Business

strategic management

What is strategic management?

Strategic management is the management of an organization’s resources to achieve its goals and objectives.

Strategic management includes setting goals, analyzing the competitive environment, analyzing internal organizations, evaluating strategies, and ensuring that management implements strategies throughout the organization.

key takeaways

  • Companies, universities, nonprofits, and other organizations can use strategic management as a way to set goals and achieve them.
  • Flexible companies may find it easier to make changes to their structures and plans, while inflexible companies may be troubled by changing circumstances.
  • A strategic manager can oversee the strategic management plan and devise an approach for the organization to achieve its benchmark goals.

Learn about strategic management

There are several schools of strategic management. The normative approach to strategic management outlines how the strategy should be developed, while the descriptive approach focuses on how the strategy should be put into practice. These schools of thought differ in that strategies are developed through an analytical process in which all threats and opportunities are considered, or more like general guiding principles to be applied.

Corporate culture, the skills and abilities of employees, and organizational structure are all important factors that influence how an organization achieves its stated goals. Companies that lack flexibility may find it difficult to succeed in a changing business environment. Creating barriers between strategy formulation and implementation can make it difficult for managers to determine whether goals are being effectively achieved.

While an organization’s top management is ultimately responsible for its strategy, the strategy itself is often triggered by the actions and thoughts of lower management and employees. An organization may have several employees working on strategy rather than relying solely on the guidance of the Chief Executive Officer (CEO).

Because of this reality, organizational leaders focus on learning from past strategies and examining the entire environment. Collective knowledge is then used to develop future strategies and guide employee behavior to ensure that the entire organization moves forward. For these reasons, effective strategic management requires both an internal and an external perspective.

Strategic management extends to internal and external communication practices and tracking to ensure the company achieves the goals defined in its strategic management plan.

example of strategic management

For example, a for-profit technical college wants to increase freshman enrollment and graduation rates for incoming students over the next three years. The aim is to make the college the best option for student money among the five for-profit technical colleges in the region, with the goal of increasing revenue.

In this case, strategic management means ensuring schools have the funds to create high-tech classrooms and hire the most qualified teachers. The college also invests in marketing and recruitment, and implements student retention strategies. The Academy’s leadership regularly assesses whether its goals have been achieved.

special attention items

Helping their companies find ways to become more competitive is the purpose of strategic management. To that end, putting the strategic management plan into practice is the most important aspect of the planning itself. Planning in practice includes benchmarking, realigning resources (financial and human), and putting leadership resources in place to oversee the creation, sale, and deployment of products and services.

What is strategic management?

Strategic management is the process of setting goals, procedures and objectives to make a company or organization more competitive. Typically, strategic management focuses on effectively deploying people and resources to achieve these goals. Typically, strategic management includes strategic evaluation, internal organizational analysis, and execution of strategy across the company.

Why is strategic management important?

In business, strategic management is important because it allows companies to analyze areas for operational improvement. In many cases, they can follow an analysis process that identifies potential threats and opportunities, or just follow general guidelines. Given the structure of the organization, companies can choose to follow a prescriptive or descriptive approach to strategic management. Under the prescriptive model, strategies for development and execution are outlined. In contrast, descriptive methods describe how companies develop these strategies.

What is an example of strategic management?

Consider a large company looking to achieve more ambitious online sales rates. To achieve these goals, a company will develop a strategy, communicate that strategy, apply it to various units and departments within the organization, align it with employee goals, and execute accordingly. If adopted an effective strategy, it will ideally help a company achieve its goals through a single, coordinated process.

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