The Role of Strategic Management

strategic-management
Source: Coporate Finance Institute

The Role of Strategic Management

The process of planning is unquestionably utilised by all companies because, in its absence, the road map for the company’s future cannot be seen. On the other hand, the role of strategic management becomes relevant when your industry or type of business has a long-term objective and aspires to have a competitive advantage over other businesses in its field. When a thorough analysis of the internal and external business environment is conducted, the role of strategic management is given the opportunity to take on a more prominent role.

The purpose of this article is to explain the role of strategic management, including its significance, its approach, and the ways in which it enables firms to have an advantage over competing companies.

 

What is strategic management?

According to John A. Pearce II and Richard B. Robinson, Jr.; “Strategic management is defined as the set of decisions and actions resulting in the formulation and implementation of strategies designed to achieve the objectives of the organization”

According to James M. Higgins; “Strategic management is the process of managing the pursuit of organizational mission while managing the relationship of the organization to its environment.”

In simple words, it can be explained as: strategic management is a process that starts with identifying and analysing the potential strengths, weaknesses, opportunities and threats, both internally and externally, and planning the way out in a manner that is most efficient and effective.

In a highly competitive environment, where the demand is high, and so is the supply, the market does not depend merely on the traditional market forces. However, the strategic layout of the company’s various functions, such as finance, operations, marketing, human resources, etc., helps to stand out from the crowd and boom.

What is the Role of Strategic Management?

Multiple functions, including but not limited to those of operations, marketing, finance, and human resources, are involved in strategic management. They call for management on the minutest scale possible.

It places an emphasis on planning, monitoring, analysing, evaluating, and putting action plans into place inside businesses in order to achieve their objectives. A company must be able to rapidly adapt in order to survive the effects of change, both internal and external. The circumstances and resources at hand will determine which of the aforementioned techniques can really be put into action. It is at this point that a rational human being enters the picture.

 

The role of strategic management

  1. Designing the blueprint

After conducting thorough research, strategic managers attempt to build a blueprint for the future steps to be followed by the organisation, ensuring that these actions are in accordance with the company’s goal and vision.

  1. Forging leaders

Within the organisation, leaders are developed with the assistance of significant study carried out solely using the methodology of being strategic. These leaders then go on to contribute to the efficient formulation of organisational goals.

  1. Effective performance

Strategic task planning allows employees to divert attention away from less important goals that don’t contribute to the organization’s long-term objectives. Having workers devote their time completely to experiments is a common practise, but it often has the unintended consequence of lowering productivity.

  1. Brings Dynamism

Planning ahead prepares workers for any eventuality, whether positive or negative. Because of this, they adapt quickly to shifts in the internal and external business environments.

  1. Disaster Management

The role of strategic management becomes more operative when it comes to achieving long-term goals. While designing strategies, the ‘could be’ threats are combatted beforehand.

  1. Survival

Even though the company is in a dominant position in its industry, its survival is unlikely if it lacks strategic management. An adversary’s very existence might be jeopardised by a single miscalculated move, as competitors are always on the lookout for an opportunity to threaten a rival.

 

How is the role of strategic management carried out?

The application of strategic management is broken down into four distinct parts. Let’s get started and investigate each of these procedures in turn.

 

The Aim of Tactics designing 

It is the initial step toward effectively putting strategic management into action. It comprises establishing the goals of the organisation and use them as a yardstick to measure performance and progression within the organisation. The objective and strategy of an organisation must not to be vague but rather should be specific, realisable, and measurable. In this section, companies discuss their future strategic initiatives, which may include dominating their respective markets, increasing the wealth of their shareholders, or increasing their earnings.

Development of a Plan of Action

In order to evaluate the state of the company at this stage, it is necessary to conduct a SWOT analysis. Here is where companies carry out a forensic investigation of themselves, concentrating on the internal as well as the exterior contexts in which they operate. The company’s possibilities, threats, strengths, and weaknesses are all highlighted in this strategic study of the company. Through the use of this strategy, a business can gain insight into the areas in which its competitors are lacking as well as the advantages that those competitors enjoy. They can then use this knowledge to the process of formulating plans for surpassing their competition and adjusting to the altering trends in the market. Businesses are aware of their current situation and concentrate their efforts on getting to where they aspire to be in the future.

Strategy Application

Organizational schematics are an excellent starting point for strategic management, but they must be implemented. Plans should be implemented to ensure the life, growth, and expansion of a business. Over sixty percent of the strategies are believed to be unsuccessfully implemented. To implement the plan successfully, you must

  • Developing structures and systems
  • Allocation of funds
  • Managing change
  • Developing decision-making skills
  • Strategic advantage & more

Appraisal of the Strategy

The final stage of strategic management involves doing an analysis and evaluation of the results produced by the strategic process. By monitoring how well their organisational strategies are working, businesses are able to determine whether it is in their best interest to remain on their current course of action or to make adjustments to their strategy in order to more effectively respond to evolving market trends. Through participation in this ongoing process, organisations have the opportunity to evaluate key performance indicators and, if necessary, put in place appropriate adjustments. The evaluation of the strategic plan provides a peek of prospective failures and determines whether or not the overall strategy of the organisation needs to make a course correction. It is important for businesses to do regular reviews of their strategies in order to determine which elements are successful and which are not.

 

Conclusion

The capacity for persuasion and leadership is essential for strategic management since this type of management requires decisiveness in crucial matters, resolution of problems, and exploitation of possibilities. Officials of the organisation need to be able to engage with stakeholders and motivate staff to embrace their ideas, in addition to having excellent analytical skills, in order to be successful in their roles. Gaining expertise in strategic management is a skill that can assist executives in adding value to their respective organisations.

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