Strategic Management | Explanation | Process | Need
Table of Contents
Strategic Management History
In the management literature of the early 80’s perhaps no other aspect of management is much talked about or debated on as the strategic management is. In fact, the growing complexity of business and the changing complexion of environment have made it the focal point of attention in as much as it is increasingly realized that success of business is linked with its strategic management.
What does the term Strategic Management mean?
Up to the late seventies, terms like “long-range planning” and “strategic planning” were largely deployed to explain the enterprise’s overall approach to deal with both internal and external contingencies. But the said words semantically connote rather a narrow meaning of the terms. Contrary to it, strategic management is a more broader concept; it embraces the overall managerial process to optimize the enterprise effectiveness.
Strategic management facilitates accomplishment of mission
Strategic management embraces a set of decisions, actions and interactions which help in designing an effective strategic network to facilitate the accomplishment of enterprise mission. In other words, it can be stated that strategic management emphasizes innovative strategic programme, looks for changes in programme, identifies the potential for changes and makes critical appraisal of programme of attaining enterprise mission.
Strategic Management and Operational Management distinguished
At this juncture, it is very much desirable to distinguish between “Strategic Management” and “Operational Management“. From the strict managerial point of view, there is a substantial difference between these two types of management with regard to the thought process, attitudes, level of importance and the skill required to carry out the task.
Strategic management is basically concerned with the top management, aimed at formulating broad policies for the working of organization whereas operational management is the exclusive prerogative of the functional executives. Therefore, the process of strategic management is more complex, circuitous and continuous and requires more foresight, dynamism and intellect on the part of strategists.
Steps involved in strategic management process
The process of strategic management basically embraces the following steps:
1. Analysis and Diagnosis of the problem: This process involves crystallization of the problem through adequate environmental scanning. This calls for the preparation of an environment profile, so that accordingly threats and opportunities could be best exploited in the interest of the organization.
2. Selection of Suitable Strategy: It is aimed at generating and screening alternative strategies for determining the most profitable one.
3. Implementation of Strategy: This phase is concerned with creating an adequate organizational climate for the execution of strategy.
4. Evaluation of Strategy: This process aims at eliciting necessary information about the working of strategy. In other words, it tries to create and maintain a suitable information system for assessing the effectiveness of strategy.
Need for Strategic Management
Anybody who is concerned or bothered about the overall functioning of an enterprise must know the importance of strategic management. A lot has been said and written about it. Here we are crystallizing some of the important thoughts.
1. To Keep Pace with Changing Environment: Modern corporations are operating in a highly dynamic environment, which is ever changing, constraining and uncertain. They are in a continuous flux of threats and opportunities. Therefore, the most pressing problem of a modem organization is to find out the ways for its survival in a highly volatile and turbulent environment. In such circumstances to keep business going, strategic management is the need of the hour, as by exploring opportunities and minimizing threats, it helps the business to achieve an optimum level of efficiency.
Most of the leading American corporations and a few Indian business houses today have utilized strategic management in profitably exploiting business opportunities.
2. To Boost Employees Efficiency: It is a common observation that employees carry out their tasks effectively if they have a clear role perception. The firms embracing strategic management, as a rule, clearly define what to do, when to do, how to do and who is to do it. As such the employees are in a position to carry out their tasks effectively. In fact, strategic management by gearing up employees’ efficiency makes things to happen which would not otherwise take place.
3. To Furnish a Strong Base For Unified Decision Making: As strategic management focuses on the determination of the major organizational objectives, by “identifying the things to be achieved,” it furnishes a strong base for unified decision-making. Consequently, not only the enterprise, but its various sub-units are also immensely benefited.