What is strategy? The set of decisions and actions resulting to formulate and implement strategies design to achieve the objectives of an organization.
Strategy is necessary to have and developinternal ability.Globalization and strides in informationtechnology makes strategic managementcomplex.Strategic management is concerned withdeciding on strategy and planning howthat strategy is to be put into effect.
Analysis of the Definitions of StrategicManagement Strategic management is a continuous process but that does not mean that the organisation never finishes its strategic work. Managers will always be focusing or reflecting on some aspect of strategic management, through different aspects of strategic management require different emphasis and effort of varying intensity at different times.
Though the process of strategicmanagement starts with the step ofperforming an environmental analysis, andmoves on to strategic control, it comesback as environmental analysis.Strategic management consists of a seriesof steps repeated cyclically.
Various activities of strategic management drawthe inputs from various functional areas ofmanagement.Strategic management process integrates humanresources with marketing, production/operationsand finance.All these functional areas of management, inthus, the cross-functional team members worktogether and the organisation will enjoy thebenefits of synergy.
Strategic management identifies itspurpose as ensuring that an organisation asa whole appropriately matches its everchanging environment.Organizations must modify their strategiesin accordance with the changes in itsenvironment.
Historical development of strategicmanagement. Basic financial planning: The Main concern during this phase is simply meeting annual Budget requirement, Operational functions like production, marketing, finance and human resources and emphasizing on the operational control. Forecast-based planning: During this phase, the primary concern is mainly on effective plans, environmental scanning, plan for the future and allocation of resources.
Externally-oriented planning:There is a remarkable shift during thisphase . The notable developments include:Increasing response to markets andcompetition, completer situational analysisand assessment of competitive strength,evaluation of strategic alternatives andallocation of resources based on changingneeds from time to time.
Strategic management:The focus shifts over time from meeting thebudget to planning for the future, to thinkingabstractly, to working to create desired future.To create future decision-makers, orchestrateand integrate all their organizations resourcesto gain a competitive advantage.They build flexibility into the organizationalplanning process, and foster a supportive,participative climate within the organisation.
Need for strategic management: Strategic management allows firms to anticipate changing conditions. Strategic management provides clear objective and direction for employees. Research in strategic management is advancing so that the process can help managers. Business which perform strategic management are more effective.
Environment is not static. It is moredynamic and global environment alsoaffects most of the firms.Strategic management helps inunderstanding environment andformulate strategy to suit to theenvironmental dynamism.
Need for strategic management: Strategic management is needed due to change process, to provide guidelines, field of study, better performance, systematic decisions, communication, allocation of resources and holistic approach.
Due to change.To provide Guidelines.Developed field of study by Research.Probability for better performance.Systematize Business decisions.Improves coordination.Improves allocation of resources.Helps the managers to have a holisticapproach.
The process of strategicmanagement A process in management is defined as a perceptible flow of information through interrelated stages of analysis directed towards the achievement of an aim. There are four basic elements in the process of strategic management:
1. Environmental scanning: It involves monitoring the environment, and evaluating and disseminating information obtained from the internal and external environment; The aim of environmental scanning is to identify the strategic factors that may determine the future of the firm.
An organization can derive several benefitsfrom environmental scanning including thedevelopment of a common perception,identification of strengths and weaknesses,an understanding of trends and conditions,and the optimum utilization of internal andexternal information.Tools such as surveys, questionnaires, focusgroups, and open forums can be employedin environmental scanning.
SWOT analysis is the most commonly usedtechnique for environmental scanning. SWOT is an acronym for the strengths,weaknesses, opportunities and threats facedby a firm.Strengths and weaknesses are within thecontrol of the top management in the longrun.Opportunities and threats are externalfactors that are outside the control of theorganization.
2.Strategy formulationIt refers to the development of long term plansfor managing opportunities and threats in theexternal environment, and for utilizing thestrengths and overcoming the weaknesses withinthe organization.A strategist takes into consideration componentsof strategic management such as companymission, company profile, external environment,strategic analysis and choice, long-term objects,annual objectives, grand strategy whileformulating a strategy
Strategy formulation helps anorganization to:Capitalize on available opportunities.Address the challenges faced by theorganization.Provide leadership that understands andmasters change.Incorporate an in-depth planning modelthat involves the community.
3.Strategy implementation The process by which strategies are put into action is called strategy implementation. Programs, budgets and procedures are developed for this purpose. This process may call for changes in overall culture, organizational structure, and/or the management system.
The implementation of strategy is typicallyhandled by middle and lower level managers,except when drastic company-wide changesare needed.Requirements for strategy implementation:1.Structure: The firm’s structure plays avital role in achieving firm’s objectives. Aproper structure is essential for strategy tobe operational.
Structure serves as a vehicle for managers toexploit the skills and capabilities of theiremployees.They can further use the structure inmotivating their employees through providingincentives to ensure superior efficiency, quality,innovation or customer responsiveness.2.BUDGET: This is a statement of theprograms to be implemented in monetary termsand is used for planning and control.The budget details the investments to be madeand the returns expected from the investments.
4.Evaluation and control: Evaluation and control refer to the processes in which corporate activities and performance results are compared with the desired performance. This information is used to take corrective action and resolve problems. It also pinpoints the weaknesses of strategic plans implemented earlier.
For effective evaluation and control, themanagement must obtain clear, prompt andunbiased information from the people whoactually execute the strategies.Unbiased information is essential as thisinformation is used for corrective actionand to minimize the mistakes theorganization might commit in the future.
Feedback is very important part of theevaluation process as it provides anopportunity to revise or correct decisionsmade in the earlier stages.Poor performance indicates that somethinghas gone wrong with either strategyformulation or implementation.It could also mean that a variable wasignored in the environmental analysis.