Strategic management is a widely practiced approach to business management that has been shown to reap impressive rewards fiscally and in terms of strengthening a brand. As the name suggests, it is a management style that deploys a range of strategies aimed at ensuring a business’s sustainability, growth and long-term success. Elements of strategic management include making plans for the future, monitoring the company’s status and progress, and using analysis and assessment techniques to further refine the strategies in play.
Strategic management can be a way to effectively respond to a constantly changing business environment. Adaptability is essential, but it should always be in the service of maintaining and developing a business’s core values and goals. Having a clear definition and understanding of these is the first step in any effective strategic management process.
A sense of purpose
Businesses use strategic management not just to increase profits, market share, and shareholder value, but also to give the company a definite and enduring sense of purpose that is shared by directors and employees alike. Strategic management is a continuous process; it’s a holistic method and point of view that looks to the future and constantly evaluates and analyzes the organization’s strengths and weaknesses to create greater efficiency and competitive advantage in both long-term and short-term scenarios.
As a key component of business management, strategic planning requires a clear awareness of an organization’s mission and a strong vision of where it should be in ten, 20, 50, or 100 years. The strategies used to realize the mission and the vision must involve resource allocation, tactical decision-making and active engagement with shifting business conditions. In this regard, strategic management can be summarized as always keeping the big picture in mind without neglecting the finer details. However, conceptualization must always be backed up by action.
Today, a full understanding of the principles and application of strategic management is essential for any business leader or CEO. Working professionals can study for a master’s in Business Management online that will teach them the skills needed to progress up the career ladder and become effective modern managers. At Aston University Online, the MSC in Business & Management course focuses on managerial thinking, financial expertise and strategic decision-making. These techniques are suitable for a wide range of roles and environments.
Strategic management experts recognize five key stages to any effective plan. The first phase involves an assessment of the current strategic direction of the company. The second entails identifying and analyzing its strengths and weaknesses, both internal and external. The next steps involve the creation of one or several action plans and then their implementation. Finally, the results are evaluated, and amendments are made to the action plan(s), if necessary, to fully achieve the desired goals.
This is a cyclical process that can be summed up as assessment-analysis-action, before returning back to assessment. With each cycle, the strategy is refined and adapted to current conditions.
For strategic management to be effective, everyone in an organization needs to be on the same page. This means keeping channels of communication open and free of the “static” that can be generated by unequal relationships, overly complicated hierarchies or poor company morale. For example, if an employee is afraid to pass on bad news and only tells the boss what they think they want to hear, their communication is not effective and strategic decisions will be flawed. This is why management and team leaders should find ways to get to know their employees.
An organization’s activities must be aligned with its core values as well as the overarching strategic management plan. If everyone isn’t pulling in the same direction, even the best efforts to strategize can be hobbled or even derailed entirely. A positive corporate culture is essential.
Coordinating different departments
In any large organization, different departments will have different goals, methods and strategies, but they should all line up under the overall strategic management umbrella. Cross-functional business decisions must also be aligned with strategic plans so that everyone is working toward the same ultimate end.
Decisions that are made in one department may impact the activities of another. Strategic management takes this into account to ensure the smooth running of the whole operation. Think of the company as a complex machine of multiple moving parts that each serve a separate function but complement one another rather than causing friction.
The evolution of strategic management
Strategic management as we understand it dates back to the mid-to-late 20th-century thinking of individuals like author and academic Peter Drucker. Drucker’s 1954 volume, The Practice Of Management, was the first text to integrate all aspects of running a business into one coherent, unified guide. Drucker was one of the first economists to put people before goods, recognizing that a successful business must first create its customer and then continue to respond to that customer’s changing needs and desires.
Around the same time, Philip Selznick introduced the idea of Distinctive Competence, which led to the development of tools and methods for assessing and analyzing the strengths and weaknesses of an organization in relation to its environment.
The Five Ps
In 1987, management scientist Henry Mintzberg defined five types of strategies that can be used in business. He called these the five Ps.
- A plan is a strategy for a particular situation.
- A ploy is a strategy to outwit a competitor.
- A pattern is a strategy based on consistent behavior.
- A position is a strategy that defines the relationship of the organization with its environment.
- A perspective is a strategy based on a particular worldview and philosophy.
All of the five Ps can be used in conjunction with one another.
Businesses use strategic management to achieve long-term goals as well as short-term aims. It is a way of adapting to an ever-changing business environment while staying ahead of competitors and sustaining growth. Organizations with a sense of purpose and a clear vision have a stronger brand in the marketplace, and any strategies need to be a good fit with their vision and organizational culture. What works well for one company may not be effective in another, so it is important to develop a tailored solution.
By taking all applicable factors into consideration, strategic managers can create a unique market position and play to their strengths to outrank competitors.