Saturday, July 27, 2019
What is Strategic Management? (Part 1 of 4)
1 Definition of Strategic Management
Strategic management is the process where managers establish an organization’s long-term direction, set the specific performance objectives, develop strategies to achieve these objectives in the light of all the relevant internal and external circumstances, and undertake to execute the chosen action plans.
Strategic management steps:
• specifying an organization’s objectives,
• developing policies and plans to achieve these objectives,
• allocating resources to implement the policies
Therefore, we can see that strategic management is a combination of strategy formulation and strategy implementation. It is the highest level of managerial activity, usually performed by an organization’s Chief Executive Officer (CEO) and executive team. Strategic management provides overall direction to the enterprise.
Strategy formulation involves:
• doing a situation analysis: both internal and external; both microenvironmental and macro-environmental.
• concurrent with this assessment, objectives are set. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
• these objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.
This three-step strategy formulation process is sometimes referred to as :
1. determining where you are now,
2. determining where you want to go, and then
3. determining how to get there.
These three questions are the essence of strategic planning.
1 Strategy implementation involves:
• allocation of sufficient resources (financial, personnel, time, technology support)
• establishing a chain of command or some alternative structure (such as cross functional teams)
• assigning responsibility of specific tasks or processes to specific individuals or groups
• it also involves managing the process. This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary.
• when implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with (and/or conversion from) legacy processes.