Strategic Management -Notes

Strategic management is the process of defining and implementing procedures and objectives that
set a company apart from its competition. Strategic management is also a skill that can be
developed as someone gains experience and adopts a strategic mindset. It is considered part of
business acumen and can also apply to fields like non-profit, government, and the public sector.

In this article, you will learn all about strategic management, including its benefits, process, and
career paths. We'll also go over the steps to becoming a strategy manager, including taking
courses, like the Strategic Management and Innovation specialization, to build in-demand skills.

What is strategic management?

Strategic management involves developing and implementing plans to help an organization

achieve its goals and objectives. This process can include formulating strategy, planning
organizational structure and resource allocation, leading change initiatives, and controlling
processes and resources.

Strategic planning involves identifying business challenges, choosing the best strategy, monitoring
progress, and then making adjustments to the executed strategy to improve performance. Tools like
SWOT (strengths, weaknesses, opportunities, and threats) analysis are used to assess where
opportunities and threats lie between the organization, its competition, and the overall market.

Strategic management happens at broader levels like organization-wide leadership, but it can also
be implemented at a department or team level.

Approaches to strategic management

There are two main approaches to strategic management: prescriptive and descriptive. A
prescriptive approach to strategic management focuses on how strategies should
be developed, while a descriptive approach focuses on how strategies should be put into
practice. The prescriptive model is more top-down, based on SWOT analysis. The descriptive
model is more guided by experimenting with different methods to find solutions and learning from
experience. It applies Agile methodology to strategic management.

Types of strategy
One way of thinking about strategic management is to classify the management focus into three
types of strategy:
• A business strategy is a high-level plan where you outline how your organization will achieve its
objectives.
 • Operational strategies are much more specific plans where you detail what actions to take to
achieve the desired results.
• Transformational strategies involve making radical changes to your organization to achieve
significant improvements.

Benefits of strategic management

The strategic management process helps an organization's leadership plan for its future goals.
Setting a roadmap and actionable plan ensures that employees and leaders know where they're
going and how to get there in the most efficient, cost-effective manner. It is a work in progress, so
strategic plans should continuously be evaluated and adjusted as the market outlook changes.

Financial benefits:
 Increase market share and profitability.
 Prevent legal risk.
 Improve revenue and cash flow.

Non-financial benefits:
 Relieves the board of directors of responsibilities.
 Allows for an objective review and assessment.
 Enables an organization to measure progress throughout time.
 Provides a big-picture perspective of the organization's future.

5 steps of the strategic management process

It's common to view the strategic management process as a five-step process. The steps are
identification, analysis, formation, execution, and evaluation.

1. Define the direction.

Identifying the direction and specific goals is the initial stage of the strategic management process.
This step involves identifying goals and determining what needs to happen to achieve them.

2. Analyze the current situation.

The second step is analysis and research. Using tools like SWOT analysis and examining the
organization's resources, including budget, time, people (staff), and more, you'll gain a better
understanding of how to leverage what's working and get rid of what's not.

3. Outline the strategy and plan of action.

Next is formulating a strategy and plan of action based on situational analysis. This step involves
crafting a specific and realistic plan to help the organization achieve its goals.

4. Execute the plan.

Executing the plan is the fourth step in the strategic management process. This step involves
putting the plan into action and monitoring its progress. You may have to adjust the plan as
circumstances change, especially if you take a more descriptive approach to strategy.

5. Evaluate the plan.

Evaluation is the fifth and final step in the strategic management process. Here, you'll assess
whether the organization has achieved its goals. If not, you can adjust your plan and implement it
in innovative ways. Feedback and analysis are essential to evaluation and preparing for an optimal
business future.

Examples of strategic management in practice

Implementing and overhauling information systems and technology

Let's say Company A is a startup that has been scaling rapidly. They hired a strategy consultant to
come in and conduct an audit. The consultant finds that the company is paying for apps and tools
that it doesn't use. They conduct survey research to understand employee needs and compile a list
of 20 apps (out of 100) that can be discontinued with little negative impact. After implementation,
the company surveys employees again in two months to gauge their needs. Overall it turned out to
be an efficient, cost-cutting strategy.

Shifting resources (budget) toward more successful revenue streams

Company B's Chief Marketing Officer asked its department to assess its brand marketing strategy.
The head of marketing found that their email marketing efforts were generating more conversions
than any other channel, so they diverted some of their print budget toward investing in expanding
the email marketing team. The email marketing team developed a strategy and plan to reach new
audience segments. After six months, more budget was shifted toward email to support the
program's success.
The strategic management framework provides a detailed overview of the strategy process
adopted by many organizations.

This framework separates the strategy process into three high level activities: defining vision and
mission, formulating strategy and implementing strategy.

Stage 1: Vision and Purpose (or Mission)

As with the VMOSA framework, the first activity that needs to be completed when following the
Strategic Management Framework is the creation of an organizational vision and mission.

The organization’s vision and mission then go on to be a constant point of reference throughout
the remainder of the organization’s strategy process.

Stage 2: Strategy Formulation

The second stage of this framework takes an organization through the process of formulating a
strategy. This is done in several sub-stages.
Analysis

The first part of strategy formulation is analysis of the current state. It’s impossible to decide on
and create a strategy if you don’t understand the lay of the land, so analyzing a wide range of
factors is the first stage of the strategic process.

At this stage organizations consider and analyze a range of factors including: the wider economy,
their industry and their own specific capabilities, strengths and weaknesses. There are a wide
range of strategic analysis tools that can help with this stage of thinking.

Strategy Formation

Once an organization understands the current state and has a detailed analysis of their
environment, their industry and themselves, they can start to look forward and consider the
opportunities and threats that they may face.

With this combined understanding of the current state and some future analysis, it becomes time
to start thinking about what specifically the organization will do. At this stage, the organization
starts to focus on how it will compete in its chosen market place or environment.

In essence, these activities are the creation of the organization’s strategy.

Goal Setting

The last part of the strategy formulation stage of the Strategic Management Framework is to
create goals and targets relating to the organizations defined strategy. It’s great to know what
you’re going to do at a high level, but for your strategy to be useful it needs to include specific
detail to manage towards. To help with this, many organizations use Balanced Scorecards.

Concepts like SMART goals and objectives may be helpful at this stage.

Stage 3: Implementing your strategy

The third stage of this framework focuses on the implementation of strategy, which is considered
to have two sub-stages.

Implementing a strategic structure

In this stage, the organization ensures it is effectively structured to deliver on its strategy. The
thinking here is that before you go and do something, you need to have all your pieces in the
right place.
At a practical level, this means that to be prepared to start delivering your strategy effectively,
you need to have the right leaders and individuals in your organization, you need to have the
right business units, you need to have the right legal structures, you need to have the right
processes and policies and capital assets and you need the right strategic projects lined up to help
you deliver effectively. Once these pieces are in place, you can press the big

Controlling your strategic delivery

The last part of this model considers the need to effectively control and deliver your objectives.
Once you have all the right pieces in place and you press the “start” button on your strategy, you
need to monitor and control your performance on a constant basis. Frequent fine-tuning is
required to ensure success and feedback plays an important role in this.

The key message here is that control frameworks are essential for strategic success in most
instances

Learning More

The way we think as humans is fascinating. Cognitive biases clearly explain some of our
“irrationality”. The Dunning-Kruger Effect is just one example of this. Understanding our Dual
Process way of thinking provides some further insight into it. This “irrationality” means that
we’re all suggestible and susceptible to nudging and the powers of choice
architecture and persuasion.

Communication is another tool often used to change people’s behaviors. Ideas like the rhetorical
triangle and the five canons of rhetoric shed some light on how this works..

Increasingly, products are also design to be persuasive, as it were. They are designed to create
habits and drive increased use.

You can listen to our podcast, below, on nudging to learn more about how our behaviors can be
influenced:

The World of Work Project View

The strategic management framework is helpful. Leaders us it to think comprehensively about

their strategies.

In many organizations the approach to strategy is cyclical, iterating through formulation and
implementation phases of roughly this process. Those cycles can be of different lengths, but a
three year strategy cycle isn’t uncommon. Of course, organizations also need to look further into
the future. They also need to manage their ongoing business and operations while still thinking
strategically about the future.
This framework only provides a high level summary of the activities required. Anyone creating a
strategy aligned to this framework should use further models to support their thinking.

As with all strategic planning, you need the right people involved in the process for it to be
effective. You also need to ensure you iterate through the processes you use as things in the real
world are constantly changing and evolving and in most cases while it’s possible to define a
strategy at a high level, doing so doesn’t mean that you won’t need to change direction in
response to changes in the real world.

The last thing we’d like to plug in here is that it would be great if your strategy helped you
become a responsible business.

Strategic management involves managing an organization's resources, analyzing internal and

external forces, and developing strategies to realize goals and objectives. There are five key
phases that can help businesses execute their strategies. An organization must first establish
clear, realistic goals.

The 5 Phases of Strategic Management

Strategic management involves managing an organization's resources, analyzing internal and

external forces, and developing strategies to realize goals and objectives. There are five key
phases that can help businesses execute their strategies.

1. An organization must first establish clear, realistic goals. Its goals should answer what
the company wants to achieve and why. Once set, the company can then identify the
objectives, or how the goals will be reached. During this phase, the company can
articulate its vision and long and short-term goals.
2. Organizations must then be able to examine, understand, and codify what internal and
external forces affect their business and goals, as well as what it needs to remain
competitive. Analytical tools, such as SWOT analysis, are helpful during this phase.
3. Based on the results of the analysis, the company can then develop its strategy, outlining
how the company will achieve its goals and how. In this phase, the company will
identify the needed people, technology, and other resources; how these resources will be
allocated to fulfill tasks, and what performance metrics are needed to measure success. It
is also critical to gain buy-in from stakeholders and business leaders.
4. Once the strategies are defined, it is time for execution. The strategy is taken from
planning to implementation. During this phase, the allocated resources are placed into
action based on their roles and responsibilities.
5. The final stage of strategic management is to evaluate the effectiveness of implemented
strategies using defined metrics. The company will also visit whether ineffective
strategies should be replaced with more viable ones. The company should continue to
monitor the business landscape and internal operations, as well as maintain strategies
that have proven effective.
Example of Strategic Management

For example, a for-profit technical college wishes to increase new student enrollment and
enrolled student graduation rates over the next three years. The purpose is to make the college
known as the best buy for a student's money among five for-profit technical colleges in the
region, with a goal of increasing revenue.

What is Strategic Management?

Strategic management is the process of developing and implementing plans and strategies to help
a business achieve its goals. It includes creating the strategy, planning structures and resource
allocation, change management and measuring performance and implementation.
The entire process can be broken down into 3 major steps:

1. Setting goals and objectives

2. Creating a plan of action
3. Allocating resources
What Does Strategic Management Involve?

Strategic management and planning involve identifying business challenges,

planning and executing strategy to solve these challenges and improve business
performance. Strategy analysts and managers use tools like SWOT and Scorecards
in strategic management.

Strategic management is important to ensure that resources are allocated correctly

at both the organization level and department-wise. Strategic management
initiatives need to be planned for both the business at large and individual teams.

Benefits of Strategic Management

Strategic management is more a way of life. It’s a school of thought that the best
managers subscribe to. But why? Let’s look at why it’s important to manage
resources in a strategic, well-planned out way.

Improved decision-making

Strategic management provides a framework for better decision-making by

allowing leadership to assess the potential impact of their decisions on the overall
strategic objectives of the organization.

Enhanced collaboration

Strategy management encourages collaboration between departments and functions

ensuring that everyone is working toward the same goals and objectives.

Better organizational performance

Strategy management also helps organizations to focus on the areas that need
improvement, identify the best ways to achieve their goals and objectives, and
measure progress.

Effective resource allocation

Strategic management encourages organizations to use their resources more

efficiently by allocating resources to the most important areas.
Increased customer satisfaction

Strategy management helps organizations to better understand their customers and

develop strategies to meet their needs.

5 Stages of Strategic Management Process

There are 5 steps in strategic management:

1. Identify goals and business direction

2. Analyse current situation
3. Create a strategy and plan
4. Implement the strategy
5. Evaluate the results
Let’s understand each step in more detail:

1. Identify Goals and Business Direction: All business processes should be

focused on achieving a certain goal. Whether this is overall profitability or one
particular acquisition, it is imperative to be clear on this goal right from the
beginning.
2. Analyse Current Situation: Use tools like the SWOT analysis to understand
whats working with the current system and what needs improvement. SWOT
stands for Strengths, Weaknesses, Opportunities and Threats. This strategic
analysis helps with insight into the internal (strengths and weaknesses) and
external (opportunities and threats) factors that are likely to either contribute
to or prevent business growth.
 3. Create a Strategy and Plan: This step is the most important – it involves
coming up with the actual strategy on how to allocate the business’s resources
in the most efficient way. Resources here include employees, money, or
machinery. The plan should be SMART – Specific, Measurable, Achievable,
Relevant and Time-bound.
4. Implement the Strategy: Once the strategies have been formulated, the next
step is to put the plan into action. Start by communicating the strategy and
plan of action to all levels of management, and ensure you monitor all
progress made.
5. Evaluate the Results: The final step of strategic management is to evaluate
and assess the effectiveness of the implemented strategies. This involves
measuring the strategies’ results and making changes as and when needed. If
the organization fails to achieve its goals, you can adjust the strategy and re-
implement it.

Types of Strategies Used in Strategic Management

1. Business Strategy: A business strategy focuses on developing a long-term

plan of action to achieve a company’s goals, such as increasing profits or
market share. It involves analyzing the current market and competitors,
creating a strategic vision, and setting objectives and goals.
2. Corporate Strategy: Corporate strategy is a plan of action that defines how a
company will reach its goals and objectives. It involves analyzing the current
environment, identifying strategic goals and objectives, and determining the
best way to meet them.
3. Competitive Strategy: Competitive strategy is a plan of action that
companies use to gain an edge over their competitors. It involves analyzing
competitors, identifying their strengths and weaknesses, and devising
strategies to capitalize on opportunities and reduce threats.
4. Innovation Strategy: Innovation strategy is the process of developing new
products, services, and processes that can give a company a competitive
advantage. It involves identifying customer needs, brainstorming ideas,
developing prototypes and testing them.
5. Operational Strategy: Operational strategy focuses on how to optimize
resources and processes in order to create value and achieve organizational
goals. It involves analyzing current operations, setting goals and objectives,
and creating plans to reach those goals.

Popular Approaches of Strategic Management

SWOT Analysis

SWOT analysis is a framework used to assess a company’s competitive position

and to create strategic planning. It stands for strengths, weaknesses, opportunities,
and threats. The SWOT analysis evaluates internal and external variables as well as
present and anticipated future situations.

A SWOT analysis is intended to help you take a practical, fact-based, and data-
driven look at the advantages and disadvantages of a company, its efforts, or its
sector. The organisation must avoid preconceived notions or grey regions and
concentrate on real-life circumstances in order to maintain the analyses’ accuracy.
Companies should use it as a reference rather than a strict prescription.

Balanced Scorecard

A balanced scorecard framework helps organisations optimise their internal

processes to enhance their external output. It uses historical performance as a key
indicator and suggests different ways for companies to make informed decisions in
future.

A balanced scorecard has four points: learning & development, company

processes, customer perspectives, and financial data. Since the vision and strategy
of a corporation are formed on these four components, it becomes important for the
company leadership to analyse the information gathered through this scorecard.

Why is Strategic Management Important?

Strategic management is important because it guides organizations on how to meet

their long-term goals.
1. It instils agility in organizations to deal with external environments & change.
2. Strategic management enables organizations to evaluate their current
performance and devise ways to improvise.
3. Having a strong strategy based on deep market research helps organizations
remain competitive, as well as identify opportunities for growth.
4. Strategic management improves efficiency by helping organizations align
their goals with resources.
Strategic management has a significant impact on businesses. An effective strategy
can lead to increased profitability, improved competitive advantage, better
customer relationships & increased organisational efficiency & productivity.
It can also help to attract and retain talented employees, identify and develop new
markets, and ensure the sustainability of the business. A successful strategy can
lead to improved efficiency, better decision-making, and higher employee morale.
Overall, strategic management can help businesses to be more successful and
competitive in their respective markets.

Real Life Examples of Strategic Management

A good example of strategic management in real life is Starbucks. In 2008,

Starbucks faced strong competition from fast food chains like McDonald’s and was
affected by the ongoing financial crisis.

To solve this issue, Starbucks implemented the “My Starbucks Idea” programme,
where customers could directly share feedback and suggestions with management.
By listening to their core audience, Starbucks gained valuable insights into what
truly mattered to their customers.

This strategic move led to several changes that improved the customer experience.
Free Wi-Fi, comfortable seating, and the popular rewards program were all born
from this initiative. By focusing on what its customers valued, Starbucks was able
to turn things around and solidify its market position.

Here’s how Starbucks’s strategic moves align with SWOT analysis.

SWOT Analysis:
 Strengths: Brand recognition, loyal customer base, global presence.
 Weaknesses: Limited menu options, high prices compared to competitors,
long wait times.
 Opportunities: Improve customer experience, expand product offerings,
leverage technology.
 Threats: Competition from fast-food chains, rising operational costs