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Strategic Management: An Overview

• Strategic management establishes goals, procedures, and objectives to boost an organization's competitiveness by deploying staff and resources effectively.
• Aim is to identify and describe the strategies managers use to enhance performance and gain a competitive edge.
• Competitive advantage: An organization with higher profitability than the industry average holds a competitive advantage.
• Strategic management involves decisions and actions by managers that determine a firm's performance, requiring a grasp of the organizational environment.
• SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats are assessed to maximize strengths, minimize weaknesses, exploit opportunities, and avoid threats.
• Strategic management is the basis for significant organizational decisions, providing direction through plans and policies aimed at achieving goals.
• Effective strategic management involves continuous planning, monitoring, and testing, leading to better operational efficiency, market share, and profitability.
• Strategic management plans for predictable and unpredictable situations, enabling organizations of all sizes to compete and achieve sustainable competitive advantage.
• Strategic management helps in setting objectives and determining how to achieve them, guiding the future direction of an organization.
• Strategic management is an ongoing process to evaluate and control business activities, assess competitors, set strategic goals, and reassess strategies for effectiveness and relevance
• Employees gain a broader perspective and understand their role in the organizational plan, which enhances trustworthiness, commitment, and satisfaction.
• Employees who understand how environmental changes affect the organization can respond effectively with strategic management.
• Strategic management integrates functional areas, harmonizes them, maintains focus on goals and ensures efficiency.

Strategy Definition and Features

• Strategy comes from the Greek word "strategos," which means "leading/moving" the army.
• Strategy is an action managers take to achieve organizational goals.
• A general direction set for the company to achieve a desired future state, resulting from strategic planning.
• Strategy focuses on integrating organizational activities and allocating resources to meet current objectives.
• It is important to consider reactions from competitors, customers, and employees.
• Strategy can be the knowledge of the goals, the uncertainty of events and the likely or actual behavior of others.
• A strategy acts as a guideline in an organization which shows its goals, key policies, and plans for achieving those goals.

Key aspects of a successful strategy

• Strategy is vital due to the uncertainty of the future, requiring firms to prepare for unforeseen events e.g decline in activity, recession, inflation and bankruptcy.
• Strategy deals with long-term developments like innovations, production methods, and new markets.
• Strategy considers the expected behavior of customers, competitors, and employees.
• Strategy serves as an organizational roadmap, detailing the overall mission, vision, and direction, maximizing strengths, and minimizing competitors' strengths.
• Strategy is a bridge between the current state and the desired future state.

The Five Stages of the Strategic Management Process

• The strategic management approach views business from a philosophical perspective, requiring upper management to plan strategically and then act.
• The best strategic management approach is where everyone understands the strategy.
• Five stages of this process are
• Goal-setting
• Analysis
• Strategy formation
• Strategy implementation
• Strategy monitoring

1. Goal-Setting - Clarify Your Vision

• The purpose of goal-setting is to clarify the vision for your business.
• The stage consists of defining both short term and long term objectives identifying processes and customizing processes for staff.

2. Analysis - Gather and Analyze Information

• Analysis is a key stage because the information gained in this stage will shape the next two stages.
• This also helps understand needs, strategic direction and initiatives.

3. Formulate a Strategy

• The first step in forming a strategy is to review the information gleaned from completing the analysis.
• It also should consider what assistance is needed to help with objectives.

4. Implement Your Strategy

• Successful strategy implementation is critical to the success of the business venture.
• Everyone within the organization must be made clear of their responsibilities and duties from management level down to staff level.
• Additionally, any resources or funding for the venture must be secured at this point.

5. Monitor Your Strategy - Evaluate and Control

• Strategy evaluation and control actions include performance measurements, consistent review of internal and external issues and making corrective actions when necessary.
• You must monitor the performance in accordance with goals to allow flexibility to make changes.

The Five Phases of Strategic Management

1. Definition of the orientation/direction that the company wants to take

• You define the Vision, the Mission, and the Goals, but also the Business Perimeter.

Abell Model

• The functions of use: the needs that the business wants to satisfy
• Customers: the target market, with those needs, that we want to achieve
• Technologies: the technical methods that the company wants to use

2. Situational analysis (external and internal)

• Investigate the context and the environment in which the company operates
• Including competitors, possibility of achieving strategic objectives and sustain competitive advantage.

SWOT

• SWOT (strengths, weaknesses, opportunities, and threats) analysis: evaluate a company's competitive position and to develop strategic planning

PEST

• Analysis (political, economic, social, and technological) is a management method whereby an organization can assess major external factors that influence its operation

3. Decision-making process

The decision-making process consists of two moments: the generation of strategic alternatives and the evaluation and selection of alternatives.

• Diversification – business enlarging
• Product Development – conceptualization design
• Market Development – target non-buying customers
• Market Penetration – selling of a good or service

4. Implementation

• The strategy is performed through a series of tactical choices.

5. Control

• The application of the strategy must be constantly monitored to check its efficiency.
• The analysis of budget variance is often used as a control tool
• A very useful tool to monitor strategic trends is sales forecast

Key Components of Strategy

• State the long-term strategic direction and broad policy directions.
• Strategic intent is the purpose of the organization, gives insight and motivates.
• Strategic intent requires directing organization's attention, inspiring people, encouraging as well directing resources.
• Strategic intent emphasizes on building new resources, while strategic fit deals with harmonizing resources to external environment.
• Mission Statement describes why an organization is operating and existing, provides a framework.
• A mission statement describes the what, who, the what makes an organization unique.

Features of a Mission

• Mission must be feasible and attainable.
• Mission should be clear to take action.
• It should be inspiring for staff and society.
• It should be neither too broad nor too narrow.
• It should be unique and distinctive
• It should be analytical
• It should be credible