Strategic Management
The word “strategy” is derived from the Greek work “strategia” which means the strategy or technique for winning the war. And the word management is derived from the Latin word “manageria”.
Strategy is defined as the basic long term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. Strategies are established to set direction, define or clarity the organization, and provide consistency or guidance in response to the environment.
L.L. Byars, L.W. Rue & Shaker Zahra defined-
“Strategic management is the process by which top management determines the long run direction and performance of the organization by ensuring that carefully formation, effective implementation and continuous evaluation of the strategy take place.”
Pearce & Robinson defined-
“Strategic management is the process of large scale, future oriented plans for interacting with the competitive environment, to optimize achievement of an organizations objectives.”
From what has been state above, we can say that strategic management is a continuous process of strategic analysis, strategy creation, implementation and monitoring, used by organizations with the purpose to achieve and maintain a competitive advantage.
Challenges of Strategic Management
i. Uncertainty: In an organization, managers have to deal with different kinds of uncertainties.
ii. Complexity: Complexity results from companies having to navigate a growing number of dimensions when developing strategy.
iii. Ambiguity: Ambiguity means a lack of clarity. Strategic decisions are very much risky because decision makers with lack potentially important information are uncertain about the probability of forthcoming events.
iv. Increasing Global Presence: In the era of globalization, managers have to take into account many different factors in their strategic planning. Such as- target groups, purchasing patterns, regulatory frameworks and currency risks.
v. Variety of Products: The complexity of product portfolios contributes to the many challenges facing strategic planning.
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Importance of Strategic Management
i. Required for Sustained Competitive Advantage: Competitive advantage is what keeps great organizations ahead of their competitors. It is not guaranteed that companies will ever achieve it through competitive advantage conducting strategic planning.
ii. Views Things from Broader Perspective: By using strategic planning in management, managers (strategic planners) can make the decisions that bring the competitive advantage.
iii. Facilitates Collaboration: Strategic planning in management is used to achieve the competitive advantage and to integrate all the functional areas of the company by facilitating the communication between the managers at all levels.
Given the many challenges and opportunities in the global marketplace, they must become both a process and a way of thinking throughout the organization.
