and objectives. It involves the most valuable asset of the organization: its employees. Every step of the strategic decision-making can create an impact on its employees. On the other hand, employee behavior has a direct impact on the success of strategic management decisions. The employees’ approach towards the strategic management decisions can create an impact on the managers’ decision on the strategic management approach as well.
The upper management of the organization is ultimately responsible for the implementation of the organizational strategy. However, the strategies are often implemented by the lower-level management and the employees through their ideas and actions.
In practical business environments, the higher-level managers usually make strategic management decisions by focusing on past strategies and by examining the business environment as a whole. This knowledge is used to develop future business strategies and to help to guide the employee behavior to ensure that both the management and the employees of the organization are focused on moving forward as a team for a common goal. Apart from the top management, many organizations have several employees who are assigned to strategy. This is done to obtain the employee perspective on the management strategies to ensure the success of the management decision. This helps the organization to obtain both inward and outward perspectives in making strategic management decisions.
Importance of Strategic Management
Strategic management allows the business organization to thoroughly analyze its operational environment. They usually follow the analytical processes such as SWOT analysis for internal and external business environment analysis, or simply follow the general guidelines given by the strategy experts.
Based on the organizational structure, the business may choose its strategic management approach and work towards achieving the goals and objectives. Strategic management works as a key factor for the organization to identify its true potentials and to identify the opportunities in the business environment. It is the decision of the management of the business to take the maximum advantage of these opportunities and drive the business activities towards the vision and mission attainment.