Strategic Management

Today management is needed in all types of organizations regardless of their size, at all organizations levels and in all work areas. Because management is universally needed, improving the way an organization is managed is one of the keys to success, and the importance of strategic management to achieve this goal is recognised around the world.

Definition

So what is strategic management exactly? In simple words, it’s what managers do to develop an organization’s strategies. And as with most management definitions, the answer usually brings another question…What are an organization’s strategies? Basically they’re the decisions and actions that determine the success of that organization in the long run.

So, in other words, strategic management is an important task, and ultimately entails all of the basic management functions – for those not familiar with the basics, those would be planning, organizing, leading and controlling.

This is just a small description, and as usual, you should always research and read several resources to improve your knowledge about the matter.

Importance

Like mentioned before, strategic management can and will influence the organization’s performance. That’s why you can have organizations that face the same environmental conditions, but with different performance levels – and considering recent studies, there is a wide belief that organization’s that use strategic planning usually have better performance that the ones that don’t.

Another reason that supports the importance of strategic management has to do with the continually changing situation that organizations face these days, because it helps managers to examine relevant factors before deciding their course of action, thus helping them to better cope with uncertain environments.

Finally, strategic management is important most organizations are composed by diverse divisions and departments that need to be coordinated, else there would be no focus on achieving the organization's goals.

Much can be said about this process, but here i'll only present the general steps to give you an idea of what is this all about. The strategic management consists of six steps:

1. Mission, goals and strategies: If you Google one of the well know companies, and search their website, you'll always find a section dedicated to their mission. That's because every organization needs a mission.Why? Because it defines the organization's purpose, their reason for being in business. It is also important to identify goals, because they are the foundation of planning and give managers a way to measure the performance their success. Finally, a manager needs to know the organizations strategies, to evaluate them and make the necessary changes.
2. External Analysis: Pretty straightforward. A manager needs to know what the competition is doing, to know how the current legislation affects the organization's activities...and so on. An external analysis is needed to examine the changes occurring in the environment, in order to adapt to those changes.
3. Internal Analysis: Now we move to inside of the organization, instead of the outside. basically in this step a manager has to analyse the organization's resources, capabilities, and spot the strengths and weaknesses in order to improve his decisions (this is also know as SWAT analysis).
4. Formulate Strategies: Considering the realities described above, managers formulate corporate, business and functional strategies.
5. Implement Strategies: Sounds logical doesn't it? After strategies are formulated they must be implemented, and like in other aspects of life, a strategy is only as good as its implementation.
6. Evaluate the Results: And now the final step where we evaluate the results. A manager should ask himself if the implemented strategies helped the organization to reach their goals.