A firms strategy can be defined as the actions that managers take to attain the goals of the firm

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.

Key Takeaways

• 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. 

Understanding Strategic Management

Strategic management is divided into several schools of thought. A prescriptive approach to strategic management outlines how strategies should be developed, while a descriptive approach focuses on how strategies should be put into practice. These schools differ on whether strategies are developed through an analytic process, in which all threats and opportunities are accounted for, or are more like general guiding principles to be applied.

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.

Strategic management extends to internal and external communication practices as well as to tracking, which ensures that the company meets goals as defined in its strategic management plan.

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.

Special Considerations

Helping their company find ways to be more competitive is the purpose of strategic management. To that end, putting strategic management plans into practice is the most important aspect of the planning itself. Plans in practice involve identifying benchmarks, realigning resources—financial and human—and putting leadership resources in place to oversee the creation, sale, and deployment of products and services.

What is strategic management?

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.

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. 

What is an example of strategic management?

Consider a large company that wants to achieve more ambitious online sales rates. To meet these goals, the company will develop a strategy, communicate this strategy, apply it across various units and departments in the organization, integrate this with employee goals, and execute accordingly. If an effective strategy is applied, ideally, it will help the company achieve its targets through a single, coordinated process. 

Which strategy should firms pursue when they are trying to simultaneously?

What strategy is making sense when the firm faces strong pressures for cost reductions and demands for local responsiveness are minimal?

When a firm focuses on increasing profitability by customizing?

What is a strategy quizlet?