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This assignment will depict the general objectives of strategic management and shall comment on critical stages of analysis, choice and implementation. It will illustrate the significance of each phase with factual examples from the media as well as its reliance on each. It will highlight the implementation process in particular and will show its substantial importance when compared to analyses and choices. The overall aim of this essay is to give a broad spectrum along with common understanding of an ongoing process of strategic management together with methods of strategic planning, as well as its benefits, disadvantages and consequences when performed poorly.
STRATEGIC MANAGEMENT
One of many definitions of strategic management could suggest that it is a set of ideas and plans made by chief executives trying to achieve certain long-term advantages for an organisation. This would be true in very generic terms but strategic management outlines much more. It is important to understand the necessity for strategy in business as well as the broad external environment in which corporations operate, and which can and will influence such organisations. In order to survive in today’s complex and contested business environment, enterprises need to respond well to these influences; sometimes they can have positive shape and therefore bring new opportunities and success for the company but other times the influences can be negative — threats. Every organisation needs to be aware of these influences, identify them and adapt accordingly.
However, strategic management should not be mistaken for a general management. Management in general is concerned with improving the overall efficiency of an organisation on a day-to-day basis; solving problems, planning, and by step-by-step process ensuring the smooth operation of an organisation in short or medium-terms, whereas the scope of strategic management goes far beyond this. Managers are challenged with a complex �fact-based’ forecasting in a long-term perspective, which will invariably bring high risks and hidden threats in the form of changes, but, more importantly, the main task is to ensure that the chosen strategy can be effectively put into operation and will bring desirable success for the enterprise.
In larger enterprises, strategic decisions can affect the whole organisation and therefore it is important that decisions are made at different levels (fig.1). On top of the pyramid, and the most important, is a Corporate Strategy, which applies mainly to large companies and is concerned with the fundamental issues of the organisation such the main purpose, owner’s and stakeholders’ expectation, investment, company vision, objectives, goals and also the overall management of the enterprise.
On the second level, there is a Business Unit Strategy.
“A strategic business unit is a part of the organisation for which there is a distinct external market for goods and services. Business Unit Strategy is about successful competition in particular market, how customers’ needs can be met through gaining advantage over competitors”
(Johnson and Scholes, 1999:11)
Operational or Functional Strategy plays an individual, short-term, functional part within the organisation where decisions need to be made immediately and carry low risks. Operational management is usually specific in divisions such as marketing, finance, customer care and human resource management.
Fig.1: Levels of Management Strategy in Business.
Every organisation is unique and will require different approaches to strategic planning depending on their long-term mission and objectives. These can include “impressing” their stakeholders by adding value to products and services, seeking growth and raising capital, developing competitive strategy, expanding internationally and adjusting to new cultures, to name but few. Although a number of different procedures in strategic planning can be successfully applied to many different businesses, three steps in strategic planning have been recognized as unique: the diagram below shows their reliance on each other:
Fig.2: Strategy Diagram
1. ANALYSIS
For many organizations success or failure depends on how well they respond to the many external macro-environmental changes in which they operate, such as Political, Economical, Sociocultural and Technological (Table1). The PEST factors combined with other micro-environmental factors can be classed as opportunities and threats (SWOT analysis ); by analyzing these, managers then should clearly perceive their enterprise resources, competitive advantages and portfolio of competences, and so forth, and be able to construct a feasible, achievable and desirable strategy.
Table 1. Examples of PEST analysis
POLITICAL
Change of legislation,
Political stability
Trade restrictions
ECONOMICAL
Tax change
Economic growth, Inflation rate
Exchange rates
SOCIOCULTURAL
Demographic trends
Population growth rate
Health consciousness
TECHNICAL
Convergence of technology
Automation
Strategic analysis is also about ascertaining a company’s resources and capabilities and either trying to �stretch’ these capabilities within the environment so as to create new cultures, identify new opportunities and create competitive advantages and leverage for the business, or trying to �fit’ these capabilities within an established environment