Strategic Management Definition, Meaning

Table of Contents:-

1. Definition of Strategic Management
2. What is Strategic Management?
3. Meaning of Strategic Management
4. Strategic Management Meaning
5. Strategic Management Definition
6. Define Strategic Management

Definition of Strategic Management

Strategic Management effectively manages an organisation’s resources to achieve its goals and objectives. This process involves setting objectives, analysing the competitive environment, and evaluating the internal organization. Effective strategic management is used to assess strategies and can be used to ensure that they are rolled out throughout the organisation.

Strategic management involves the identification of opportunities and threats that an organisation may encounter internally and externally or from its competitors. Effective strategic management requires analysing both external and internal factors in detail. 

The theoretical frameworks of strategic management are categorised into different schools of thought, with two primary approaches: prescriptive and descriptive. The prescriptive approach to strategic management defines a structured and systematic strategy development process. In contrast, the descriptive approach focuses on real-life practices and experiences of firms, as well as strategies that have been implemented. 

What is Strategic Management?

Top management manages the strategic direction, enabling an organization to succeed and gain a competitive advantage. Their responsibilities include key activities such as Vision and Mission Development, External Relations and Environmental Scanning, Strategic Planning, aligning employees with organizational objectives, Decision Making, and Performance Monitoring and Control. Top management adapts the organization’s strategy and operations to meet the demands of a dynamic environment for sustained success.  

Business culture, employee skills and competencies, and organizational structure influence an organization’s ability to achieve its objectives. Inflexible companies may find it challenging to succeed in a changing business environment. Many times, managers may face several challenges while evaluating the achievement of goals, mainly when there is a disconnect between strategy formulation and execution.

The senior management of an organization sets long-term goals, formulates strategies to achieve goals, allocates resources effectively, and oversees the execution of plans, developing and implementing the strategic direction and performance of employees to ensure organizational success. 

Many times the lower-level managers and employees are influenced by the actions and ideas of the organization’s strategies. An organization may have many employees devoted to implementing strategy rather than relying on the CEO.

Previous strategies provide learning opportunities for organizational leaders, who primarily concentrate on environmental investigations. By applying knowledge, outcomes, successes, and failures derived from past strategies, managers can effectively guide employees to contribute towards shaping the organization’s future strategies, driving progress and success throughout the entire organization.

Meaning of Strategic Management

Strategic management refers to the systematic and iterative process of developing and implementing organisational plans. It enables an organization to evaluate its internal and external business environment.  Managers use this process to help an organisation establish a strategic vision, define objectives, and resource allocation. This process also includes planning organizational structure and developing and executing strategies in alignment with the organization’s goals.

Strategic management aims at achieving a sustained competitive advantage, outperforming competitors and achieving a strong position in the entire market. Additionally, it evaluates, guides and adjusts the organization to changes in the business environment. 

Strategic Management Meaning

Strategic management establishes the objectives, develops policies and plans to achieve those objectives and allocates resources to implement the plans effectively within an organisation. 

Strategic management is the highest level of managerial activity, usually performed by top executives with the help of the executive team. It provides direction to the whole business. Ten schools of thought in strategic planning have been identified and categorized into three groups by Mintzberg, Ahlstrand, and Lampel (1998).

The term strategy refers to the presence of instability in the environment. If the environment is static then we need to develop and stick to a single plan.

The world is evolving at an exceptional rate. Alvin Toffler’s book “Future Shock,” published in 1970 highlighted a trend toward accelerating rates of change in society. He explained how social and technological norms experience shorter lifespans with each passing generation. He raised concern about society’s ability to cope with the turmoil and anxiety resulting from fast changes happening in the world.

The book ‘The Third Wave’ written by Toffler in 1980 describes how human civilization has gone through continuous changes and various stages. He describes this as the defining characteristic of the third stage of civilization (the first two stages being agricultural and industrial waves).

Today’s regularly changing business world requires a strategic planning model that can help to predict future challenges.  This model should combine foresight with an analysis of the organization itself such as organisational culture, mission, strengths and weaknesses. By doing so organisations can effectively identify strategic issues and develop strategies to resolve them. For example, subsidies for farmers may be a point of contention that requires careful consideration in the strategic planning process.

In a developing country like India, subsidies are necessary for impoverished farmers. In contrast, subsidies provided to farm producers in developed countries are given to make them competitive in the global market.

So, negotiations in the World Trade Organization, where subsidies are generally discouraged except under specific circumstances, may require strategic planning by both parties to address each other’s arguments and to save their respective interests.

Strategic Management Definition

Mintzberg and Waters (1985) believe that strategic planning falls on the deliberate end of the continuum between emergent and deliberate strategies. Deliberate strategy is characterized by conscious intention, design, and control, unlike emergent strategy, which is characterized by a lack of control or unintended outcomes.

It is argued that the more stable the environment and centralized control, the more chances there are of implementing a deliberate strategy. The same principle is applicable in the opposite scenario.

At the organizational level, the growing trend of institutional pluralism in public service provision requires public service managers to adopt strategic positions. Additionally, New Public Management has focused on enhancing the accountability and efficiency of public service functions. 

The concept of strategy is implicit in enforcing efficient and responsible responses. The importance of strategy is based on the following factors:

i) It’s concerned with the long-term direction of the organization.
ii) Its distinct identity is separate from the operational matters concerned with day-to-day matters.
iii) The need to put the organization into a position to carry out its mission effectively and efficiently; and
iv) Integrating an organization’s goals, policies, and activities into a cohesive whole.

Define Strategic Management

Bowman and Asch (1987) state, “Strategic management is the process of making and implementing strategic decisions…..[it] is about the process of strategic change. [It is] the match an organization makes between its resources and threats and risks and opportunities created by the external environment in which it operates. So, strategy can be seen as a link between what the organization wants to achieve, its objectives, and the policies adopted to guide its activities”.

Strategic management is also a technique that can create a favourable future for the organization. Stakeholders (i.e., anyone interested in the organization’s goals) are involved in envisioning the most desirable future and working together to make this vision a reality.

Short-term strategies focus on planning and managing for the present, and long-term strategy involve preparing for and preempting the future.

According to Derek Abell (1993),  “The dual nature of strategic management is the least understood part of the process. He claims that balancing the temporal aspects of strategic planning requires using dual strategies simultaneously.” This could be specifically useful for the public sector organizations.

FAQs

1. What do you mean by strategic management?

Strategic management defines organizational forms of value-addition capability and the purpose of the existence of an organization. It is the formulation and implementation of strategies lying within the boundaries of the corporate resources in response to the market opportunities and threats to achieve sustainable competitive advantage over competitors.

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