Meaning of Strategic Management20/03/2020
Strategic management is the management of an organization’s resources to achieve its goals and objectives. Strategic management involves setting objectives, analyzing the competitive environment, analyzing the internal organization, evaluating strategies, and ensuring that management rolls out the strategies across the organization.
Strategic management is divided into several schools of thought. A prescriptive approach to strategic management outlines how strategies should be developed, while a descriptive approach focuses on how strategies should be put into practice. These schools differ on whether strategies are developed through an analytic process, in which all threats and opportunities are accounted for, or are more like general guiding principles to be applied.
Strategic management has been defined by various thinkers, philosophers and practitioners. Strategic management can be defined as the formal process for defining company vision & mission, assess internal & external environment, formulate strategies under resource constraints, implement strategies, and evaluate the strategies. Strategic management is the art and science of formulating, implementing and evaluating cross function decision that enable the business to achieve its objectives.
Lamb Robert (1984) – Strategic management is an on-going process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e., regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment, or a new social, financial, or political environment.
Learned (1965): It is the study of the functions and responsibilities of general management and the problems which affect the character and success of the total enterprise.
Schendel and Hofer (1979): Strategic management is a process that deals with the entrepreneurial work of the organization, with organizational renewal and growth, and, more particularly, with developing and utilizing the strategy which is to guide the organization’s operations.
Bracker (1980): Strategic management entails the analysis of internal and external environments of firms to maximize the utilization of resources in relation to objectives.
Jemison (1981): Strategic management is the process by which general managers of complex organizations develop and use a strategy to co-align their organization’s competence and the opportunities and constraints in the environment.
Van Cauwenbergh and Cool (1982): Strategic management deals with the formulation aspects (policy) and the implementation aspects (organization) of calculated behaviour in new situations and is the basis for future administration when repetition of circumstances occurs.
Schendel and Cool (1988) – Strategic management is essentially work associated with the term entrepreneur and his function of starting (and given the infinite life of corporations) renewing organizations.
Fredrickson (1990) – Strategic management is concerned with those issues faced by managers who run entire organizations, or their multifunctional units.
Teece (1990): Strategic management can be defined as the formulation, implementation, and evaluation of managerial actions that enhance the value of a business enterprise.
Rumelt, Schendel, and Teece (1994): Strategic management is about the direction of organizations, most often, business firms. It includes those subjects of primary concern to senior management, or to anyone seeking reasons for success and failure among organizations.
Bowman, Singh, and Thomas (2002): The strategic management field can be conceptualized as one centred on problems relating to the creation and sustainability of competitive advantage, or the pursuit of rents.
Example of Strategic Management
For example, a for-profit technical college wishes to increase new student enrollment and enrolled student graduation rates over the next three years. The purpose is to make the college known as the best buy for a student’s money among five for-profit technical colleges in the region, with a goal of increasing revenue.
In that case, strategic management means ensuring the school has funds to create high-tech classrooms and hire the most qualified instructors. The college also invests in marketing and recruitment and implements student retention strategies. The college’s leadership assesses whether its goals have been achieved on a periodic basis.
Importance of Strategic Management
- It guides the company to move in a specific direction. It defines organization’s goals and fixes realistic objectives, which are in alignment with the company’s vision.
- It assists the firm in becoming proactive, rather than reactive, to make it analyse the actions of the competitors and take necessary steps to compete in the market, instead of becoming spectators.
- It acts as a foundation for all key decisions of the firm.
- It attempts to prepare the organization for future challenges and play the role of pioneer in exploring opportunities and also helps in identifying ways to reach those opportunities.
- It ensures the long-term survival of the firm while coping with competition and surviving the dynamic environment.
- It assists in the development of core competencies and competitive advantage, that helps in the business survival and growth.
The basic purpose of strategic management is to gain sustained-strategic competitiveness of the firm. It is possible by developing and implementing such strategies that create value for the company. It focuses on assessing the opportunities and threats, keeping in mind firm’s strengths and weaknesses and developing strategies for its survival, growth and expansion.
Features of Strategy
- Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment.
- Strategy deals with long term developments rather than routine operations, i.e. it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future.
- Strategy is created to take into account the probable behavior of customers and competitors. Strategies dealing with employees will predict the employee behavior.