In this article, I’m sharing with you the characteristics of strategic management that will help you to understand the features that strategic management has. But before that, you should know what strategic management means.
Strategic management talks about the big picture and the essence of strategic management are to identify the goals of an organization, resources, and how these resources can be used effectively to meet the objectives. Strategic management is a continuous and ongoing process and must provide the basic guidelines for decision-making in business organizations.
The organization’s strategic plan is a living document that is always visited and revisited and as new information becomes available, this should be used to make adjustments and revisions to the previous ones.
Definition of Strategic Management
Several experts in the management field define strategic management in different ways. One definition mentions strategic management as a set of decisions and actions that result in the formulation and implementation of plans designed to achieve particular goals of a company.
Strategic management consists of nine important tasks:
- Formulating the mission of the company
- Analyzing the internal conditions of the company
- Analyzing external environment
- Analyzing the choices owned by the company by adjusting its resources to the external environment
- Identify the most profitable options
- selection of long term goals
- Develop annual goals and short-term strategies
- Implement the strategies
- Evaluating the success
As indicated by the nine tasks, strategic management includes planning, directing, organizing, and controlling decisions and actions related to business strategy.
Understanding Strategic Management According to Several Experts
According to Wheelen, Strategic Management is a series of managerial decisions and actions that lead to the preparation of effective strategies to achieve company goals with SWOT analysis.
As per David, The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its goals are called strategic management.
Porter mentions something that makes the company as a whole more than the parts so there is an element of synergy in it.
From these fairly broad understandings, it shows that strategic management is a series of activities for basic and comprehensive decision-making, and is accompanied by the determination of the application method made by the leadership and also carried out by all parties involved in a company to achieve the goals of the business organization.
Characteristics of Strategic Management
Following are the 8 characteristics of strategic management:
1) Long-Term Issues
The issues that strategic management handles are usually of long-term nature. These issues do not necessarily affect the organization immediately but will benefit the organization in the future. For example, if a company spends on the education of its employees, it may not witness increases in productivity in the short-run, but in due course, highly educated employees will deliver better results and will also help in increasing the returns.
That is why strategic management gives you a big picture of the organization and you may not see any result in short term. They are implemented to achieve long-term goals but also they are very effective in several short-term scenarios.
2) Competitive Advantage
Strategic management assists the managers in looking for fresh avenues for achieving sustainable competitive advantage. When strategic management principles are applied regularly in the proceedings of the organization, managers can increase the number of satisfied customers, provide goods and services at economical prices, and can develop a highly satisfied workforce.
3) Impact on Operations
An effective strategic management process affects operational issues positively. For example, if increases in salary and performance are correlated then this would increase the operational productivity, as the employees will be motivated to put more effort into their work. Operating decisions are the ones that involve topics like deciding the best way to handle sales with a particular segment of customers or making decisions regarding selling products on credit. Decisions concerned with operational issues are made by lower-level managers.
Strategic management makes decisions regarding situations that would occur in the future and are not a part of the day-to-day activities. Managers are ignorant about the after-effects of their decisions because of the dynamic and uncertain business environment.
Since strategic management is uncertain, it becomes complex as well. Managers come across situations related to the business environment that is not easy to understand. There is a need for analysing internal and external environments.
The implementation of strategic management affects the entire organization and not merely the operation on which strategic management principles are applied. It entails strategic choices and is a systematic approach. So, business organizations need to implement strategies carefully and wisely because it affects an organization as a whole and also gives results that benefit the organization as well.
7) Long-Term Implications
The implications of strategic management are long-term and do not affect the routine operations of the organizations. The concepts of strategic management are concerned with the mission, vision, and objectives of the organization.
8) Facilitates Strategic Implementation
Strategic management makes sure that strategies are effectively executed and implemented with the help of action-oriented plans and it is a very very important step because if strategies are good enough but are not implemented properly then they will not give the results the company expects.
Which are the two main key characteristics of strategic decisions?
- Long term goal
What are the four main characteristics of strategy?
- a simple strategy that is easy to implement
- it should consistently be performed
- the strategy has a short goal but should be more focused on the long term, and
- by relationship, it should very dynamic.