Yaqoob is currently studying CMA. Have done 'A' levels in commerce subjects. His field according to his studies is management and finance.
What is Strategic Management?
Strategic management is the process to develop the strategic vision, set out objectives, formulate and implement strategies, and introduce corrective measures for risks and threats (if any) to achieve the organization's goals and objectives.
There are two types of objectives:
- To achieve a competitive advantage, with an aim of surpassing the competitors, and to gain influential control over the market.
- To act as a guide to the organization for assisting in handling the changes within the business environment.
- Companies, universities, nonprofits, and different organizations can use strategic management as the simplest way to form goals and achieve objectives.
- Changing structure and plans may be easier for flexible companies, but not for inflexible firms.
- A strategic manager could administrate strategic management plans and develop ways for an organization to reach its benchmark goals.
Key Factors of Strategic Management
Organizational structure, the abilities and skills of employees, and the business culture are the key factors involved in achieving the goals of a business. There must not be any barrier between the development of strategies and their implementation, or else the manager would not be able to assess the performance of an organization. A company should not rely solely on the Chief Executive Officer (CEO) for guidance, as there may be several employees dedicated to strategy.
Effective strategic management involves both inward and outward perspective. Strategic management requires internal and external communication practices as well as monitoring, which ensures that the organization achieves goals as defined in the strategic management plan.
The management of a firm should know how to make the most out of resources. It will help a firm to work more on the strengths and compete with rivals. In this way, management can target a potential audience and stay connected to a firm’s core values. While the managing team strategizes plans accordingly and if there are sudden changes, they can still go the extra mile. It is suggested to allocate some time each year to assess and examine the policies and plans such as mission, goals, and vision statements.
Thinking strategically has become a necessity in global business world. Strategies are essential ingredients for success in a global market. Companies without strategic planning are no longer guarded.
— Abbass F. Alkhafaji
Example of Strategic Management
Are you looking to grow your business? To achieve this, your business needs to offer high-quality products and services. One question you need to ask yourself repeatedly is what products my customers are meeting. If you know the answer, then you are well aware of the needs of potential customers. This way, you can customize the products according to customers' requirements. If your company keeps adding value to its products, new customers can become your regular customers. All you need to do is continue to supply the best products, the best packaging, and maintain a reasonable price. If you help customers, in return they will get you what your company wants.
In addition, it is beneficial to keep the prices of your products high in certain areas of the market. This will give consumers the impression that your product is valuable. However, this should not be the case in every market. Your organization should maintain the value of your product as a competitor. Also, it is important to buy any online software that maintains your monthly profit record. When the expert accountant can help you run this software and monitor whether the income exceeds the expenses.
Importance of Strategic Management
The major importance of strategic management is that it helps in decision making and ensures the long-term survival of the firm. Strategic management helps firms to anticipate changing conditions and allows managers to direct the organizational activities along the right path. By implementing strategic management, a firm gains many types of economic and non-economic importance.
- Strategic management gives clear aims and directions to employers. It ensures that the top management has a cooperative opinion on strategic issues and actions.
- Planning is the key to success. Thus, a strategic planning tool helps to predict future trends and make decisions according to changes.
- Several studies suggest that strategic management leads to better performances and firms which execute strategic management are more effective.
- Employees perform better when they are aware of the firm’s future. Strategic management gives a clear perception of directions and objectives for the firm’s future.
- Strategic management plays a vital role in increasing the employees’ motivation as their participation and representation in strategy formulation lead to a better understanding of the responsibilities, priorities, and operation reward system.
- Strategic management provides a greater understanding of the firm’s goals that will minimize the resistance to change. And it will also eliminate the uncertainty associated with change.
A firm is able to accomplish its long-term objectives and can identify business opportunities by performing strategic management. It also helps to analyze the business environmental threats and assist in identifying strategic advantages.
Successful companies are, of course, the first to consider the global marketplace as their arena for competition.
— Balsmeier and Borne
It is now clear how important these key areas are in the success of a business. If the project managers fail to address these key factors of success, they are more likely to make costly decisions. Consider these success factors and identify the ones where you lack. Ask yourself questions: How do each of these factors affect your business, and what will you do to improve them? In short, thinking about "what ifs" questions can help you manage your business more efficiently, and you can reduce the risks.
© 2021 Muhammad Yaqoob