The analysis and formulation of a business strategy and its subsequent implementation must take into account, on the one hand, the opportunity factors regarding its competitive environment; and, on the other hand, the integration of these with the diagnosis of its economic situation and with the set of objectives and rules that guide the operation of the company. This implies the use of an appropriate methodology.
In this sense, almost all proposals in this regard consider strategic management as a process with a series of phases that must be developed in a certain order
What is strategic management?
Strategic management are all the decisions made by the company’s management, which have a medium and long-term impact and are mainly aimed at defining the company’s strategy and guaranteeing its development and sustainability.Ā
Ā
Strategic management thus allows the efforts of different workers to be coordinated around a project. The main actions of strategic management are planning and organization, defining the hiring and retention policy for teams, and deploying and monitoring the strategic plan.
Read More: How To Become a Project Manager: Tips, Skills and MBA major
Importance of strategic management
Ā Before delving into the strategic management process, it is important to consider some of its benefits.
- Improve the decision-making process.Ā
What you don’t know, you can’t handle. Companies need to understand the performance of all business functions to stay current and prepare for the future. With clear strategic direction, managers are in a much better position to assess overall strengths and weaknesses and make data-driven decisions.
- Make smart decisions.Ā
Without a clear understanding of business needs, it is difficult for companies to assess capability gaps and make appropriate hiring and acquisitions to accurately map the gaps and make smart decisions to reduce those gaps.
- Motivate interested parties.Ā
With a solid strategic plan, it is easier for companies to engage and motivate stakeholders, providing them with a designed roadmap to overcome potential problems and ensure business continuity.
- Improve employee commitment.Ā
Companies need a defined and well-respected objective to motivate workers and teams to perform at their best. With the strategic management process, companies can establish for themselves a clear vision and goal that all workers can relate to and improve both their motivation and commitment.
Ā
What is the strategic management Components?
The five Components of the process are:
- Goal Setting
- Analysis
- Strategy Formulation
- Strategy Implementation
- Evaluation And Control
Contact with IBAS: +201000498154
Ā
- Goal setting
How to establish business objectives and strategies. The purpose of setting goals is to clarify the vision of the business. This stage consists of identifying three facets: First, defining short- and long-term objectives. Second, identify the process of how to achieve the objectives.
Finally, personalize the process according to our staff, and give each member a task with which they can be successful. Check during this process that the objectives are detailed, realistic, and match the values of your business vision. Typically, the final step in this stage is to make these goals and objectives known to all staff.
Ā
- Analysis
The focus of strategic analysis should be to understand the needs of the business as a sustainable entity, with a strategic vision, and identify initiatives that will help the business grow.
Be sure to identify your organization’s strengths and weaknesses, as well as threats and opportunities that may arise along the way.
Ā
- Strategy formulation
The first step in forming a strategy is to review the information obtained from the analysis. Determine what resources the business currently has that can help achieve the defined goals and objectives. Identify any areas from which external resources should be sought.
The problems facing the company must be prioritized by their importance to be successful. Once prioritized, begin formulating the strategy.Ā Ā
Ā
- Strategy implementation
Successful implementation of strategy is essential to the success of the company. This is the action stage of the strategic management process. If the overall strategy does not work with the current structure of the business, a new structure should be installed at the beginning of this stage.
Everyone within the organization must be clear of their responsibilities and duties, and how these fits into the overall goal. Additionally, all resources or funds for the company must be guaranteed at this time.Ā Ā
Ā
- Evaluation and Control
Strategy evaluation and control actions include performance measurements, consistent review of internal and external issues, and corrective actions when necessary.
Ā These parameters should reflect the goals established in Stage 1. Determine your progress by measuring actual results versus the plan.
Read More: Supply Chain Management vs Logistics: Differences, Similarities and Roles
Advantages of strategic management
Strategic management is the only possible way to stand out from the competition and win over the target audience. These are some of its benefits:
- Strategic vision
The strategic vision allows managers to analyze the internal and external scenario of the company, and see the next steps and the consequences of each decision made. The vision statement should be carefully crafted to inspire employees to move in the same direction and channel their forces toward the company’s goal in a realistic and focused manner.
- Create a competitive advantage
Some identify competitive advantage as the essence of strategic management. In this case, it is about the company’s ability to create more value than the competition at the lowest possible cost.
Ā
To do this, organizations must create unique and valuable positions that respond to specific customer needs to earn their place in the market. Operational efficiency is also essential for creating a competitive advantage, and reducing costs and waste to achieve better results.
- Synergy in activities
Synergy means making a simultaneous effort, with cooperation between the people involved, and the activities carried out. This is one of the main achievements of strategic management, which keeps all areas of the company interconnected and guides actions towards a single objective.Ā
- Sustainable growth
Growth is the objective of every company, whether through the expansion of its activities, the conquest of new markets, or internationalization. But for this growth to be well-managed and sustainable, managers must adopt strategic management. With this strategy, it is possible to follow a line of sustainable growth, expanding the boundaries within the limits of the organization.
Ā
Contact with IBAS: +201000498154
Examples of strategic management
These are some examples of brands that have done correct strategic management:
Apple
To become one of the most valuable brands in the world, Apple stuck to its strategy of challenging the status quo. The āThink Differentā campaign illustrates the company’s power to create revolutionary products and conquer new global markets. Even after this success, Apple has not stopped innovating and remains convinced of the need to create new solutions and new technologies.
Airbnb
Airbnb has gone from being a startup to one of the greatest powers in the world tourism market, thanks to a bold strategy. The company used the growth hacking technique to reach a market value of $1 billion, betting on generating trust as the basis for the success of the shared hosting service. Additionally, it invested in a strong digital presence and a narrative strategy to communicate its differences.
Read More: What Is a BBA? Your Guide to the Bachelor of Business Administration
Conclusions
Strategic planning is a critical function in managing a company. To ensure success in a dynamic and competitive business environment, organizations rely heavily on well-executed strategic tools. In this essay, we will explore the key tools used in strategic planning, the importance of their proper execution, and their impact on company results.
The development of the overall strategy in the strategic planning process is a fundamental step that lays the foundation for the long-term success of the organization. It begins with defining an inspiring vision and mission, followed by a thorough analysis of the environment and an assessment of internal capabilities. The formulation of strategic objectives provides the concrete direction for the formulation of specific strategies.
Strategic tools are essential elements in the planning and execution of business strategy.Ā Ā
Ā