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Strategic Management

What is Strategic Management?

Strategic Management encompasses the formulating and implementing of important goals and initiatives that are determined by senior management. This also includes planning and managing the resources available to an organisation.

What is Strategic Management?

Strategic Management encompasses the formulating and implementing of important goals and initiatives that are determined by senior management. This also includes planning and managing the resources available to an organisation.

It continuously requires the business processes and procedures to be evaluated, as well as the external factors that can influence the operations. The strategic management process is key to the decisions and initiatives that are taken by the top of the organisation. Strategic management is implemented in all fields and in companies of all sizes.

Strategic management definition

Strategic management encompasses the planning, monitoring, analysing and criticising of all matters an organisation requires in order to reach their set goal. Business environments change constantly and demand their organisation to continuously optimise their strategies. Strategic management helps organisations to criticise current situations and to determine the effectiveness of alternative strategies.

The origin of strategic management

Strategic management as an independent discipline was established in the 1950’s and 1960’s. Key figures such as Peter Drucker, Alfred Chandler, Igor Ansoff and Philip Selznick have made important contributions to this development.

Before 1960, the word ‘strategy’ was only used in terms of war, not conducting business. After 1960, companies started to manage the strategic management process by implementing strategic planning jobs.

Strategic management process

The process is more than just following a number of steps. It is a more philosophical approach to managing an organisation. An organisation’s senior management needs to first draw up a strategy and then implement it. Strategic management is most effective when everybody in the organisation is brought up to speed as to what the strategy and its implications mean to their work in particular.
Even though strategic management does not consist of merely following some steps, the process can be divided into four steps.

1. Environment analysis

An environment analysis refers to the process of providing, collecting and analysing information for strategic purposes. Accurate and relevant information directly coming from a company’s internal and external environment helps senior management identify factors that affect business operations and other industry developments. Environment analysis is an ongoing activity which, through continuous evaluation, should be developed as best it can.

2. Strategy development

The second important element of the strategic management process is the developing and formulating of the strategy. Strategy development includes the process of determining what the best way forward is in order for the organisation to reach their goal. Based on a company’s general strategy, the division managers formulate both the business and functional strategies.

3. Implementation strategy

During the two phases mentioned above, the strategy was developed and formulated. During the third phase of the strategic management process, the strategy will be implemented. Implementation of a strategy means to implement the new or adjusted strategy. This phase includes the designing of the structure, the distributing of resources, development of the decision-making process and the managing of employees.

4. Strategy evaluation

The fourth step is the most important one in the entire strategic management process. Some of the factors and techniques applied during this phase include the assessing of internal and external factors, the measuring of performances and taking corrective action. The evaluation of strategies ensures that both the strategy and the implementation thereof meet the organisation’s objectives.

Strategic management concepts

Over the past years, management consultants and academics have introduced various frameworks and concepts related to strategic management. The arrival of these new methods and techniques reflects the simultaneously increased focus on management, competition and cost. A selection of popular and well-known methods in the field of strategic management are briefly described below.

SWOT Analysis

The SWOT analysis is possibly the most widely used tool for strategic management purposes. This tool was born out of research on Harvard Business School’s corporate policy. During this research, the concept of aligning competencies with the surroundings was introduced. This framework later became known as SWOT. Read more about it here.

Mission / vision statement

A company’s vision statement is about the greater ambitions they hope to achieve in the future.

The mission statement describes what the organisation must do now in order to realise the vision.

Often, the mission and vision statements are mixed up. The two should support each other whilst describing different matters. It defines how the organisation will set itself apart from other companies that operate in the same industry.

Porter’s Five Forces

The Porter’s Five Forces model describes five different competition strengths and analyses how these are formed in each industry. This tool helps determine an industry’s strengths and weaknesses. The Five Forces analysis is often used to describe the structure of a sector in order to subsequently form a strategy.

BCG matrix

The Boston Consulting Group’s BCG Matrix, or Product Portfolio Matrix, was designed to support senior management with their long-term strategic planning. It is now also suitable to help a company consider various growth possibilities. This model is also called the growth/share matrix.

Insourcing

December 30th, 2021

Insourcing: this article provides a practical explanation of Insourcing. After reading, you’ll have a basic understanding of this powerful management tool. What is Insourcing? Insourcing often involves processes that must be controlled by specialists. These specialists are hired…

Resource Allocation

December 29th, 2021

Resource Allocation: this article provides a practical explanation of resource allocation. After reading, you’ll understand the basics of this powerful strategy tool. What is Resource Allocation? Resource allocation is the process in which a company decides where to…

Earned Value Management (EVM)

December 26th, 2021

Earned Value Management: this article provides a practical explanation of Earned Value Management (EVM). After reading, you will understand the basics of this powerful project management tool. What is Earned Value Management (EVM)? Earned Value Management (EVM) is…

PESTEL Analysis

December 22nd, 2021

PESTEL Analysis: this article explains the PESTEL Analysis in a practical way. After reading you will understand the basics of this powerful strategy tool. You will also find a PESTEL Analysis template in this article to get started with the…

VRIO Analysis

December 21st, 2021

VRIO Analysis: this article explains the VRIO Analysis in a practical way. After reading it, you understand the core of this strategy theory. This article also contains a downloadable and editable VRIO Analysis template. What is a VRIO Analysis? At…

Ansoff Matrix

December 21st, 2021

Ansoff Matrix: this article explains the Ansoff Matrix by Igor Ansoff in a practical way. After reading you will understand the basics of this powerful marketing strategy tool. Introduction “Stagnation means decline.” This is a significant starting principle for both…

Balanced Scorecard (BSC)

December 18th, 2021

This article explains the Balanced Scorecard, developed by Robert Kaplan and David Norton, in a practical way. After reading you will understand the basics of this powerful strategy and performance management tool. This article also contains a downloadable and…

VMOST Analysis (Harnish)

December 18th, 2021

VMOST Analysis: this article explains the theory of the VMOST Analysis, developed by Verne Harnish in a practical way. After reading it, you understand the core of this strategy theory. What is a VMOST Analysis? The VMOST Analysis, also…

PEST Analysis

December 13th, 2021

PEST Analysis: this article explains the PEST Analysis by Francis J. Aguilar in a practical way. After reading you will understand the basics of this powerful macro environment analysis. What is the PEST Analysis? Definition The PEST Analysis is…

Organizational Life Cycle (Adizes)

November 16th, 2021

Organizational Life Cycle: in this article you will find a practical explanation of the Organizational Life Cycle theory by Ichak Adizes. After reading this, you will know the basic concepts of this powerful tool. Ichak Adizes’s Organizational Life Cycle theory…

Benefits Realization Management (BRM)

August 9th, 2021

In this article you will find a practical explanation of Benefits Realization Management (BRM). After reading, you will understand the basics of this powerful tool for optimising project resources and its benefits for business growth. What is Benefits…

Carroll’s CSR pyramid

July 22nd, 2021

Carroll’s CSR pyramid: this article provides a practical explanation of Carroll’s CSR pyramid. After reading, you’ll understand the basics of this powerful strategy tool. Carroll’s CSR pyramid explained Carroll’s CSR pyramid is a framework that explains how and…
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