You must have come across numerous case studies of different businesses talking about how they successfully overcame their process-related challenges. But what is common among all of them? Their well-defined strategic management approach.
Strategic management is a popular concept among business owners and most firms understand its significance. Irrespective of their size, companies analyze their position and develop strategies to obtain financial and non-financial benefits. It helps meet the goals and vision of an organization, remain competitive, and survive all odds in the long run.
Strategic management can be defined as the procedure of developing and implementing plans that help an organization meet its objectives and goals. This might include formulating strategies, allocating resources, and planning the organizational structure. This type of management takes place at different levels like the leadership level and the departmental level.
The strategic management is focused around three strategy types:
The strategic management process involves strategy development, implementation and analysis. It comprises analyzing the current organization situations, developing plans to accomplish goals, and executing those plans. Let’s look at this entire procedure in detail below:
First, decide the short and long-term goals of your organization. Think about the individual, team, and department-level tasks. You must know the impact of these task accomplishments on the organization’s goals in the future before delegating responsibilities.
In this stage, information is gathered, scrutinized, and provided for strategic purposes. Evaluating the industry environment is necessary to be aware of the latest trends and competitors.
You will get a clear picture of the resources required to gain an edge over competitors. You must also continuously analyze your processes, employees, and resources to improve.
Strategies are created at business, corporate, and international levels depending on the finalized objectives. The decisions are made for the best use of available employee connections with suppliers, dealers, government, and consumers.
Strategies must help improve the company’s competitive position without resulting in huge expenses. The strategies should also not have negative legal, economic, social, or political consequences.
A strategy is worthless if not enforced promptly. This stage includes distributing resources, designing the organizational structure, developing systems, and managing human resources.
To put the organization’s chosen strategy into action, good communication and managerial skills are of utmost importance. These skills can ensure that all the departments readily agree to and work towards implementing new strategies.
The final step includes constant monitoring and preparing a remedial plan to improve the outcome of strategies. Managers must do a SWOT analysis to identify strengths, weaknesses, opportunities, and threats that may affect the organization. This stage is crucial for an organization to progress without obstacles.
Strategic management is usually implemented at a strategic level, and it is performed by the top management, directors, or C-suite executives. Some organizations have a specific department for strategy.
The style of strategic management followed in an organization is determined by the leadership. Further, it is also important for strategies to be implemented to follow up by executives. Creating just a strategy and not following how it has been executed at the grassroots level is not a sufficient activity.
The style of strategic management must be all-encompassing, from strategy creation to execution. A good style to follow is participative leadership, where leaders involve team members in the decision-making process.
Strategic management and planning include identifying business challenges, planning and executing strategies to solve these challenges, and improving business performance. Strategy analysts and managers use tools like SWOT and Scorecards in strategic management.
Strategic management is important to ensure that resources are allocated correctly at both the organizational level and department-wise. The initiatives taken under strategic management need to be planned for both the business at large and individual teams.
SWOT Analysis
SWOT analysis is a framework that assesses a company’s competitive position and creates strategic planning. It stands for strengths, weaknesses, opportunities, and threats. The SWOT analysis assesses the internal and external variables as well as the current and future situations.
A SWOT analysis is meant to be able to give you a practical, fact-based, and data-driven look at the advantages and disadvantages of a company, its efforts, or its sector. The organization should, therefore, avoid preconceived notions or grey regions and instead concentrate on real-life situations for the analyses to be accurate. Companies should instead refer to it rather than prescribe it strictly.
Balanced Scorecard
A balanced scorecard framework assists organizations to optimize their internal processes and thereby enhance their external output. It makes use of historical performance as a significant indicator and suggests various ways in which companies can make informed decisions for the future.
A balanced scorecard has four points: learning & development, company processes, customer perspectives, and financial data. Since the vision and strategy of a corporation are formed on these four components, it becomes important for the company leadership to analyze the information gathered through this scorecard.
Let’s look at some examples where strategic management has been implemented to meet the overall objectives of the company:
Apple’s Strategic Vision: Apple’s strategic management is deeply rooted in creating products which are both technologically advanced and beautifully designed.
Key Strategic Actions:
Takeaway: Apple’s strategic management highlights the significance of a clear vision, innovation, and its constant focus on improving the customer experience.
Airbnb’s Strategic Vision: Airbnb has disrupted the typical hospitality industry by using technology to connect hosts with travelers and provide unique accommodations.
Key Strategic Actions:
Takeaway: Airbnb’s strategic management highlights the power of disruptive innovation, user-centric design, and the significance of developing a strong community.
Strategic management is critical for achieving organizational goals while overcoming all obstacles.
Regardless of its sector and size, any company has numerous goals to achieve. These can be aimed at building industry leadership, international competitiveness, brand awareness, etc. Strategic management is crucial in successfully achieving all these goals.
A business requires optimal investment and dedicated employees for its growth. However, business conditions keep changing, and companies have little influence over these factors.
Hence, there is no guarantee of profits in the future. Strategic management can protect companies from risks and employees from losing their jobs.
Digital transformation of businesses is happening at a rapid pace worldwide. Customer demands are increasing, and innovations are being introduced constantly. Successful adoption and implementation of these technologies can be challenging and risky.
Strategic management helps organizations remain competitive as they integrate new processes and manage operations. It also helps in upskilling employees by enabling them to learn about new technologies.
In today’s world, employees and consumers give a lot of value to an organization fulfilling its social responsibilities effectively. Strategic implementation can ensure that the company completes its planned tasks efficiently.
Fulfilling corporate social responsibility (CSR) is not only mandated by law but can also act as a unique proposition for an organization and set it apart from its competitors.
When you see old and new industry players profit and grow, you are quite likely to formulate your strategies and implement them. Strategic management helps businesses keep track of global trends and prevents them from becoming obsolete.
There are different types of strategic management that an organization can use for formulating and implementing strategies aligning with their business goals.
These types follow a certain approach for developing plans based on the business requirement. Let’s discuss the major 5 types of strategic management as elaborated below.
1. Linear Strategic Management
Under this, the organization identifies multiple risks and opportunities depending on the internal and external business environments. Once identified, the organization implements strategies suitable for mitigating risk-grabbing opportunities.
Organizations using this react to internal and external changes that do not have any major effects on the products and services offered.
2. Adaptive Strategic Management
Under this, the organization evaluates the internal and external business environment for possible risks and opportunities.
Once done, it creates strategies that could help it adapt to the changing business environment. Under this, they follow the concept of dynamic adaptation where organizations need to adjust to the current business environment.
3. Interpretive Strategic Management
The organization focuses on understanding and implementing its mission and goals. With it, the organization continuously evaluates its strategy’s performance to determine whether the strategies are aligning to its objectives.
Majorly, these strategies are meant to meet the needs of customers, employees, and stakeholders.
4. Expressive Strategic Management
With this type, emotionally intelligent strategies are created and implemented, considering their stakeholders’ opinions. Following this type helps businesses understand what their stakeholders think about their business and how their opinions can be used to shape plans.
5. Transcendent Strategic Management
Under this, the company formulates and implements strategies for its long-term objectives. It considers the financial performance, environmental impact, and customer satisfaction to create strategies. By following this type, businesses can increase their company’s value in the long run.
Conclusion
Strategic management is an indispensable process that helps organizations be effective in the achievement of their goals and be capable of adapting to the dynamic environment of business. Through strategic planning, implementation, and even continuous monitoring, organizations adapt to be competitive and effective.
Whether it’s through operational, business, or transformational strategies, this is always centered on ensuring that resources and actions fit into long-term objectives. It can be said that successful examples like Apple and Airbnb reflect the benefits of strategic management in innovation, customer experience, and sustained growth.
More importantly, it serves as a backbone for informed decision-making, risk management, and collaboration at all levels within an organization.
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