Strategic Management
Strategic management is defined as a process of planning, organizing, directing and controlling the resources of an organization in order to achieve its predetermined goals and objectives. Strategic management involves an in-depth analysis of both internal and external environments of an organization. It is primarily concerned with building a sustainable competitive position in the market. The strategic management process consists of four distinct stages viz. Planning, Formulation, Implementation and Monitoring.
Strategic Planning
Strategic planning is a formal process of determining the desired course of action for an organization to achieve its desired objectives. It is the process of setting goals, determining resources needed to achieve those goals and developing plans for achieving those goals. It is a systematic way of analyzing the internal and external environment of an organization, developing the organization’s mission and vision statements, setting objectives and designing strategies. The strategic planning process involves examining the current situation, setting objectives, designing strategies, assigning tasks and resources, monitoring performance and reviewing results.
Strategic Formulation
Strategic formulation is an analytical process in which an organizations’ objectives and strategies are developed. It includes the development of an organization’s mission and vision statements, setting objectives, and deciding on policies and strategies to achieve these objectives. It also involves budgeting, scheduling and deciding on the tactics to implement the strategies. The process of strategic formulation is used to identify and analyze the external and internal environments of an organization, to assess the strengths and weaknesses of the organization, and to develop strategies for the future.
Strategic Implementation
Strategic implementation is the act of carrying out the strategies developed in the strategic planning process. It involves translating the strategies into operational plans, assigning responsibility for individual tasks and establishing feedback loops for continual monitoring and review. The implementation phase is essential for realizing the goals and objectives set in the strategic planning process. Without implementation, there can be no progress or success.
Strategic Monitoring and Review
Strategic monitoring and review is an important part of the strategic management process. It involves continual assessment of the organization’s performance against its objectives and strategies, and detecting any deviations that could jeopardize the successful implementation of the strategies. It also involves comparing the actual results against the expected results and making necessary adjustments, if needed. The elements of a successful monitoring and review system include a clear set of objectives, performance indicators, monitoring and review techniques, and corrective action plans.
The Benefits and Challenges of Strategic Management
Like any other business process, a successful strategic management process requires a number of important resources and commitments. While the benefits of successful strategic management that include competitive edge and enhanced performance of the organization are worth the effort, there are certain challenges associated with the process.
Benefits of Strategic Management
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Improved Decision-Making: Strategic management helps an organization reduce uncertainty, by providing an effective framework for decision-making.
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Resource Optimization: Strategic management enables an organization to identify and exploit synergies between its resources, leading to improved utilization of resources.
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Competitive Advantage: Strategic management enables an organization to develop strategies for achieving and sustaining a competitive advantage in the market.
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Improved Performance: Strategic management helps an organization improve its performance in terms of profitability, growth and sustainability.
Challenges of Strategic Management
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Complexity: Strategic management involves an in-depth analysis and understanding of the external and internal environment, making it a complex and time consuming process.
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High Cost: Strategic management requires resources such as personnel, technology and data, leading to a high cost incurred.
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Communication: Poor communication or lack of clarity among employees can lead to ineffective implementation of strategies.
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Uncertainty: The external environment is ever-changing, making it difficult to devise long-term strategies.
Strategic management is a formal process of determining an organization’s desired course of action in order to achieve its predetermined objectives. The strategic management process consists of four distinct stages: planning, formulation, implementation and monitoring. Strategic management enables an organization to identify and exploit synergies between its resources, develop strategies for achieving and sustaining a competitive advantage in the market, and improve its performance in terms of profitability, growth and sustainability. While the benefits of successful strategic management are numerous, the process is complex and time consuming, and also involves a high cost. Despite these challenges, strategic management is an essential part of any organization’s success and long-term growth.
