Tag: Strategic

The Steps with Advantages and Disadvantages of Strategic Management

The Steps with Advantages and Disadvantages of Strategic Management; Strategy: The word “strategy” derives from the Greek word “stratçgos”; stratus (meaning army) and “ago” (meaning leading/moving). A strategy is an action that managers take to attain one or more of the organization’s goals. The strategy can also be defined as “A general direction set for the company and its various components to achieve a desired state in the future. Strategy results from the detailed strategic planning process”.

Here explains you’ll read and learn; The Steps with Advantages and Disadvantages of Strategic Management.

A strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within the organizational environment to meet the present objectives. While planning a strategy it is essential to consider that decisions do not take in a Vaccum and that any action taken by a firm is likely to be met by a reaction from those affected, competitors, customers, employees or suppliers.

The strategy can also define as knowledge of the goals, the uncertainty of events and the need to take into consideration the likely or actual behavior of others. The strategy is the blueprint of decisions in an organization that shows its objectives and goals, reduces the key policies, and plans for achieving these goals, and defines the business the company is to carry on, the type of economic and human organization it wants to be, and the contribution it plans to make to its shareholders, customers, and society at large.

Steps of Strategic Management:

The strategic management plan has various facets that are being discussed here. The strategies are applied to have proper planning and appropriate allocation of funds for the accomplishment of the goals of the company.

Step 1: Formulation;

The formulation of the strategies essentially involves the environment within which every company has to survive. Here various important decisions make to figure out how the company will reach out to the competition. Here the external environmental analysis is done. The political, economic, legal and social aspects are assessed during the formulation of the strategies.

1. Industry Environment:

The strategic decision-maker checks for the competitor environment. They try to assess the resources available to the rivals and also their bargaining power with the customers. It is also important to understand the trend of the suppliers; check if there are any latest threats of the new entrants in the industry.

2. Internal Environment:

Though most of the companies do not take care of the internal environment this is amongst the most important while implementing strategic management fundamentals. You should have a clear SWOT analysis of your employees, processes, and resources.

Step 2: Implementation;

This is the next important step in strategic management – here the management has to decide as to how the resources will be utilized to reach out to the goals formulated by the company. The implementation phase also checks how the resources of the organization have been structured.

Advantages of Strategic Management Process:

The process of strategic management is a comprehensive collection of different types of continuous activities and also the processes which use in the organization. Strategic management is a way to transform the existing static plan in a proper systematic process. Strategic management can have some immediate changes in the organization. The following mentioned are few advantages of strategic management;

1. Making a better future;

There is always a difference between reactive and proactive actions. When a company practices strategic management – the company will always be on the defensive side and not on the offensive end. You need to come out victorious in the competitive situation and not be a victim of the situation. It is not possible to foresee every situation but if you know that there are chances of certain situations then it is always better to keep your weapons ready to fight the situation.

2. Identifying the directions;

Strategic management essentially and clearly defines the goals and mission of the company. The main purpose of this management is to define realistic objectives and goals – this has to be in line with the vision of the company. Strategic management provides a base for the organization based on which progress can measure and base on the same, the employees can compensate.

3. Better business decisions;

It is important to understand the difference between a great idea and a good idea. If you do have a proper and clear vision of your company – then having a mission and methods to achieve the mission always seems to be a very good idea. It turns into a great idea when you decide what is the type of project that you want to invest your money; how do you plan to invest your time and also utilize the time of your employees. Once you are clear with your ideas about the project and the time each of your employees and you will have to allocate, you will need to focus your attention on the financial and human resources.

4. The longevity of the business;

The times are changing fast and dynamic changes are happening every day. The industries worldwide are changing at a fast pace and hence survival is difficult for those companies which do not have a strong and perfect base in the industry. The strategic management ensures that the company has a thorough stand in the related industry and the experts also make sure that the company is not just surviving on luck and better chances or opportunity.

When you look at various studies you would know that the industries which are not following the strategic management will survive for not more than five years. This suggests that companies should have a powerful focus on the longevity of the business. This suggests that without strategic management, a company can’t survive in the long run.

5. Increasing market share and profitability;

With the help of strategic management, it is possible to increase the market share and also the profitability of the company in the market. If you have a very focused plan and strategic thinking then all the industries can explore better customer segments, products and services and also to understand the market conditions of the industry in which you are operating in. Strategic management skills will help you to approach the right target market. The experts will guide for better sales and marketing approaches. You can also have a better network of distribution and also help you to take business decisions which at the end of the day results in profit.

6. Avoiding competitive convergence;

Most of the companies have become so used to focusing on the competitors that they have started imitating their good practices. It has become so much competition that it is becoming difficult to part the companies or identify them differently. With the help of strategic management this magic is possible; try and learn all the best practices of a company and become a unique identity that will keep you apart from your competitors.

7. Financial advantages;

The firms which follow the process of strategic management prove to have more profits over some time as compared to the companies that do not opt for strategic management decisions. Those firms which involve in using strategic management use the right method of planning; these companies have excellent control over their future. They have a proper budget for their future projects; hence these businesses continue for a long time in the industry.

8. Non-financial advantages;

Besides the financial benefits, the companies using strategic management also provides various non-financial benefits. The experts informed that the firms which practice strategic management are always ready to defeat the external threats. They have a better understanding of the strengths and weaknesses of the competitor and hence they can withstand the competition. This paves way for better performance and rewards for the company over some time. The main feature of this management system is that it has the capacity for problem prevention and problem-solving skills. It also helps in bringing about discipline in the firm for all types of internal and external processes.

Disadvantages of Strategic Management Process:

The process of strategic management includes a set of long-term goals and objectives of the company; using this method helps the company is facing competition in a better manner and also increase its capabilities. These are some of the benefits but every coin has two sides – the same is the case with strategic management. Here are some of the limitations of strategic management;

1. Complex process;

The strategic management includes various types of continuous process which checks all type of major critical components. This includes the internal and external environments, long term and short term goals, strategic control of the company’s resources and last but not least it also has to check the organizational structure. This is a lengthy process because a change in one component can affect all the factors.

Hence one must understand the issues with all the concerned factors. This generally takes time and in the end, the growth of the company affects. Being a complex process it calls for lots of patience and time from the management to implement the strategic management. To have proper strategic management, there should be strong leadership and properly structured resources.

2. Time taking process;

To implement strategic management, the top management must spend proper quality time to get the process right. The managers have to spend a lot of time researching, preparing and informing the employees about this new management. This type of long term and time-consuming training and orientation would hamper the regular activities of the company. The day to day operations are negatively impacted and in the long term, it could affect the business adversely.

E.g. many issues require daily attention but this is not taken care of because they are busy researching the details about strategic management. In case, the proper resolution of the problems is not done on time then there could be a great amount of attrition increase. Besides this, the performance of the employees will also go down; because, they are not getting the required resolution of their problems. This type of situation may lead the management to divert all their critical resources towards employee performance and motivation; while doing this your strategic management process will be sidelined.

3. Tough implementation;

When we speak the word strategic management then it seems to be a huge and large word. But it is also a fact that the implementation of this management system is difficult as compared to other management techniques. The implementation process calls for perfect communication among the employees and employers. Strategic management has to be implemented in such a way that the employees have to remain fully attentive; there should be active participation among the employees and besides this, the employees have to be accountable for their work.

This accountability means not only for the top management but for all employees across the hierarchy. The experts mentioned that implementation is difficult because they have to continuously strive to make the employees aware of the process and benefits of this system. E.g. if a manager was involved in forming the strategic process and he/she has not been involved in the implementation process then the manager will never be accountable for any processes in the company.

4. Proper planning;

When we say management systems then it calls for perfect planning. You just cannot write things on paper and leave them. This calls for proper practical planning. This is not possible by just one person but it is a team effort. When these types of processes are to implement then you need to sideline various regular decision-making activities that would adversely affect the business in the long run.

Short Review:

In recent years, most of the firms have understood the importance of strategic management – it plays a key role in the upbringing and downfall of any company. In a nutshell, we can conclude that the purpose of strategic management is possible if a company can provide dedicated resources; and, staff to formulate and implement the entire system. If strategic management is implemented in the company thoroughly then there is no doubt that the company will survive all types of odds; and, competition and remain in the market for a long period.

This is required in the present situation for all companies. It just calls for proper planning and the right people to implement them in the company. You need to keep a regular check on all external and internal factors affecting your industry; besides this check all your financial resources whether they are enough to expand your business. If you could keep in mind these things the implementation will become very easy and quick for any organization irrespective of their sizes.

The Steps with Advantages and Disadvantages of Strategic Management

July 5, 2017
What are Benefits of Strategic Management?

What are the Benefits of Strategic Management? Strategic management essentially means the implementation and formulation of various strategies to achieve the goals of the company. This is the detailed initiative that is taken by the top management; these strategic decisions are taken based on available resources; they also take into consideration the effects of the external and internal environment on their decisions.

Here explains read and learn; Benefits of Strategic Management with its advantages and disadvantages:

There are many benefits of strategic management and they include identification, prioritization, and exploration of opportunities. For instance, newer products, newer markets, and newer forays into business lines are only possible if firms indulge in strategic planning. Next, strategic management allows firms to take an objective view of the activities being done by it; and, do a cost-benefit analysis as to whether the firm is profitable.

Just to differentiate, by this, we do not mean the financial benefits alone (which would be discussed below); but, also the assessment of profitability that has to do with evaluating whether the business is strategically aligned to its goals and priorities.

The key point to note here is that strategic management allows a firm to orient itself to its market and consumers; and, ensure that it is actualizing the right strategy.

1] Financial Benefits;

It has been shown in many studies that firms that engage in strategic management are more profitable; and, successful than those that do not have the benefit of strategic planning and strategic management.

When firms engage in forwarding looking planning and careful evaluation of their priorities, they have control over the future; which is necessary for the fast-changing business landscape of the 21st century.

It has been estimated that more than 100,000 businesses fail in the US every year and most of these failures are to do with a lack of strategic focus and strategic direction. Further, high performing firms tend to make more informed decisions; because they have considered both the short-term and long-term consequences and hence, have oriented their strategies accordingly. In contrast, firms that do not engage themselves in meaningful strategic planning are often bogged down by internal problems and lack of focus that leads to failure.

2] Non-Financial Benefits:

The section above discussed some of the tangible benefits of strategic management. Apart from these benefits, firms that engage in strategic management are more aware of external threats; an improved understanding of competitor strengths and weaknesses and increased employee productivity. They also have a lesser resistance to change and a clear understanding of the link between performance and rewards.

The key aspect of strategic management is that the problem solving and problem preventing capabilities of the firms enhance through strategic management. Strategic management is essential as it helps firms to rationalize change and actualize change; and, communicate the need to change better to their employees. Finally, strategic management helps in bringing order and discipline to the activities of the firm in both internal processes and external activities.

3] Closing Thoughts;

In recent years, virtually all firms have realized the importance of strategic management. However, the key difference between those who succeed and those who fail is how strategic management is done and strategic planning is carried out makes the difference between success and failure. Of course, there are still firms that do not engage in strategic planning or where the planners do not receive support from management. As well as, These firms ought to realize the benefits of strategic management and ensure their longer-term viability and success in the marketplace.

The Advantages of Strategic Management;

The following advantages below are;

1] Discharges Board Responsibility;

The first reason that most organizations state for having a strategic management process is that it discharges the responsibility of the Board of Directors.

2] Forces An Objective Assessment;

Strategic management provides a discipline that enables the board; and, senior management to take a step back from the day-to-day business to think about the future of the organization. Without this discipline, the organization can become solely consumed with working through the next issue or problem without consideration of the larger picture.

3] Provides a Framework For Decision-Making;

The strategy provides a framework within which all staff can make day-to-day operational decisions; and, understand that those decisions are all moving the organization in a single direction. It is not possible (nor realistic or appropriate) for the board to know all the decisions the executive director will have to make, nor is it possible (nor realistic or practical) for the executive director to know all the decisions the staff will make.

The strategy provides a vision of the future, confirms the purpose and values of an organization, sets objectives, clarifies threats and opportunities, determines methods to leverage strengths, and mitigate weaknesses (at a minimum). As such, it sets a framework and clear boundaries within which decisions can be made. Also, the cumulative effect of these decisions (which can add up to thousands over the year) can have a significant impact on the success of the organization. Providing a framework within which the executive director and staff can make these decisions helps them better focus their efforts on those things that will best support the organization’s success.

4] Supports Understanding & Buy-In;

Allowing the board and staff participation in the strategic discussion enables them to better understand the direction; why that direction was chosen, and the associated benefits. For some people simply knowing is enough; for many people, to gain their full support requires them to understand.

5] Enables Measurement of Progress;

A strategic management process forces an organization to set objectives and measures of success. Also, the set of measures of success requires that the organization first determine; what is critical to its ongoing success and then force the establishment of objectives and keeps; these critical measures in front of the board and senior management.

6] Provides an Organizational Perspective;

Addressing operational issues rarely looks at the whole organization and the interrelatedness of its varying components. Strategic management takes an organizational perspective and looks at all the components and the interrelationship between those components to develop a strategy that is optimal for the whole organization and not a single component.

The Disadvantages of Strategic Management;

The following disadvantages below are;

1] The Future Doesn’t Unfold As Anticipated;

One of the major criticisms of strategic management is that it requires the organization to anticipate the future environment to develop plans, and as we all know, predicting the future is not an easy undertaking. The belief is that if the future does not unfold as anticipated then it may invalidate the strategy taken. Recent research conducted in the private sector has demonstrated that organizations that use the planning process achieve better performance than those organizations that don’t plan; regardless of whether they achieved their intended objective. Also, there are a variety of approaches to strategic planning that are not as dependent upon the prediction of the future.

2] It Can Be Expensive;

There is no doubt that in the not-for-profit sector there are many organizations that cannot afford to hire an external consultant to help them develop their strategy. As well as, Today many volunteers can help smaller organizations; and, also funding agencies that will support the cost of hiring external consultants in developing a strategy. Regardless, it is important to ensure that the implementation of a strategic management process is consistent with the needs of the organization; and, that appropriate controls are implemented to allow the cost/benefit discussion to be undertaken, before the implementation of a strategic management process.

3] Long Term Benefit vs. Immediate Results;

Strategic management processes design to provide an organization with long-term benefits. If you are looking at the strategic management process to address an immediate crisis within your organization, it won’t. It always makes sense to address the immediate crises before allocating resources (time, money, people, opportunity, cost) to the strategic management process.

4] Impedes Flexibility;

When you undertake a strategic management process; it will result in the organization saying “no” to some of the opportunities that may be available. This inability to choose all of the opportunities presented to an organization is sometimes frustrating. Also, some organizations develop a strategic management process that becomes excessively formal. Processes that become this “established” lack innovation and creativity and can stifle the ability of the organization to develop creative strategies. In this scenario, the strategic management process has become the very tool that now inhibits the organization’s ability to change and adapt.

A third way that flexibility can be impeded is through a well-executed alignment and integration of the strategy within the organization. An organization that is well-aligned with its strategy has addressed its structure, board, staffing, and performance and reward systems. This alignment ensures that the whole organization is pulling in the right direction, but can inhibit the organization’s adaptability. Again, there are a variety of newer approaches to strategy development used in the private sector (they haven’t been widely accepted in the not-for-profit sector yet); that build strategy and address the issues of organizational adaptability.

Benefits of Strategic Management.

July 5, 2017
Goal Commitment: Meaning and Definition

Goal Commitment? What affects the strength of commitment to goals? How does this affect goal attainment? Goal commitment is our determination to pursue a course of action that will lead to the goal we aspire to achieve (Bandura, 1986). The strength of goal commitment will affect how hard one will try to attain the goal. Goal commitment affects by the properties described thus far: difficulty and specificity. For example, when goals are too difficult, commitment declines, followed by a drop-off in performance (Locke & Latham, 1990).

What is Goal Commitment?

“Degree to which a person determine in achieving a desired (or required) goal.”

Goals are central to current treatments of work motivation, and goal commitment is a critical construct in understanding the relationship between goals and task performance. Despite this importance, there is confusion about the role of goal commitment, and only recently has this key construct received the empirical attention it warrants. This meta-analysis, based on 83 independent samples, updates the goal commitment literature by summarizing the accumulated evidence on the antecedents and consequences of goal commitment. Using this aggregate empirical evidence, the role of goal commitment in the goal-setting process is clarified and key areas for future research identifies.

Commitment also affect by goal intensity, goal participation, and peer influence.

Goal Intensity:

Commitment is related to goal intensity, or the amount of thought or mental effort that goes into formulating a goal and how it will be attained (Locke & Latham, 1990). This is similar to goal clarification because when we clarify a goal; we involve in a conscious process of collecting information about the goal and task and our ability to attain it (Schutz, 1989).

In a study of fifth graders, Henderson (cited in Locke & Latham, 1990) found that students who formulated a greater number of reading purposes with more detail and elaboration attained their goals to a greater extent than did students with superficial purposes. Although there was no difference in IQ scores of the groups; the students who set more goals with elaboration were better readers. It stands to reason that the more thought that gives to developing a goal; the more likely one will commit to the goal.

Goal Participation:

How important, motivationally, is it for people to participate in goal setting? This is an important question because goals are often assigned by others at home, school, and work. The state imparts curriculum standards or goals to teachers, who in turn impose them on students. A sales manager may assign quotas to individual salespersons. Letting individuals participate in setting goals can lead to greater satisfaction. Nevertheless, telling people to achieve a goal can influence self-efficacy; because it suggests they are capable of achieving the goal (Locke & Latham, 1990).

To investigate the effects of assigned and self-set goals; Schunk (1985) conducted a study of sixth-grade students with LD who were learning subtraction. One group was assigned goals (e.g., “Why don’t you try to do seven pages today”). A second group set goals themselves (e.g., “Decide how many pages you can do today”). A third group worked without goals. Students who self-set goals had the highest self-efficacy and math scores. Both goal groups demonstrated higher levels of self-regulation than the control group without any goals.

Nevertheless, Locke and Latham (1990) concluded that self-set goals are not consistently more effective than assigned goals in increasing performance. The crucial factor in assigned goals is acceptance. Once individuals become involved in a goal, the goal itself becomes more important than how it was set or whether it was imposed. Because, at work and in schools, goals are often assigned by others; the assigned goals must accept by participants. Joint participation in goal setting by teachers and students may increase the acceptance of goals.

Peer Influence:

One factor where teachers might be influential in promoting goal acceptance and commitment is peer influence. Strong group pressures are likely to increase commitment to goals (Locke & Latham, 1990). This group cohesiveness is more often found on athletic teams. Obviously, the coach wants a strong commitment to the team goals. In the classroom, group goals may aid the commitment of students working in cooperative learning groups and thus lead to a higher quality of work.

An Entrepreneur will need to do if you want to commit towards achievement:

The following achievement below are;

Make sure that your business goals are achievable.

The biggest enemy of achieving business goals is setting up unrealistic goals. For example, if you set the goal to increase sales by 500%; although the growth of the industry is lower than 10%, surely, 500% would be unrealistic.

If you notice that some goal cannot be achieved, simply adjust it in the line with reality. For example, use a 15% increasing in sales instead of 500%. The goal of 15% would be much more realistic, and certainly; it will be as imperative for you and your business to achieve it because it is above-average in the industry.

Use specific sentences in your business goals.

Imagine the goal from our example above: increasing sales in the future. For how much we will need to increase the sales? At which time we will need to increase the sales? This is a really confusing and undetermined goal. If you don’t know what to achieve and when to achieve it, you will probably not even try to achieve it.

Write your business goals on the paper.

Different scientific researches prove that if you put something on a paper; your commitment to that something is will be higher. In his book Influence; The Psychology of Persuasion, Dr. Robert Cialdini gives an example from the Korean war in which the Chinese soldiers in the camps where he held prisoners (soldiers) were looking for written statements that communism is better than the US system to write on the paper. Thus a long time they were committed to his own statement in which basically they did not believe. If your business goal writes on paper they will be in a group with a higher commitment than the goals that remain only in our head.

Determine the activities that must accomplish.

Knowing the activities that must implement to achieve your business goals in advance will increase the level of commitment to the goal. Therefore, once you have the goal of the paper, list the activities.

Assign responsible for each activity.

At the end of each activity assign responsibility for implementations. In such a way, the commitment will transfer to the employees or your team members; and, at the same time will assure achievement.

Goal Commitment: Meaning and Definition

April 23, 2017
Components of a Strategy Statement

What are Components of a Strategy Statement?

The strategy statement of a firm sets the firm’s long-term strategic direction and broad policy directions. It gives the firm a clear sense of direction and a blueprint for the firm’s activities for the upcoming years. The main constituents of a strategic statement are as follows:

Strategic Intent

An organization’s strategic intent is the purpose that it exists and why it will continue to exist, providing it maintains a competitive advantage. Strategic intent gives a picture of what an organization must get into immediately in order to achieve the company’s vision. It motivates the people. It clarifies the vision of the vision of the company.

Strategic intent helps management to emphasize and concentrate on the priorities. Strategic intent is, nothing but, the influencing of an organization’s resource potential and core competencies to achieve what at first may seem to be unachievable goals in the competitive environment. A well expressed strategic intent should guide/steer the development of strategic intent or the setting of goals and objectives that require that all of the organization’s competencies be controlled to a maximum value.

Strategic intent includes directing organization’s attention on the need of winning; inspiring people by telling them that the targets are valuable; encouraging individual and team participation as well as the contribution, and utilizing intent to direct allocation of resources.

Strategic intent differs from strategic fit in a way that while strategic fit deals with harmonizing available resources and potentials to the external environment, strategic intent emphasizes on building new resources and potentials so as to create and exploit future opportunities.

Vision Statement

A vision statement identifies where the organization wants or intends to be in future or where it should be to best meet the needs of the stakeholders. It describes dreams and aspirations for future. For instance, Microsoft’s vision is “to empower people through great software, any time, any place, or any device.” Wal-Mart’s vision is to become the worldwide leader in retailing.

A vision is the potential to view things ahead of themselves. It answers the question “where we want to be”. It gives us a reminder about what we attempt to develop. A vision statement is for the organization and its members, unlike the mission statement which is for the customers/clients. It contributes to effective decision-making as well as effective business planning. It incorporates a shared understanding about the nature and aim of the organization and utilizes this understanding to direct and guide the organization towards a better purpose. It describes that on achieving the mission, how the organizational future would appear to be.

Mission Statement

The mission statement is the statement of the role by which an organization intends to serve its stakeholders. It describes why an organization is operating and thus provides a framework within which strategies are formulated. It describes what the organization does (i.e., present capabilities), who all it serves (i.e., stakeholders) and what makes an organization unique (i.e., the reason for existence).

A mission statement differentiates an organization from others by explaining its broad scope of activities, its products, and technologies it uses to achieve its goals and objectives. It talks about an organization’s present (i.e., “about where we are”). For instance, Microsoft’s mission is to help people and businesses throughout the world to realize their full potential. Wal-Mart’s mission is “To give ordinary folk the chance to buy the same thing as rich people.” Mission statements always exist at the top level of an organization, but may also be made at various organizational levels. Chief executive plays a significant role in the formulation of a mission statement. Once the mission statement is formulated, it serves the organization in long run, but it may become ambiguous with organizational growth and innovations.

In today’s dynamic and competitive environment, the mission may need to be redefined. However, care must be taken that the redefined mission statement should have original fundamentals/components. The mission statement has three main components a statement of mission or vision of the company, a statement of the core values that shape the acts and behavior of the employees, and a statement of the goals and objectives.

Goals and Objectives

A goal is a desired future state or objective that an organization tries to achieve. Goals specify in particular what must be done if an organization is to attain mission or vision. Goals make the mission more prominent and concrete. They coordinate and integrate various functional and departmental areas in an organization.

Objectives: Objective, in general, indicates a place where you want to reach. In organizational literature, it means the aim which an organization tries to achieve. Objectives are generally in plural form. Objectives are predetermined; they provide clear direction to the activities and results to be obtained from the planning process. Objectives must be SMART (Specific, measurable, achievable, realistic and timely). Objectives must be clearly defined so that the works become goal-oriented and the unproductive and unsystematic tasks can be avoided.

Goals: A Goal is simply something that somebody wants to achieve. The synonyms of goal are aim, ambition, purpose, target and objective. Simply speaking, goal refers to the purpose towards which the efforts are made or endeavors are directed. A goal has a time-frame which is generally long term. So, it’s a long term plan.

At this stage, it is important to differentiate between the terms objective and goal, because the words, objective and goals seem to be synonymous, but, in fact, they are not. It does not matter much which word you call goal and which word you call objective if you are consistent in your own use and understand its relevance or applicability. However, if there are words in English that are confusing, especially to the students, objective and goal are the ones among them. It’s, therefore, important to understand them so as to avoid the confusion.

When you have something you want to accomplish, it is important to set both goals and objectives. Once you learn the difference between goals and objectives, you will realize that how important it is that you have both of them. Goals without objectives can never be accomplished while objectives without goals will never get you to where you want to be. The two concepts are separate but related and will help you to be who you want to be.

April 19, 2017
What is Strategic Management? Meaning and Definition

What is Strategic Management? Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. Strategic management can also define as a bundle of decisions and acts which a manager undertakes and which decides the result of the firm’s performance.

Here explains read and learn; What is Strategic Management? Meaning and Definition.

Strategic management provides overall direction to the enterprise and involves specifying the organization’s objectives, developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision making in the context of complex environments and competitive dynamics. Strategic management is not static; the models often include a feedback loop to monitor execution and inform the next round of planning.

Michael Porter identifies three principles underlying strategy: creating a “unique and valuable market position”, making trade-offs by choosing “what not to do”, and creating “fit” by aligning company activities with one another to support the chosen strategy. Dr. Vladimir Kvint defines strategy as “a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully.”

The corporate strategy involves answering a key question from a portfolio perspective: “What business should we be in?” Business strategy involves answering the question: “How shall we compete in this business?” In management theory and practice, a further distinction is often made between strategic management and operational management. Operational management is concerned primarily with improving efficiency and controlling costs within the boundaries set by the organization’s strategy.

Definition of Strategic Management:

Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes.

The strategy is defined as;

“The determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.”

Strategies are established to set direction, focus effort, define or clarify the organization, and provide consistency or guidance in response to the environment. As well as, Strategic management involves the related concepts of strategic planning and strategic thinking. It is analytical and refers to formalized procedures to produce the data and analyses used as inputs for strategic thinking; which synthesizes the data resulting in the strategy. Strategic planning may also refer to control mechanisms used to implement the strategy once it determines.

In other words, strategic planning happens around strategic thinking or strategy making activity. Strategic management often describes as involving two major processes: formulation and implementation of a strategy. While described sequentially below, in practice the two processes are iterative and each provides input for the other. Also, Strategic Management is all about identification and description of the strategies; that managers can carry to achieve better performance and a competitive advantage for their organization. An organization is said to have a competitive advantage if its profitability is higher than the average profitability of all companies in its industry.

Explanation;

The manager must have a thorough knowledge and analysis of the general and competitive organizational environment to make the right decisions. They should conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make the best possible utilization of strengths, minimize the organizational weaknesses, make use of arising opportunities from the business environment and shouldn’t ignore the threats.

Strategic management is nothing but planning for both predictable as well as unfeasible contingencies. It applies to both small as well as large organizations as even the smallest organization faces competition; and, by formulating and implementing appropriate strategies; they can attain sustainable competitive advantage.

It is a way in which strategists set the objectives and proceed about attaining them. It deals with making and implementing decisions about the future direction of an organization. They help us to identify the direction in which an organization is moving.

Strategic management is a continuous process that evaluates and controls the business and the industries in which an organization involve; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors; and then reevaluates strategies regularly to determine how it has been implemented and whether it was successful or does it needs replacement.

What is Strategic Management? Meaning and Definition.

More things;

Strategic Management gives a broader perspective to the employees of an organization; and, they can better understand how their job fits into the entire organizational plan; how it co-relate to other organizational members. It is nothing but the art of managing employees in a manner that maximizes the ability to achieve business objectives. The employees become more trustworthy, more committed and satisfied; as they can co-relate themselves very well with each organizational task.

They can understand the reaction of environmental changes in the organization; and, the probable response of the organization with the help of strategic management. Thus the employees can judge the impact of such changes on their job and can effectively face the changes. Also, the managers and employees must appropriately do appropriate things. They need to be both effective as well as efficient.

April 19, 2017
Strategy

What is Strategy?

A method or plan has chosen to bring about the desired future, such as achievement of a goal or solution to a problem.

The art and science of planning and marshaling resources for their most efficient and effective use. The term is derived from the Greek word for generalship or leading an army. See also tactics.

A strategy is a high-level plan to achieve one or more goals under conditions of uncertainty. In the sense of the “art of the general”, which included several subsets of skills including “tactics”, siege craft, logistics etc., the term came into use in the 6th century C.E. in East Roman terminology and was translated into Western vernacular languages only in the 18th century. From then until the 20th century, the word “strategy” came to denote “a comprehensive way to try to pursue political ends, including the threat or actual use of force, in a dialectic of wills” in a military conflict, in which both adversaries interact.

Companies now face increasingly turbulent, complex and threatening environments. In the past, they could succeed by focusing virtually all management efforts on running their day to day affairs as efficiently as possible. Although such focusing is still important, adapting the firms to changing environmental conditions have become an essential gradient for success.

The strategic management perspective highlights the significance of devoting more attention to analyzing environments and formulating strategies that relate directly to environmental changes. The ultimate purpose of strategic management is to help the organization increase its performance through increased effectiveness, efficiency, and flexibility.

A strategy is a way of doing something. It usually includes the formulation of an objective and a set of action plans for the accomplishment of the objective.

Strategic management may be understood as the process of formulating, implementing and evaluating business strategies to achieve organizational objectives. It is a set of managerial decisions and actions that determine the long-term performance of a corporation. It involves environmental scanning, strategy formulation, strategy implementation, evaluation, and control.

The study of strategic management emphasizes on monitoring and evaluating environmental opportunities and threats in the light of corporation’s strengths and weaknesses.

Step 01: Analyze opportunities and threats or constraints that exist in the external environment.

Step 02: Formulate strategies that will match the organization’s strengths and weaknesses with opportunities and threats or constraints that exist in the external environment.

Step 03: Implement the strategies.

Step 04: Evaluate and control activities to ensure that organizations objectives are achieved.

It is important because the resources available to achieve these goals are usually limited. Generally involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources). This is generally tasked with determining strategy. The strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes. It involves activities such as strategic planning and strategic thinking.

Henry Mintzberg from McGill University defined strategy as a pattern in a stream of decisions to contrast with a view of strategy as planning, while Max McKeown (2011) argues that “strategy is about shaping the future” and is the human attempt to get to “desirable ends with available means.” Dr. Vladimir Kvint defines strategy as “a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully.”

Many Definitions of Strategy

In 1988, Henry Mintzberg described the many different definitions and perspectives on strategy reflected in both academic research and in practice. He examined the strategic process and concluded it was much more fluid and unpredictable than people had thought. Because of this, he could not point to one process that could be called strategic planning. Instead, Mintzberg concludes that there are five types of strategies:

As plan: A directed course of action to achieve an intended set of goals; similar to the strategic planning concept.

As pattern: A consistent pattern of past behavior, with a strategy realized over time rather than planned or intended. Where the realized pattern was different from the intent, he referred to the strategy as emergent.

As position: Locating brands, products, or companies within the market, based on the conceptual framework of consumers or other stakeholders; a strategy determined primarily by factors outside the firm.

As ploy: A specific maneuver intended to outwit a competitor; and

As perspective: Executing strategy based on a “theory of the business” or natural extension of the mindset or ideological perspective of the organization.

In 1998, Mintzberg developed these five types of management strategy into 10 “schools of thought” and grouped them into three categories. The first group is normative. It consists of the schools of informal design and conception, the formal planning, and analytical positioning. The second group, consisting of six schools, is more concerned with how strategic management is actually done, rather than prescribing optimal plans or positions. The six schools are entrepreneurial, visionary, cognitive, learning/adaptive/emergent, negotiation, corporate culture and business environment. The third and final group consists of one school, the configuration or transformation school, a hybrid of the other schools organized into stages, organizational life cycles, or “episodes”.

Michael Porter defined strategy in 1980 as the “Broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals” and the “Combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there.” He continued that: “The essence of formulating the competitive strategy is relating a company to its environment.”

April 19, 2017