Strategic Management; A Tool For Competitive Advantage.
Strategic management is a crucial part of any business today. In the boardrooms, it is all about strategy and how to get ahead of the competition. Historically, the term was a military word as opposed to a corporate word and it came to use in the business environment in the last century. The word strategy comes from the Greek word “stratos,” a term of war that means “the act of the general.” So many definitions have been brought forward to try and explain the meaning of strategic management. Hofer and Schendel define it as “the mediating force or ‘match’ between the organization and the environment.
Kenneth Andrews in the Concept of Corporate Strategy, 1971, defined strategic management as “the pattern of objectives, purposes or goals and the major policies and plans for achieving these goals and the major goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.” The beauty of a strategy is in it being flexible and invisible. For a strategy to be a competitive tool for a business, it has to remain within the corridors of the boardroom and should never be leaked to the competitors.
Proper Strategy was used to successfully end the Nazi regime in Germany. Over time, strategic management has evolved to incorporate strategic marketing and strategic planning independently. In today’s business world, strategic management is more of corporate strategy while strategic planning and strategic marketing among others are SBU’s. An SBU is a Strategic Business Unit that is structurally independent but in line with the whole business strategy. In a marketing scenario, a company may be producing a certain type of brand which captures like 30% of the market and the company has a plan of capturing 70% of the market. One strategic plan would be to launch a different brand as a substitute so as to capture the other 40% and the two brands will be treated with their own specific SBU’s since their external markets are different and they have different missions of course. Whereas one brand has captured 30% of the market, the other brand wants to capture 40%.
Strategic management is at the core of a business success. Understanding the market precisely, bringing together a proper team with relevant skills, investing in the relevant technology and then muscling the necessary resources is crucial for the success of any business. In other words, Strategic management is the organized development of the resources of the functional areas: financials, manufacturing, marketing, technology and manpower. These are the core components of a business and getting them right means the eventual success of an enterprise.
Strategic management concerns itself with the various functions of the organization that contribute to the achievement of the corporate business strategy. This strategy is further aimed at achieving the mission, vision and objectives of the business. Making sure that everybody understands where the business ought to be, what it does, how it does it and most of it all why it does it is the first step in attaining strategic management success. When all the individuals in an organization understand this, then they go ahead to set their own individual strategic goals to make sure they attain the SBU’s within their departments. If they don’t understand the whole business model, chances are they won’t set their own specific goals because they don’t understand what needs to be achieved at the end of the day.
A strategy puts into context the reasonability of the set goals, the objectives, tactics, actions and the time span for achieving that. Strategy is time bound whether short term or long term and this is where the outline of what is to be done is important. Understanding how it will be done and the ultimate objective of the actions is another crucial component. This is where the hierarchy of the process comes in which spirals downward from mission – objectives – strategies – tactics – Actions, programs and rules. The linear chain is more less the same but precise. It follows that the strategy is set – deployment of resources is done – then the desired objectives are achieved. At the lowest level, the individuals in an organization set their individual goals, all geared towards the achievement of the organizational level goals.
The 21st century business needs strategic management to successfully beat the competition. Strategic leaders are needed to give businesses the competitive edge. It all begins with having the right mission and vision and then having a management that not only prides in innovation but is also forward thinking. Getting it right at the initial stage means eventual success. To beat the competition, think ten times better than them. Strategic management is what gives you this.
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