by Strategic management, especially when done well, is important for a business’ long-term success. When we say that a business is carrying out strategic management, what is meant is that “strategic management” defines a strategy for its business activities, with clear, well-defined goals. The business will then create clear, well-defined plans that it will then put in action to achieve its goals and to align its business activities, so that the business will be in harmony with those goals. It also will allocate all of the necessary resources to achieve those goals.
A good strategic management plan goes beyond the improving a business’ bottom line. A good plan also gives the company a valid social license for operations. In today’s environment, this is becoming an ever-more important aspect for each business, because businesses have multiple internal and external stakeholders. For example, consumers are seeing an increase in their awareness of their products being sold by companies. They’re also becoming increasingly more interested, not only in the products a business produces, but also in the way that a company conducts its business activities. This includes operations from an environmental standpoint as well as from an ethical one. All of these aspects should be considered in strategic management and should be included in the business’ plans, which should ensure that the business will survive in the long run.
Need of Strategic Management for an Organization
- Increasing Rate of Changes
The environment in which the business operates’ is fast, changing.
A business concern which does not keep its policies up-to-date, cannot survive for a long time in the market. In turn, the effective strategy optimises profits over a long run.
- Higher Motivation of Employees
The employees (human resources) are assigned clear cut duties by the top management viz. what is to be done, who is to do it, how to do it and when to do it. ? When strategic management is followed in any organisation, employees become loyal, sincere and goal oriented and their efficiency is also increased.
They also get rewards and promotions resulting in higher motivation for the employees. A strategy must respect human values and duly consider the aspirations of individual members.
- Strategic Decision-Making
Under strategic planning, the first step is to set the goals or objectives of a business concern. Strategic decisions taken under strategic management help the smooth sailing of an enterprise. Strategic planning is the overall planning of operations for effective implementation of policies.
- Optimization of Profits
An effective strategy should develop from policies of a concern. It takes into account actions of competitors. It considers future operations in respect of market area and opportunity, executive competence, available resources and limitations imposed by the Government. An effective strategy should optimise profits over the long run.
- Miscellaneous
Mr. H.N Broom in his book on ‘Business Policy and Strategic Action’ has mentioned that a strategy has a primary concern with the following:
(a) Marketing opportunity: Products, prices, sales potential and sales promotion.
(b) Available distribution channel and costs
(c) The scale of company operations.
(d) The manufacturing process required to implement their scale of operations (with an optimal production cost)
(e) The research and innovation programme.
(f) The type of organisation.
(g) The amounts and proportions of equity and credit capital available to the firm and their combined adequacy.
(h) The planned rate of growth
Thus, strategy is important because it makes possible the implementation of policies and long range plans for attaining company goals, creation of effective business strategy requires a basic knowledge of economic theory, management principles, accounting, statistics, finance and administrative practice.
Skills Required for Strategic Management
Strategic management is a multi-faceted operation that requires lots of different skills in business and in leadership. For example, strategic management requires the manager be highly analytical and to have refined analytical skills.
Leaders who develop the strategies that drive a business are also required to have a bird’s eye view of the company, as well as an intimate understanding of how everything in the business is interconnected. They need to understand such things as the expectations of the stakeholders, the needs of the customers, the competitive landscape, the global trends, the environment within which the business operates and so on.
For strategic management to be successful, it needs to start with an understanding of the internal factors as well as the external factors that determine the success of the company, whether short term or long term. That understanding needs to be both honest and clear.
The relevance of strategic management is all about strategy, and so it will require strategy. The manager must have the ability to be abstract in the theoretical world of business analysis and also to be practical in business strategy. Business managers should be able to look at the business analysis, so that can identify the opportunities that the analysis reveals. They should then be able to choose the opportunities that they will follow, so that they can then develop a unique strategy, which defines how the business will leverage the opportunities, so that he will become successful.
Also, strategic management is all about leadership and, as such, it will require leadership skills of the strategic manager. The manager should be a strong enough leader to be able to implement the business strategy that’s been set out in the strategic-management arm of the business. These managers need to engage with the stakeholders of the company, both internally and externally, and be aware of the challenges that face strategic implementation. Additionally, they should be skilled enough leaders to overcome those challenges.
Training Required for Strategic Management
In theory, at least, it is possible to master all of the skills that strategic management requires, simply by gaining experience on the job. However, this is impractical and slow, at best. It is important to develop a training program for strategic management so that it is faster to attain the abilities that strategic management requires. This training should also be conducted under the guidance of a strategic management expert.
There are many institutions out there that offer courses in business development and management. When picking a college to go to, look for a course that is practical and takes you along the tricky path from business analysis to business strategy. That said, there are quite a few advantages to a good strategic management training program:
(i) Understanding
When you take a good strategic management course, you gain an intimate understanding of the way the business environment today is both interconnected and global.
(ii) Development
When you take a good strategic management course, you get the opportunity to develop your strategic thinking skills, especially in relation to the way your business operates within its immediate and greater environment.
(iii) Identification
Good training in strategic management will give you the ability to quickly and easily identify opportunities for your company in its immediate as well as greater business environment.
(iv) Creation
A good strategic management course will teach you how to create strategies that are both effective and efficient in the leveraging of the opportunities which you identify for your business.
(v) Management
As would be expected, good training in strategic management will give you the ability to manage both your team and the organization as a whole, as it moves forward to achieve the goals of your strategic plan.
The best kind of training in strategic management will give you the ability to work directly on the issues that affect your business. You will analyze the challenges faced by your business and provide support for your business as you develop a strategy for it. Good training will also provide you with the necessary leadership skills that will help you execute your business strategies.
