Today people from around the world ask, What is strategic management and why is it important? Strategic management is an ongoing continuous process that’s used to measure and provide direction for the organization. Secondly, it shows how the organization operates and relates to the external environment. Further, it deals with factors that affect its progress, opportunities, and process to attain expected results.
The strategy helps an organization stay on course, focused, and formulate proper competitive strategies and working methods. Then to adapt at every stage of the business cycle, from entry, maturity, and decline of the business cycle for any product or market in which the organization functions.
It helps leaders to come up with a structured plan on how to deal with the objectives. Strategic plans and processes of management reflect the organization’s overall performance and how it interacts with the external environment. Any good strategic management program must be aligned with the organization’s corporate philosophy, vision, mission, and objectives.
Strategic Management Process
The Process of strategic management involves upholding a new culture that introduces a competitive edge over competitors of any business or organization. It’s a complex process that involves edifying the organization’s overall performance. It links its strategic mission, vision, and goals to the process of change to improve performance. Then finally introduces an improved version of the vision that improves future objectives and goals.
The main different types of strategy for management are business strategy, operational and transformational business strategy. Business strategy refers to the process of systematically evaluating the process and objectives of the organizations. Then prescribing solutions to problems hindering the process of attaining the goals. Operation strategies are those applied in the process of normal business operations to see changes. The transformational business strategy changes the old way of doing things to newly proven methods that will work.
Strategic Tools and Techniques
Strategic planning or management is a process of diagnosing the need for change in the organization. It then comes up with ways to deal with these problems. Kurt Lewin’s change model proposes the 3 stages of change, which include freezing, unfreezing, and refreezing the old ways of doing things. Strategic management utilizes SWOT analysis to measure the organization’s strengths, weaknesses, and threats. Which then is combined with the PESTEL tool to effectively evaluate political, economic, social, ecological, and legal factors affecting the organization.
Importance of Strategic Management
The main importance of strategic planning and management is to provide direction for the organization. Achieving competitive advantage over the competition and ensuring the organization’s programs are operating as expected. This is used in any country, despite location and type of organization and administration. The purpose of strategic management is to outline the process of how the objectives will be attained. In administration and management, this concept outlines actions and goals that help any organization to archive a competitive advantage.
Example of Strategic Management
There’s a wide range of strategies, which may include a business strategy to attain certain required results and desirable outcomes. Technology strategy has been used even in government-owned institutions due to the introduction of new public management. Most companies have learned to compete with changes in technology. The production stage is useful for the diversification process of products and analysis of sales to know which one works and which does not.
Human resources strategy targets to balance organization output and demand for products. This is important to know how many people are needed for a certain type of work. Also, how goals are met, either in the long run or short run. A marketing strategy is needed for every business to thrive. Companies must make sales. If your firm is not making sales, there’s a likely hood of going through bankruptcy and closure. Hence most newly-established firms and companies set targets to be achieved within the first six months of being operational. Finance strategy helps to make proper measurable decisions to avoid wastage of capital and investments. Also, these are costly for the organization. Finally, through financial strategic planning, managers come up with ways of spending income, both in the short and long run.
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