Strategic management is a unique way of achieving desired goals and objectives. Strategic management is simply defined as the art and science of formulating, applying and assessing cross-functional decisions that allow an entity to accomplish its goals and objectives. This management process mainly involves three functional areas including understanding the strategic position of the entity, strategic choice, and strategic employment.
Strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization’s managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization’s objectives, developing policies and plans to achieve those 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 in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.
Michael Porter identifies three principles underlying strategy:
- Creating a “unique and valuable position“
- Making trade-offs by choosing “what not to do”
- Creating “fit” by aligning company activities with one another to support the chosen strategy.
The business environment is changing day by day, and because of the environment changing, every business organization will face various challenges. In this case, SM plays a vital role in the organization through its enduring planning, regulating, analysis, and assessment of all requirements an organization needs to meet its goals and objectives.
Considering the strategic choice can be defined as the decision of choosing a future strategy of an entity. This addresses the question “Where shall we go “. In this process, entities involve with various strategic options and select the best strategy among alternatives.
Some common strategic choices of organizations can be represented as follows:
- Business Strategy
- Corporate strategy
- International strategy
- Innovation and Entrepreneurship
- Acquisitions and alliances
The simple meaning of strategic analysis understands the strategic position of the organization. This process involves identifying the impact of the changing environment in which it operates. Therefore, strategic analysis is important for setting up strategic plans for decision-making and achieving better organizational performance. The strategic analysis is mainly concerned with the followings:
- Strategic capabilities of the organization.
- Identifying the impact of the environment.
- Organizational goals, stakeholders, and CSR.
- Organizational culture.
The process of managing strategies in action can be referred to as strategic implementation. It means the execution of plans and strategies to achieve desired goals and objectives of an organization.
Strategy implementation consists of strategy performance and evaluation, strategy development processes, organizing, leadership & strategic change, and strategy practice.
Linear strategy: A planned determination of goals, initiatives, and allocation of resources, along the lines of the Chandler definition above. This is most consistent with strategic planning approaches and may have a long planning horizon. The strategist “deals with” the environment but it is not the central concern.
Interpretive strategy: A more recent and less developed model than the linear and adaptive models, interpretive strategy is concerned with “orienting metaphors constructed for the purpose of conceptualizing and guiding individual attitudes or organizational participants.” The aim of interpretive strategy is legitimacy or credibility in the mind of stakeholders. It places emphasis on symbols and language to influence the minds of customers, rather than the physical product of the organization.
Adaptive strategy: In this model, the organization’s goals and activities are primarily concerned with adaptation to the environment, analogous to a biological organism. The need for continuous adaption reduces or eliminates the planning window. There is more focus on means (resource mobilization to address the environment) rather than ends (goals). Strategy is less centralized than in the linear model.
Internal marketing is marketing directed at employees. This strategic dimension ensures that everyone within an organization understands and enjoys the product and understands the current strategic marketing campaign. In times of organizational crisis, positive internal marketing messages may reassure the staff and offer tips for dealing with the media and consumers.
Internal marketing is marketing directed at employees.
Integrated marketing attempts to offer a unified marketing message to anyone who comes in contact with the company or its products. Information technology has encouraged the growth of integrated marketing and related strategic dimensions because of the increases in points of contact between a business and consumers. Unified integrated marketing messages usually involve communicating value to a specific set of potential customers, known as the product’s target market.
Relationship marketing is a strategic dimension centered on the creation of lasting connections with customers, media members, distributors, and other businesses. Customer relationship marketing (CRM) is a popular element of this strategic dimension. In CRM, companies keep vast data banks full of customer information to help employees personalize communications and products to meet the needs of individual clients. Like integrated marketing, CRM is driven by access to information technology.
Performance marketing deals with the results of a marketing campaign and evaluating the application of strategic dimensions to the business process. Evaluations of these programs typically include analysis of sales reports and the administration of customer surveys. Far-reaching business elements, such as social, ethical, and legal concerns, are also facets of performance management, and involve evaluation of the business impact on the public and the environment.
Some strategic dimensions cross over into each other. For example, market research is a huge, overriding part of the field that influences almost every aspect, or dimension, of a company’s marketing campaign. Marketers research the market looking for an unfilled need or want, then create a product to fill that void, and target advertisements to the consumers who may need or want the product. This research into the target market member’s lifestyles can tell marketers how to reach consumers and how to structure advertising messages.