Strategic management is the ongoing monitoring, planning, analysis and assessment of all that is necessary for an firm to meet objectives and goals. Changes made in the business environment require firms to constantly assess their strategies for success. The strategic management process helps firms take stock of their present situation, chalk out strategies, deploy them and analyze the effectiveness of the implemented management strategies.
Five stages of strategic management process
There are many schools who taught on how to do strategic management, managers and academics have developed numerous frameworks to help in knowing the strategic management process. In simple words, the process includes five phases:
- Estimating the organization’s current strategic direction.
- Analyzing and identifying internal and external weaknesses and strengths.
- Develop action plans
- Implement action plans
- Evaluating to what degree action plans have been successful and making changes when required results or target are not being accomplished.
Levels of Strategy
Strategy is the heartbeat of every business. All businesses have rivalry companies, and it is strategy that allows one firm or business to rise above the others to become successful. Even if you have a great idea for running a business and you also have a good product, you are unlikely to go anywhere without having strategy. There are three levels of Strategy. They are:-
- Corporate Strategy
- Business Strategy
- Functional Strategy
This is the first level of strategy in the business world which is at the ‘top of the heap’. Before you go far away, more specific strategy, you need to outline a basic strategy that is going to oversee everything else that you will do. At a most basic level, corporate strategy will outline exactly what type of businesses you are going to capture, and how you plan to enter and win in those markets you will be capturing.
Once you are done with corporate level strategy the there will be need of business level strategy. In other words, the strategies that you make at this level are slightly more specific and they usually relate to the smaller businesses within the large firm.
This is last but the most important part because all the work done at this level is practical. This is the day-to-day strategy that is going to keep your firm moving in the right direction. This level of strategy is perhaps the most important of all, as without a daily plan you are going to be stuck in zero while your rivalry companies continues to drive forward. As you work on putting together your functional strategies, remember to keep in mind your higher level goals so that everything is coordinated and working in the direction of achieving the organisational goal.
Features of Strategic Management
Strategies is a product of the developed conscience and intellect that we humans proudly employ and possess. Strategic management implies the usage of the heart as well as brain and is not a routine ever continuing process. It requires great experience and skills to be alloted effectively and needs full application of one’s conscience.
The future is uncertain. We cannot predict what will happen in future but on the basis of the information that is available to us we will be able to presume some things about the future. For example, a discovery that the item XYZ causes cancer can permit us to create a very reasonable presumption that the item XYZ is going te be illegal in the near future. This presumption thus permits us to not make any investment in something directly associated to XYZ.
Dependent on Personal Qualities
The above two considerations make it amply clear that Strategic Management moreover depends on the personal qualities of the managers occupying the high level positions. These personal qualities together with skills and experience obtained over years of employment and observation cannot be imparted by coaching or training classes and needs practical exposure for extended periods of your time unless the person is born with the talent of strategizing (which is rare).
Goal Oriented Process
The process of Strategic Management is a goal oriented process. The process is done with the intention and goal of analyzing the assorted components through SWOT analysis and other tools to develop a thought or strategy that effectively permits the business to maneuver itself around each hurdle and make use of its strength.
Facilitates decision making
Strategic Management plays a integral role in making vital decisions. Whenever a manager has to make a decision he has to admit the bearing of such a decision on the overall strategy and the business’ trajectory. Thus the strategies developed acts as a guide to make accurate and efficient decisions.
Strategic Management is the first step in any business. The strategies that the business has to apply in its activities is developed at the first stage itself and only after the creation of the strategy that other processes commence by making the strategy as its basis.
Strategic Management is a pervasive process. The core strategies are formulated for the entire business by the top level management and strategies to achieve the overall goal so laid down by the top level management is developed through the assorted lower business units.
Allows for Risk Management
It can be considered as a subset or a specific form of strategic management. In risk there are the chance of a future loss and risk management involves formulating various strategies to combat the risks making risk management a form or variety of strategic management. Strategic management in this form allows for eliminating and identifying the risks exhibit by various hazards to the business.
The development of strategy is not a simple process and it needs creating the best out of often very restrictive situations. This drives innovations and permits managers to approach issues from different angles and solve issues more efficiently.