What Is Strategic Management?

In the article, you will learn what a strategic management system is, how it appeared and why it is needed. And why without a strategy any business is doomed to failure, and with it – to success and prosperity.

Strategic Management System: What Is It and Why Do Companies Need It?

Strategic management is the formulation and implementation of the main goals and initiatives taken by the company’s management on behalf of its owners based on an analysis of resources and an assessment of the internal and external environment in which the organization operates.

Strategic management is also called strategic management, as it provides the overall management of the company as part of the implementation of the strategy. It is also associated with a whole range of activities necessary for the effective operation of the company: planning, environmental analysis, resource accounting, control, and regulation.

What other information should be included in the strategy?

    1. The strategy should contain detailed information so that any employee of the company can easily understand what he personally must do to achieve the overall goals of the company.
    2. Each employee should easily find the answer to the question of why his personal result is necessary to achieve a common goal. The employee must understand not only what exactly he should do, but also why he should do it. Without this, there is no involvement of employees and their commitment to the company.
    3. The strategy should contain a complete detailed plan broken down into stages – what needs to be done to achieve intermediate results and the overall goals of the company. When people see a complete list of tasks that need to be completed to achieve a goal, they often find missing steps in it. This can significantly speed up implementation and eliminate annoying errors.

The Main Stages of Strategic Management

Among the main stages of strategic management are:

      1. Determination of the scope of business and development of the purpose of the firm.
      2. Transformation of the purpose of the company into private long-term and short-term goals of the activity.
      3. Determination of the strategy for achieving the goals of the activity.
      4. Development and implementation of the strategy.
      5. Evaluation of activities, monitoring the situation, and the introduction of corrective actions.

Besides, the strategic decisions are most often based on the intuition and experience of the Strategist, since it is impossible to logically calculate all the possibilities and options for the development of a competitive situation even in a military confrontation. To expand the experience/knowledge of the Strategist, it is possible to involve “advisors”. However, either the responsibility and initiative remain with the Strategist, or the “strategic planning process” turns into bureaucratic procedures and loss of initiative in competition.

Integral Parts of the Strategic Management

It should be noted that the human factor begins to play an increasingly significant role in changing conditions. Operations are clearer and easier. It is practically impossible to carry out strategically effective changes within the framework of the current activities of the company. Therefore, in most cases, managers try to limit themselves to local changes, spending significantly more time and effort on operational activities than on strategic ones.

Strategic management consists of:

    • Analysis of the external and internal situation;
    • Formation of the mission and goals of the company;
    • Selection and development of strategy;
    • Company portfolio analysis;
    • Designing the necessary organizational structure;
    • Choice of the control system;
    • Determining the company’s policy in various areas of its activity.