What is strategic management?
Constant planning, observing, analyzing and evaluating all the factors necessary to meet the company's tasks and aims - this is what strategic management is really like. Even the smallest business changes demand from enterprises to analyze their own success.
Strategic management is essential to examine an enterprise's current situation, develop strategies, implement them and assess their effectiveness. There are five main areas of Strategic Management, which can be realized in a number of different ways according to the surrounding. It is worth mentioning that Strategic Management is available not only for stationary platforms but also for mobile ones.
Advantages of strategic management
The advantages of Strategic Management are considered to split into two categories - financial and non-financial.
Strategic management carries out the main goals of the executive board, and also encouraging business leaders to reflect on and make plans for the business's prospects. The given concept is a driving force for the enterprise and its personnel. Compared to one-off strategic targets, Strategic Management is a process, which continues over time and results in major efficiency and profitability through continual review of the operations within any given business.
The fundamental principles of Strategic Management
It is essential for an enterprise to have an understandable direction, value and purpose. In such cases it is worthwhile to have a look at something like strategic planning. This will assist in both short and long-term management and will also help the enterprise to plan its resources which are essential for the achievement of its objectives.
Strategic management will help the enterprise to make the appropriate solutions, set objectives and follow the times, which in turn will help expand its market share and further planning.
Five phases of strategic management
There are a variety of approaches to identify the phases of Strategic Management, but broadly speaking, the given process typically consists of five stages:
- Assessment of the existing strategic orientation of the enterprise;
- Finding bottlenecks and studying their impact;
- Drawing a concrete plan for action;
- Carrying out the action plan;
- Evaluating the results obtained and, if the desired result has not been achieved, making adjustments.
Communication with partners, data gathering, and the corporate culture are vital to strategic management, especially among large enterprises. If any one of the mentioned factors is wrong, it is possible to find discrepancies between the strategic management plan and the work done in the enterprise. So, strategic management involves reviewing all the business solutions before they are realized to guarantee that everything is in accordance with its targets.
Types of Strategic Management
A concept exists that the business goals are to establish the client, and the client's wishes define exactly where the business stands. This idea is regarded as foundational and belongs to the eminent philosopher, Peter Drucker.
The main objective of Strategic Management is to pool resources and make it possible for the personnel to fulfill the clients' needs as effectively as it can be. Later a famous professor, Theodore Levitt, formulated another concept - to produce a high-quality product.
In 1957, the concept of "Distinctive Competence" was coined by the social scientist Philip Selznick. This defined the concept of key competences and competitive benefit within the theory of strategic management. So, a mechanism was developed to evaluate the strong and weak aspects of an enterprise in terms of risks and possibilities in the surrounding.
Henry Mintzberg, a management scientist, also acknowledged that the Strategic Management approach is more agile and less foreseeable than his predecessors had believed. He identified five strategic determinations, and links between them:
- Plan. An approach is a well-defined plan for coping with various events.
- Ploy. An approach is a cunning ploy to outsmart the opponent. It may be an element of a plan.
- Pattern. An approach is the outcome of a sequence of deliberate or inadvertent behaviour. It may be outside the plan.
- Position. An approach is a mediation or fit between the enterprise and its surrounding. Can be consistent with each of the other four definitions.
- Perspective. An approach is an established worldview. Also can be consistent with each of the four given definitions.
Significance of Corporate Culture.
Corporate Culture is a core factor in measuring the successfulness and unprofitability of a company and should be accounted for by SM leaders. Culture is a leading aspect when it comes to the objectives set, targets performed and resources invested in an enterprise. With a powerful Corporate Culture, it is simpler for managers to encourage personnel to complete tasks qualitatively. In enterprises where managers and other low-level personnel are engaged in making solutions and establishing strategies, the SM process helps to achieve this. Developing appropriate strategies is essential to the CC. In the case of ill-suited strategies, obstacles may arise in the process of meeting the targets.
The Importance of Vision.
Another relevant aspect is the existence of a strong strategic leader. one of the characteristics of a great leader is his or her ability to enhance personnel to do quality work so as to enhance the company's performance. Really effective leaders know what it takes to encourage and persuade workers to do their job in order to move the enterprise to a new level of success. Weak leaders, in turn, fail to unite their team and direct their forces in the right way. The vision of an enterprise is a description the enterprise intends to achieve in the long perspective. A properly formulated vision makes it possible to set clear objectives and aims for the enterprise. Managers ought to know not only how to formulate aims and objectives, but also how to transform this into actions. It is exactly the kind of approach that will make an enterprise successful.
Mission Statement.
Successful mission statements allow you to understand what the enterprise is in front of you by reflecting its identity. While the vision represents the enterprise's perspective, task descriptions are essential elements of the previous and ongoing enterprise. Enterprises need the encouragement of interested parties, such as personnel, owners, vendors, and clients, to operate successfully. The mission statement makes it clear to stakeholders why should they provide support to the organizations. There must be a connection between the vision and the mission statement. When leaders select to separate these concepts, however, it can lead to negative consequences. High schools have fallen into this trap by being unable to decide between devoting time to student learning and research. .
The SWOT
analysis
It is one of the SM types that enterprises use to establish and examine their strategies for conducting business. It discovers and contrasts the strong and weak aspects of the enterprise with possibilities and dangers from the outside. The SWOT analysis defines a variety of issues that affect the aims and targets of an enterprise.
The SWOT analysis facilitates the identification of the effectiveness of the resources and abilities of an enterprise in a competitive field and clarifies the appropriate strategies for its successful existence.
Balanced Scorecard in SM . BS is a method of management, which transforms the goals into a set of tasks that can be assessed, controlled and, in case of need, modified in order to meet the defined objectives of the enterprise.
The Balanced Scorecard functions by using a four-stage system to evaluate the activities of an enterprise. These comprise:
- Standard financial assessment (operating profit, increase in sales, ROI);
- Client review ( satisfaction and keeping of clients);
- Internal evaluation ( connecting business activities to the established objectives)
- G&D analysis ( engagement and employee loyalty and efficiency of content systems)
SMART objectives as a way of meeting visions and targets
To achieve certain objectives, enterprises have to break them down into smaller tasks that will act as a clear plan for their personnel on a day-to-day basis. Objectives that are specific, measurable, achievable, realistic and time-bound are considered most effective, and these criteria can be remembered by adding up the word SMART from their first letters. SMART objectives promote the success of personnel in the enterprise. Objectives can be categorized as measurable and aggressive. For measurable objectives, the achievement of a goal can be quantified; for aggressive ones, it represents a significant challenge for the enterprise. According to the results of research, effectiveness is maximized when objectives are both challenging and achievable. It is well known that easy objectives, in turn, have a negative effect on employee motivation.