Strategic management is an important part of effective business leadership. It means coming up with and putting into action long-term plans and goals to make the organization successful. This process involves carefully analysing both internal and external factors of the business that could affect it. It also means creating strategies to make the most of opportunities and reduce risks.
Table of Contents:-
- Definition of Strategic Management
- Meaning of Strategic Management
- Understanding Strategy
- What is strategy?
Definition of Strategic Management
Management of the resources of an organization to achieve its goals and objectives. Strategic management involves setting objectives, analyzing the competitive environment, and analyzing the internal organization. It evaluates strategies and makes sure that they are rolled out throughout the organization.
Strategic management involves recognizing the opportunities and threats facing an organization, whether coming from within the organization or from competitors and recognizing how the organization stacks up against its competitors. It requires the ability to see both externally and internally.
Various theoretical frameworks divide strategic management into different schools of thought. The prescriptive approach to strategic management defines the process of strategy development, while the descriptive approach concentrates on executed strategies. These schools differ on whether strategies are developed through an analytical process in which all threats and opportunities are to be accounted for or the kind of general guiding principles that have to be applied.
What is Strategic Management?
Top management holds the responsibility for strategic management, encompassing tasks such as setting priorities, allocating resources, streamlining operations, aligning employees and adjusting to a changing environment. It traces the intention of the organization for the next five years.
Business culture, skills and competencies of employees, and organizational structure are important factors. These factors influence how an organization can achieve its stated objectives. Inflexible companies can find it difficult to succeed in a changing business environment. Managers may face difficulty in efficiently evaluating objective achievement when a barrier exists between strategy development and implementation.
While the higher management of an organization is ultimately responsible for its strategy. Many times the lower-level managers and employees themselves are intensified by the actions and ideas of the strategies. An organization may have many employees devoted to strategy rather than relying on the CEO. Previous strategies are serving as a learning opportunity for organizational leaders, who are primarily concentrating on environmental investigations. The application of this knowledge directs employee behaviour towards shaping future strategies and driving the entire organization’s progress.
Meaning of Strategic Management
By the term strategic management, we mean the process that helps the organization assess its internal and external business environment, set the strategic vision, set objectives, formulate strategies and implement the strategies that the organization aligned to achieve its goals.
Strategic management aims at achieving a sustained competitive advantage, superseding the competitors and achieving an effective position in the entire market. Further, it evaluates, guides and adjusts the enterprise to changes in the business environment.
The strategy describes how management plans to achieve its objectives.
Strategy is like a blueprint of the decisions that an organization takes to achieve its objectives and goals, plans to achieve these goals, and defines the business that the firm is likely to pursue, The type of economic and human resource organization it wants to be and plans to contribute to its shareholders, customers, and society at large.
In short, strategy means “the art of general”. The term first gained currency in the late 18th century and had to do with stratagem, by which a general sought to deceive an enemy.
The general for a campaign with plans, and the way the general went and dealt with his army in battle. According to Clausewitz, strategy means “the art of employing fighting as a means of obtaining the object of war”.
The word strategy has gone far beyond its original military meaning. Various sectors now employ the strategy when facing long-term horizons, resource competition, and the pursuit of their goals.
With the development of strategy as a theoretical discipline, scholars have sought to identify the principles of strategy that have traditionally guided military strategists in warfare.
A strategy comprises significant decisions formulated to achieve specific objectives. It refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise, memories, perceptions, and expectations that provide general guidance for specific actions in the pursuit of particular ends.
What is strategy?
The word “strategy” is derived from the Greek word “stratogos”; which means generalship (stratus meaning army) and “first” (meaning leading/moving). The term was used in the army, here strategy refers to the management of the troops. Once the enemies are engaged, the focus is on planning and strategy.
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From here gradually the concept of strategy and the term strategy paved their way into the world of business and management. In business parlance, it has no definite meaning. It serves as a common term to denote various aspects.
Strategy can be viewed from different angles it is a perspective, competition, innovation, positioning, planning, and pattern. Many researchers describe strategy as the connection between the higher management’s guidelines or objectives and the plans or actions taken.
It’s important to realize that strategic decisions have wider implications, and any move made by the company will lead to reactions from affected competitors, customers, employees, or suppliers.
Understanding strategy is one of the most important concepts to emerge in the subject of management studies in recent times. It has emerged as a vital input for organizational success and as a tool to deal with the uncertainties faced by the organization.
Companies have adopted the strategy as a tool for mitigating ambiguity and establishing a strong foundation or principle for business conduct. Strategy is a convenient way to organize the many variables that operate within an organizational context and to understand their interrelationship. It has helped thinkers and practitioners to formulate their ideas systematically and apply them in practice.