Nature of Strategic Management

Strategic management is an art and science of cross functional decisions that enable an organization to achieve its objectives by formulating, implementing and evaluating. Strategic decisions are required in uncertain situation. Purpose of strategic management is to exploit and create new and different opportunities for tomorrow; long-range planning. 

Basic stages of Strategic Management process:

1. Strategic formulation
2. Strategic implementation
3. Strategic evaluation

Strategic Formulation Includes:

•  Developing- Vision and mission

•  Discovering-External opportunities and threats

•  Determining- Internal strengths and weaknesses

•  Establishing- Long term objectives

•  Generating-Alternative strategies

•  Choosing-Particular strategy selection

Strategic Implementation Includes:

•    Establish Annual Objectives

•    Devise policies

•   Motivate Employee

•   Allocate Resource

Strategic Evaluation Requires:

• Internal and External Review

• Performance Measurement

• Corrective Action

Key terms in Strategic Management:

• Competitive Advantage

• Strategists

• Vision and mission statement

• External opportunities and threats

• Internal strengths and weaknesses

• Long term objectives

• Strategies

• Annual Objectives

• Policies

Competitive Advantage: 

In strategic management attaining and retaining competitive advantage is one of the basic factors. Anything that an organization does especially well compare to their rivals regarded as the competitive advantage of that organization. During global recession ample balance, less fixed assets than rivals, internet provides major competitive advantages. Normally competitive advantages only for certain period due to rival firms imitating and undermining that advantages, so must strive to achieve sustained competitive advantages by (a) continually adapting change with external events and internal capabilities, competencies, and resources (b)effectively practice SMP.

Strategists: 

Strategists are individual who are responsible for success and failure. Strategist first help to gather analyze and organize information. Then track industry and competitors trend .After tracking trend strategist develop forecasting model and scenario analysis .At last strategist evaluate performance, spot opportunities identify threats and develop corrective plans. Strategist differs because of personal philosophies, social responsibilities, concern profitability, attitude, values, ethics, willingness to take risk etc.

Vision and mission statement:

Vision Statement: Vision Statement is the source of inspiration. It only focuses on future. Vision set direction for business planning and give foundation for developing comprehensive mission statement.

Example: What do we want to become?

Mission Statement: Mission statement is more descriptive than vision Statement. It focuses on present. It informs about the desired level of performance. Mission statement is most visible and part of strategic management process. This statement reflects every aspect of a business.

Example: What is our business? Identifies the scope of firms operations. 

Strategies: 

By using different strategies long term objectives can be achieved. Examples: Geographic expansion, Acquisition, Product development, Market penetration, Joint venture, Retrenchment etc.

Long term objectives: 

Specific results that an organization seeks to achieve in pursuing its basic mission. Objectives should be measurable, consistent and clear. Objectives are essential for ensuring any firm’s success.

Annual Objectives: 

Short–term mile stones that firms must achieve to reach long term objectives. Annual Objectives should be computable, quantitative, realistic, challenging.

Policies:  

By following policies annual objectives can be achieved. To support objectives policies can be considered as the guidelines to achieve annual objectives.