Business Environment and Strategic Management

Business Environment and Strategic Management

Introduction

Strategic management is defined as the branch of business management, which deals with the development, planning and implementation of substantive goals, objectives and orientations of market-based organizations. The time horizons in strategic management generally include two to five years, with strategic plans, but most have a longer-term time horizon. Due to the strong overlap of the topic with issues of product policy, the marketing and the importance for the stakeholders of the company's strategic management corresponds strongly with the concept of corporate governance (Hanson, 2010).

Discussion

Strategic Management is extended to long-term goals and actions of the company. Strategy Formulation and its precise tools are the core of governance and an important sign of good management of the company. Strategic management is the development and implementation of actions leading to long-term access of the level of effectiveness of the company above the competition.

Strategy can be defined as the image of organizational actions and management approaches used to achieve organizational goals and objectives. When the executives start developing strategies for their corporations, they always start by analyzing the environment of the company. These analyses include the environmental conditions of the company, as well as, the industry. The executives then start the assessing the strengths and weaknesses of the company, as well as, the competitors. Keeping in mind the strategic analysis of the company, internal and external, strategies are made. These strategies are made which set a distinctive strategic position of the company (Carton & Hofer, 2006). The strategies also help the organization in making further strategies which can help them in maintaining their competitive advantage, as well as, maintain a healthy competition in the market. A company makes its strategy either to compete with the competitors through strategies like low cost leadership or premium price (www.hbr.org). The value chain of the company is then aligned with the strategies in a way that they help each other. The value chain then crates the marketing, manufacturing, human resource and other decisions (Davenport & Leibold, 2006). The final strategies are then made making use of these strategies and the final shape to the process of strategic management is given. The financial targets are also set and the budget is allocated to different departments so that they can start pursuing their strategies.

The logic here is that the strategies of a company, as well as, the options available to the strategic managers are bound by the internal and external environment. In simpler terms, it is the structure of an organization that ultimately shapes its strategies. The roots of the structuralist approach found its base from the industrial economics in the past century. The economics of industrial organization has been a dominant power in the strategy formulation and strategy implementation in such organizations for more than thirty years (Carton & Hofer, 2006). This theory suggests that the performance of a firm is dependent on the conduct of the firm, which is in turn dependent on the structure of the ...