STRATEGIC MANAGEMENT: DEFINITION, PROCESS, AND IMPORTANCE
Introduction
Strategic management is essential for organisations to achieve their long-term goals and remain
competitive in a changing environment. It involves planning, monitoring, analysing, and
assessing everything needed for a business to meet its objectives. This paper explains the
meaning of strategic management, its process, and its importance for businesses.
What is Strategic Management?
Strategic management is the process of formulating, implementing, and evaluating decisions that
enable an organisation to achieve its objectives. It focuses on integrating management,
marketing, finance, production, research and development, and other business areas to achieve
organisational success.
In simple words, strategic management is about deciding where the organisation wants to go
(goals), how it will get there (strategy), and making sure it is on the right path (evaluation).
The Strategic Management Process
1. Goal Setting
○ Defining the vision, mission, and objectives of the organisation.
○ Example: A company’s goal to become the market leader in eco-friendly
packaging.
2. Environmental Analysis
○ Analysing internal and external environments to identify strengths, weaknesses,
opportunities, and threats (SWOT analysis).
○ Internal analysis looks at resources, capabilities, and core competencies.
○ External analysis includes industry trends, competitors, and market opportunities.
3. Strategy Formulation
○ Developing strategies at different levels:
○ Corporate Strategy: Overall direction of the organisation (e.g. diversification,
mergers).
○ Business Strategy: How to compete successfully in particular markets (e.g. cost
leadership, differentiation).
○ Functional Strategy: How to support business strategy with resources and skills
(e.g. HR, marketing strategies).
4. Strategy Implementation
○ Putting the formulated strategy into action by allocating resources, setting up
structures, and motivating employees.
5. Strategy Evaluation and Control
○ Monitoring and assessing the results of the strategy to ensure objectives are
achieved.
○ Making adjustments when necessary to respond to changes in the internal or
external environment.
Levels of Strategy in Strategic Management
1. Corporate-Level Strategy
○ Decisions about the overall direction of the company and management of its
business portfolio.
2. Business-Level Strategy
○ How to compete successfully in a specific market or industry.
3. Functional-Level Strategy
○ Specific actions taken within departments (marketing, finance, HR) to support
higher-level strategies.
Importance of Strategic Management
1. Provides Direction
○ Clarifies the organisation’s goals and how to achieve them efficiently.
2. Helps Cope with Change
○ Prepares organisations to respond to changing market conditions, technology, and
competition.
3. Enhances Organisational Performance
○ Aligns resources and efforts towards achieving objectives, leading to better
performance.
4. Identifies Opportunities and Threats
○ Systematic analysis helps organisations identify market opportunities and
potential risks early.
5. Improves Resource Allocation
○ Ensures resources are used in the most effective way to achieve goals.
6. Builds Competitive Advantage
○ Helps organisations create strategies that give them an edge over competitors.
Conclusion
In conclusion, strategic management is crucial for organisations to survive and grow in a
competitive environment. It involves setting goals, analysing the environment, formulating
strategies, implementing them effectively, and evaluating results. By applying strategic
management, businesses can achieve long-term success and remain adaptable in facing
challenges and changes.
