Anda di halaman 1dari 22

Strategic management is the process of developing and executing a series of competitive

moves to enhance the success of the organization both in the present and in the future.

Strategic management is a process in which a business analyzes its current practices then formulates and implements a strategy for future development.

What is Strategic Management


goal of strategic management is to gain the competitive edge in the marketplace and to create long-term solvency for the company. Utilizing strategic management creates necessary flexibility for a business to navigate market changes with authority and confidence.

Goal of Strategic Management

Advantage of Strategic Management


Competitive Advantage
Utilizing strategic management to create a competitive advantage makes one business' product stand out.
Netflix DVD by mail rental service exemplifies how one company re-invented the DVD rental service, changed the DVD rental market, and gained the competitive advantage.

Creating the competitive advantage benefits a single business, but it also benefits society by providing a better product or service, enhancing consumer and/or business technology, and creating a progressive marketplace.


Using strategic management to enhance market competitiveness benefits the business' bottom line. Slashing prices increases a business' competitive edge, but it also decreases the profitability of the products and services. A company must analyze the entire scope of their business practices to create the best management strategy and leverage the highest financial gain. The financial benefits of strategic management come from various areas such as: acquisition of cheaper resources, reducing production and service costs, providing efficient and helpful customer service, creative and focused marketing campaigns, and building brand recognition. Using strategic management to increase sales volume and customer satisfaction while decreasing costs creates a financial advantage.

Financial Advantage


Organizational Advantage
Strategic management provides tools to manage a business' human capital and create a healthy and positive culture that helps the business thrive. Happy people create a happy environment, which in turn creates a happy customer. Utilizing strategic management to create a better workplace creates a better workforce.

Disadvantages of Strategic Management


Unanticipated Results

Strategic management attempts to predict the future. Unfortunately, however, the future cannot always be predicted. A major environmental, political or financial crisis can create radically different results from those that the firm has anticipated. Additionally, predictions can be difficult to make in an environment characterized by rapid change. In these situations, strategic management can actually have a negative impact on a firm.


Lack of Short-Term Results

Strategic management is focused on long-term results. Investors, however, are interested in short-term results. Strategic management often involves creating short-term losses in order to create long-term value for the firm. These short-term losses can drive down the value of a business and can create a serious risk of bankruptcy


Poor Adaptability

In business, it is important to be able to react to the environment. Strategic management can make a firm extremely bureaucratic and rigid. This leaves the firm unable to react to changes, meaning that the firm cannot take advantage of opportunities or avoid threats.



Strategic management is not an easy task to take on. Developing and implementing a strategy for a business requires highly trained and specialized individuals. Most business strategists have a master's degree or doctorate in the discipline. These individuals can be costly to employ and as can outside consulting firms which specialize in strategic management.

Principles of Strategic Management


One principle of strategic management is creating and maintaining a company's vision. This vision includes expectations for the business' place in the market in the near and extended future, as well as what role the company will play in the community or possibly the nation. Keeping your business vision in mind will determine how you manage other aspects of your company.

Methods to Achieving the Vision

Once you have a vision for your company, you must find ways to fulfill it. This may include increasing community awareness of your business, driving sales, retaining customers or building other locations or franchises. Finding a method that works for your business is a difficult aspect of strategic management. It's easy to know where you want to be, but it can be difficult to know how to get there. Methods may include personnel changes, outsourcing, marketing and advertising, and investment.

Principles of Strategic Management

Execution of Method Strategic management includes not only planning and brainstorming, but executing your ideas and methods. The execution principle of strategic management involves taking those ideas into the business world and making them work for your company. For instance, once you have decided on the best method for driving sales to your business, such as an advertising or marketing scheme, good management requires executing the scheme. This can be a difficult principle, as it often requires capital investment or changes in the company.

Principles of Strategic Management


the Vision

Another principle of strategic management is adapting the vision to the circumstances surrounding your business. Because market conditions can affect your business, it may be necessary to adapt your vision accordingly. During times of recession, your vision may change. Likewise, as technology changes, your business may need to adapt to stay competitive in its market.

Strategic Management Process


strategic management process means defining the organizations 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 process has following four steps:

1.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.

2.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.

3.Strategy Implementation- Strategy implementation

implies making the strategy work as intended or putting the organizations chosen strategy into action. Strategy implementation includes designing the organizations structure, distributing resources, developing decision making process, and managing human resources.

4.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 its implementation meets the organizational objectives.

Evaluation Methods

The Macro Strategic Environment


analysis of the macro environment is crucial in determining the factors which have a direct impact and/or might influence the strategic direction of an organisation.

Approaches to analyze the External Environment

STEEP (Socio-demographic,

Technological, Economic, Environmental and Political influences) approach to analyzing the external environment. PEST-Political, Economic, Social, Technological

Evaluation Methods

The Micro Strategic Environment


analysis of the immediate competitive environment is important for understanding the strengths and weaknesses of the competition and the organization's relative position in the industry. It is upon this basis that the organization can then go on to formulate strategies that enable a strategic advantage to be gained over competitors.

Porters five forces model; Approach to analyze Micro Environment

Evaluation Methods

Stakeholder Analysis


understanding of stakeholder needs and expectations are paramount in the development, implementation and success of an organisations strategy. It is therefore important to analyse the power and interest stakeholders may have over an organisation.

Evaluation Method

Resources, Competences and Core Competences


contrast to analyzing the external micro and macro environment, the resource-based view (RBV) seeks to explore the internal resources of an organisation and how these can be leveraged to gain a competitive advantage. An analysis of an organisations resources can include its financial, physical, human, intellectual and reputational resources