What is Strategic Management?
Strategic management is the strategic use of a business’s resources to reach company goals and objectives. Strategic management requires reflection on the processes and procedures within the organization as well as external factors that may impact how the company functions.
Chartered Business Administrator – ChBA® (USA)
The process of strategic management should guide top-level actions and decisions. Companies of all sizes and in all industries can benefit from the practice of strategic management.
Strategic management includes setting objectives for the company, analyzing the actions of competitors, reviewing the organization’s internal structure, evaluating current strategies, and confirming that strategies are implemented company-wide.
Strategic management is the sum of strategic planning and strategic thinking. Planning the Strategic is the identification of achievable goals. Strategic thinking is the ability to identify the needs of the organization to achieve the goals identified through strategic planning.
How does strategic management work?
It can be either prescriptive or descriptive. Prescriptive means developing strategies in advance of an organizational issue. Descriptive strategic management means putting strategies into practice when needed. Both methods of strategic management employ management theory and practices.
While upper management is responsible for implementing strategies, ideas, goals, or organizational challenges that can come from any member of the company. Many companies employ strategists whose job is to think and plan strategically to improve company function.
There are four steps to strategic management:
1. Analysis
Before planning a new strategic process, you must evaluate the current process to achieve your goal. What is working? and what is not working? … also, What input from organizational stakeholders can you gather?
This is the time to answer any questions that will help solidify the necessary elements of the strategic plan. A SWOT analysis, or identification of strengths, weaknesses, opportunities, and threats, is a useful tool.
2. Formation
Once you have the information you need, it is time to create an action plan for reaching the goal. Make sure the steps are clear, focused, and directly related to the goal. Prepare easy-to-understand implementation guidelines if the process or procedure will impact many people within the organization.
3. Execution
Follow the steps outlined in your strategic plan. Make sure that all stakeholders are implementing the plan as designed for maximum efficiency.
4. Evaluation
Evaluate the final product. Important questions to ask include:
- Did you achieve your goal?
- Was the process implemented appropriately company-wide? Based on these responses, can reflect and revise as needed.
- What is the purpose of strategic management?
It offers many benefits to companies that use it:
- Competitive advantage: Strategic management gives businesses an advantage over competitors because its proactive nature means your company will always be aware of the changing market.
- Achieving goals: Strategic management helps keep goals achievable by using a clear and dynamic process for formulating steps and implementation.
- Sustainable growth: Strategic management has been shown to lead to more efficient organizational performance, which leads to manageable growth.
- Cohesive organization: Strategic management necessitates communication and goal implementation company-wide. An organization that is working in unison towards a goal is more likely to achieve that goal.
- Increased managerial awareness: Strategic management means looking toward the company’s future. If managers do this consistently, they will be more aware of industry trends and challenges. By implementing strategic planning and thinking, they will be better prepared to face future challenges.
For example, Furniture Company Wood’s Fine Furnishings is preparing to introduce a new line of kitchen tables. They decide to implement strategic management to ensure that the product release goes smoothly, efficiently, and consistently across all of their retail locations.
Analysis
In the past, Wood’s Fine Furnishings has suffered from inconsistent marketing and incorrect shipping costs with the release of new products in its multiple retail locations. Before the release of their new kitchen table line, they decided to run a SWOT analysis to see how they can improve the process.
- Strengths:
- Quality product
- Several locations for ease of purchase
- Flat shipping rate
- Weaknesses:
- Poor communication between store managers and between store employees
- Shipping rate applied multiple times at some stores
- Inconsistent marketing strategy
- Opportunities:
- Unified marketing
- Transparent fees
- Threats:
- Wood’s Fine Furnishings’ main competitor released a line of kitchen tables last quarter
Formation
Using its SWOT analysis, Wood’s Fine Furnishings creates a strategic plan for the release of its kitchen tables. It includes providing consistent marketing collateral, both physical and digital, to all retail locations. It also includes sending a representative to each retail location to explain how to correctly apply the shipping rate to all purchases. Finally, it sets up an internal messaging system so store managers can communicate with one another quickly and easily about challenges and successes in their stores.
Execution
However, one month before the release of the new kitchen tables, the marketing team provides the marketing collateral to all retail stores. So every store is given the same guidance on how to implement the marketing items effectively. Two weeks before the launch, store managers are trained as a group on the new messaging system.
So, The trainers field questions and make sure every manager has the messaging service set up on their company cell phone and office computer to be accessible at all times. One week before the launch, a representative from company headquarters trains every retail employee on how to appropriately apply shipping costs to a sale. Managers are also present to make sure this process is carried out correctly with customers.
Evaluation
Wood’s Fine Furnishings reviews the data from their kitchen table release one month after the first day of sales.
Then, They find that the marketing plan drove consumers to the retail location closest to them to see the tables in person. The internal messaging system was under-utilized by most managers, many of whom did not like customers seeing them on their phones while out on the floor. There were no issues with shipping costs during this release. The strategic managers take this data and use it as they begin to plan for their next new product release.
It can help companies reach their goals. It ensures the steps necessary to reach a business goal are implemented company-wide. In this article, we will define strategic management, explain how strategic management works, discuss the purpose of strategic management and provide an example of strategic management.
