WHAT IS STRATEGIC MANAGEMENT

Strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for
an organization to meet its goals and objectives. Fast-paced innovation, emerging technologies and customer expectations
force organizations to think and make decisions strategically to remain successful. The strategic management process
helps company leaders assess their company's present situation, chalk out strategies, deploy them and analyze the
effectiveness of the implemented strategies. The strategic management process involves analyzing cross-functional
business decisions prior to implementing them. Strategic management typically involves:

 Analyzing internal and external strengths and weaknesses.

 Formulating action plans.
 Executing action plans.
 Evaluating to what degree action plans have been successful and making changes when desired results are not being
produced.

Importance of strategic management

Strategic management necessitates a commitment to strategic planning, which represents an organization's

ability to set both short- and long-term goals, then determining the decisions and actions that need to be taken to reach
those goals.

Strategic management process is a management technique used to plan for the future: Organizations create a
vision by developing long-term strategies. This helps identify necessary processes and resource allocation to achieve those
goals. It also helps companies strengthen and support their core competencies.

By determining a strategy, organizations can make logical decisions and develop new goals quickly to keep pace
with the changing business environment. Strategic management can also help an organization gain competitive advantage
and improve market share.

The value of organizational culture in strategic management

Organizational culture can determine the success and failure of a business and is a key component that strategic
leaders consider when developing a dynamic organization. Culture is a major factor in the way people in an organization
outline objectives, execute tasks and organize resources. A strong business culture will make it easier for leaders to
motivate their staff to execute their tasks in alignment with the outlined strategies.

Strategic Management is all about identification and description of the strategies that managers can carry so as
to achieve better performance and a competitive advantage for their organization. An organization is said to have
competitive advantage if its profitability is higher than the average profitability for all companies in its industry.

Strategic management can also be defined as a bundle of decisions and acts which a manager undertakes and
which decides the result of the firm’s performance. The manager must have a thorough knowledge and analysis of the
general and competitive organizational environment so as to take right decisions. They should conduct a SWOT Analysis
(Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best possible utilization of strengths, minimize
the organizational weaknesses, make use of arising opportunities from the business environment and shouldn’t ignore
the threats.

Strategic management is nothing but planning for both predictable as well as unfeasible contingencies. It is
applicable to both small as well as large organizations as even the smallest organization face competition and, by
formulating and implementing appropriate strategies, they can attain sustainable competitive advantage.

It is a way in which strategists set the objectives and proceed about attaining them. It deals with making and
implementing decisions about future direction of an organization. It helps us to identify the direction in which an
organization is moving.

Strategic management is a continuous process that evaluates and controls the business and the industries in which
an organization is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential
competitors; and then reevaluates strategies on a regular basis to determine how it has been implemented and whether
it was successful or does it needs replacement.

Strategic Management gives a broader perspective to the employees of an organization and they can better
understand how their job fits into the entire organizational plan and how it is co-related to other organizational members.
It is nothing but the art of managing employees in a manner which maximizes the ability of achieving business objectives.
The employees become more trustworthy, more committed and more satisfied as they can co-relate themselves very well
with each organizational task. They can understand the reaction of environmental changes on the organization and the
probable response of the organization with the help of strategic management. Thus the employees can judge the impact
of such changes on their own job and can effectively face the changes. The managers and employees must do appropriate
things in appropriate manner. They need to be both effective as well as efficient.

One of the major role of strategic management is to incorporate various functional areas of the organization
completely, as well as, to ensure these functional areas harmonize and get together well. Another role of strategic
management is to keep a continuous eye on the goals and objectives of the organization.

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. At its
heart, strategic management involves identifying how the organization stacks up compared to its competitors and
recognizing opportunities and threats facing an organization, whether they come from within the organization or from
competitors.

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 over 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.

Business culture, the skills and competencies of employees, and organizational structure are important factors
that influence how an organization can achieve its stated objectives. Inflexible companies may find it difficult to succeed
in a changing business environment. Creating a barrier between the development of strategies and their implementation
can make it difficult for managers to determine whether objectives were efficiently met.

While an organization’s upper management is ultimately responsible for its strategy, the strategies themselves
are often sparked by actions and ideas from lower-level managers and employees. An organization may have several
employees devoted to strategy rather than relying on the chief executive officer (CEO) for guidance. Because of this reality,
organization leaders focus on learning from past strategies and examining the environment at large. The collective
knowledge is then used to develop future strategies and to guide the behavior of employees to ensure that the entire
organization is moving forward. For these reasons, effective strategic management requires both an inward and outward
perspective.

WHAT IS BUSINESS POLICY

Definition of Business Policy

Business Policy defines the scope or spheres within which decisions can be taken by the subordinates in an
organization. It permits the lower level management to deal with the problems and issues without consulting top level
management every time for decisions.

Business policies are the guidelines developed by an organization to govern its actions. They define the limits
within which decisions must be made. Business policy also deals with acquisition of resources with which organizational
goals can be achieved. Business policy is the study of the roles and responsibilities of top level management, the significant
issues affecting organizational success and the decisions affecting organization in long-run.

Features of Business Policy

An effective business policy must have following features-

 Specific- Policy should be specific/definite. If it is uncertain, then the implementation will become difficult.
 Clear- Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no
misunderstandings in following the policy.
 Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed by the subordinates.
 Appropriate- Policy should be appropriate to the present organizational goal.
 Simple- A policy should be simple and easily understood by all in the organization.
 Inclusive/Comprehensive- In order to have a wide scope, a policy must be comprehensive.
 Flexible- Policy should be flexible in operation/application. This does not imply that a policy should be altered always,
but it should be wide in scope so as to ensure that the line managers use them in repetitive/routine scenarios.
 Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for
guidance.
DIFFERENCE BETWEEN BUSINESS POLICY AND STRATEGY

 Strategy is the best plan opted from a number of plans, in order to achieve the organizational goals and objectives.
Policy is a set of common rules and regulations, which forms as a base to take day to day decisions.
 Strategy is a plan of action while the policy is a principle of action.
 Strategies can be modified as per the situation, so they are dynamic in nature. Conversely, Policies are uniform in
nature, however relaxations can be made for unexpected situations.
 Strategies are concentrated toward actions, whereas Policies are decision oriented.
 Strategies are always framed by the top management but sub strategies are formulated at the middle level. In
contrast to Policy, they are, in general made by the top management.
 Strategies deals with external environmental factors. On the other hand, Policies are made for internal
environment of business.
 Policy is a blueprint of the organizational activities which are repetitive/routine in nature. While strategy is
concerned with those organizational decisions which have not been dealt/faced before in same form.
 Policy formulation is responsibility of top level management. While strategy formulation is basically done by
middle level management.
 Policy deals with routine/daily activities essential for effective and efficient running of an organization. While
strategy deals with strategic decisions.
 Policy is concerned with both thought and actions. While strategy is concerned mostly with action.
 A policy is what is, or what is not done. While a strategy is the methodology used to achieve a target as prescribed
by a policy.
 Policies are guidelines or paths of action to reach the goals, while strategies are major courses of action or patterns
of successful action to achieve the objectives. They are intended to meet and fight against a certain competition,
much larger and apparently more powerful than the enterprise itself by using its resources in the best possible
manner.
 A policy embraces both thought and action, while strategy concentrates mostly on action, i.e.,it is most action-
oriented.
 A policy usually spells out a certain course of action/approach to reach the set objectives, the strategy outlines
one’s approach to meet competitive situations, uncertainties, risk and insecurity likely to arise in the future.
 Business policy lays emphasis mainly on long-term growth, through a set path of action for achieving the goal;
whereas strategy’s main concentration is on meeting a competitive situation; and therefore, they have a short or
medium-term target before them.

STRATEGIC MANAGEMENT PROCESS

The strategic management process means defining the organization’s strategy. It is also defined as the process by
which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance.

Strategic management is a continuous process that appraises the business and industries in which the organization
is involved; appraises it’s competitors; and fixes goals to meet all the present and future competitor’s and then reassesses
each strategy.

Strategic management process has following four steps:

 Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing
information for strategic purposes. It helps in analyzing the internal and external factors influencing an
organization. After executing the environmental analysis process, management should evaluate it on a continuous
basis and strive to improve it.
 Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing
organizational objectives and hence achieving organizational purpose. After conducting environment scanning,
managers formulate corporate, business and functional strategies.
 Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the
organization’s chosen strategy into action. Strategy implementation includes designing the organization’s
structure, distributing resources, developing decision making process, and managing human resources.
 Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The key strategy
evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring
performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as
well as it’s implementation meets the organizational objectives.
 These components are steps that are carried, in chronological order, when creating a new strategic management
plan. Present businesses that have already created a strategic management plan will revert to these steps as per the
situation’s requirement, so as to make essential changes.

Components of Strategic Management Process