WHAT IS STRATEGIC MANAGEMENT?

Strategic management is the management of an organization’s resources to achieve its

goals and objectives.

Strategic management involves setting objectives, analyzing the competitive

environment, analyzing the internal organization, evaluating strategies, and ensuring that
management rolls out the strategies across the organization.

Strategic management is the process of setting goals, procedures, and objectives in

order to make a company or organization more competitive. Typically, strategic management
looks at effectively deploying staff and resources to achieve these goals. Often, strategic
management includes strategy evaluation, internal organization analysis, and strategy
execution throughout the company.

 Companies, universities, nonprofits, and other organizations can use strategic

management as a way to make goals and meet objectives.
 Flexible companies may find it easier to make changes to their structure and plans,
while inflexible companies may chafe at a changing environment.
 A strategic manager may oversee strategic management plans and devise ways for
organizations to meet their benchmark goals.

WHY IS STRATEGIC MANAGEMENT IMPORTANT?

In business, strategic management is important because it allows a company to

analyze areas for operational improvement. In many cases, they can follow either an
analytical process, which identifies potential threats and opportunities, or simply follow
general guidelines. Given the structure of the organization, a company may choose to follow
either a prescriptive or descriptive approach to strategic management. Under a prescriptive
model, strategies are outlined for development and execution. By contrast, a descriptive
approach describes how a company can develop these strategies.

UNDERSTANDING STRATEGIC MANAGEMENT

Business culture, the skills and competencies of employees, and organizational

structure are all important factors that influence how an organization can achieve its stated
objectives. Inflexible companies may find it difficult to succeed in a changing business
environment. Creating a barrier between the development of strategies and their
implementation can make it difficult for managers to determine whether objectives have been
efficiently met.

While an organization’s upper management is ultimately responsible for its strategy,

the strategies themselves are often sparked by actions and ideas from lower-level managers
and employees. An organization may have several employees devoted to strategy rather than
relying solely on the chief executive officer (CEO) for guidance.

Because of this reality, organizational leaders focus on learning from past strategies
and examining the environment at large. The collective knowledge is then used to develop
future strategies and to guide the behavior of employees to ensure that the entire organization
is moving forward. For these reasons, effective strategic management requires both an inward
and outward perspective.

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.

In that case, strategic management means ensuring the school has funds to create
high-tech classrooms and hire the most qualified instructors. The college also invests in
marketing and recruitment and implements student retention strategies. The college’s
leadership assesses whether its goals have been achieved on a periodic basis.

STRATEGIC PLANNING VS. STRATEGIC MANAGEMENT: WHAT’S THE

DIFFERENCE?
Strategic planning and strategic management may sound like they’re interchangeable,
but they are two different parts of a very important process: achieving a business’s long-term
goals. Strategic planning is the approach used in forming an organization’s direction (e.g., its
vision, mission and priorities).
On the other hand, strategic management is the overall process of achieving that
direction, from planning to executing. Managing the action plans, projects and lifecycle of the
strategic plan is crucial to accomplishing your business’s long-term priorities.
Sometimes businesses will be better at looking forward and figuring out their
opportunities than they are at executing their plans, or vice versa, so it’s important to break
down what strategic management involves. The Association for Strategic Planning divides
strategic management into three phases: think, plan and act.
1. Think
Thinking comprises both an external assessment and an internal assessment. You
want to consider external forces, such as emerging opportunities for your business to leverage
in the future and threats you can minimize or work around. Technology can pose both an
opportunity and a threat; your business must decide what your vision is and how developing
technology fits into that vision.
Your internal assessment should evaluate your capabilities, processes, culture and
change readiness. It’s incredibly important to understand how flexible and ready for change
your organization is. Developing a good strategy doesn’t automatically equal buy-in from
your employees. Culture and change readiness can blindside you when you’re trying to
implement your strategy if you don’t take them into account beforehand and effectively
manage change.
You should also take your customers into consideration. What feedback are you
getting from them? Do they seem interested in a product or service you traditionally haven’t
provided? Is a competitor disrupting your industry or gaining some sort of advantage over
your business? Don’t leave out your customers when evaluating your organization’s SWOT
(strengths, weaknesses, opportunities and threats).
2. Plan
This is where strategic planning comes into play. Essentially the process involves
using your SWOT analysis to form your long-term vision and drill down from there into your
strategic priorities, goals and action plans.
A key aspect of strategic planning is to include organizational drivers of success.
Make sure to ask what “success” and “done” looks like. You should be able to measure your
progress to see if you’ve met your goals. Determine those measurements during the planning
process, not after.
3. Act
Executing your strategic plan involves a few vital steps. First is creating a
performance culture to give your employees visibility into what your goals are, how they’re
being met and when you successfully complete a goal. Since every employee plays some sort
of role in the strategic plan’s execution, visibility and communication must start at the top.
Otherwise, those employees are less invested in the plan, and you run into change
management problems.
To overcome those problems, you must also build accountability. Developing a
culture of ownership allows every employee to feel like they own the results and successes of
your plan.
Not every plan will go smoothly without any readjustments. Be sure to act on the
measurements you set in the planning phase. Are you seeing the results you expected? Is
there something new you can leverage? Reviewing and evaluating your strategy execution to
adjust course is one of the most important strategic management actions you can take.
EVERY EMPLOYEE PLAYS A ROLE IN STRATEGIC MANAGEMENT
While communication and metrics are two big parts of strategic management, don’t
discount prioritization. You can’t ask your employees to do two full-time jobs, so you need to
balance strategy with everyday work so production doesn’t grind to a halt and make your
strategy a moot point. Prioritize goals and actions plans and build out a timeline that takes
into account the everyday work.
Also make sure you keep an eye on how people’s roles change because of the
strategy. Updating job descriptions and titles helps ensure employees feel aligned behind a
shared vision and are committed to the strategy. Clearly communicate performance
measurements at all levels and find a way for employees to provide feedback in return.
And in the end, remember that strategic management is an iterative, ongoing process,
not a single event. When you have the plan, the buy-in and the measurements, you’ll still
need to review and readjust to help your organization stay on the path to achieving its long-
term vision and goals.
MISSION AND VISION STATEMENTS
 Along with strategic planning, mission and vision statements are among the most
widely used tools, and consistently rank above average in satisfaction.

A Mission Statement defines the company’s business, its objectives and its approach
to reach those objectives. A Vision Statement describes the desired future position of the
company. Elements of Mission and Vision Statements are often combined to provide a
statement of the company’s purposes, goals and values. However, sometimes the two terms
are used interchangeably.

HOW MISSION AND VISION STATEMENTS WORK:

Typically, senior managers will write the company’s overall Mission and Vision
Statements. Other managers at different levels may write statements for their particular
divisions or business units. The development process requires managers to:

 Clearly identify the corporate culture, values, strategy and view of the future by
interviewing employees, suppliers and customers
 Address the commitment the firm has to its key stakeholders, including customers,
employees, shareholders and communities
 Ensure that the objectives are measurable, the approach is actionable and the vision is
achievable
 Communicate the message in clear, simple and precise language
 Develop buy-in and support throughout the organization

COMPANIES USE MISSION AND VISION STATEMENTS TO:

Internally

 Guide management’s thinking on strategic issues, especially during times of

significant change
 Help define performance standards
 Inspire employees to work more productively by providing focus and common goals
 Guide employee decision making
 Help establish a framework for ethical behavior

Externally

 Enlist external support

 Create closer linkages and better communication with customers, suppliers and
alliance partners
 Serve as a public relations tool