MANAGEMENT

Principle of Strategic Management

Principle of Strategic Management

Introduction

Strategic Planning is one of the most important tools used to design a plan for a problem or process. It assesses internal and external situation before formulating the strategic plan of an organization. The plan assesses these factors and after formulating the strategy, implements the plan and evaluate it. If there are problems, then plan and strategy is in accordance with the situation. Strategic management refers to the branch of Business Administration, which deals with the development, planning and implementation of content, goals and direction of organizations (Dobson, Starkey & Richards, 2004, pp. 35).

Concepts of strategic management process

The strategic management process is a continuous and systematic process during which company executives makes decisions that will have outcomes in the future. Additionally they develop plans and programs to implement the decisions and achieve the goals and finally, evaluate the performance. The strategic management process is a unique opportunity to unite the management, employees and stakeholders and customers in a common reflection to understand where the company and where it goes.

Components of the strategic management process

The strategic management process follows four steps which are briefly discussed in the following passages.

Analysis

The analysis phase consists of two main parts: the analysis of the environment and the analysis of the company. The former includes the analysis of competitors and the industry structure and industry dynamics analysis.

Planning

Strategic goals are to align and focus of strategic planning. As strategic goals are not simply given but must be planned in the strategy process and they put in relation and set concrete.

Strategy formulation and evaluation

In this phase, a strategy is developed to achieve these goals, the information of the environment analysis and company analysis needs.

Implementation

Implementation refers to the specific, strategy-led action by the corporate members according to the strategy formulated. If implementation of strategies fails to be done effectively, the strategic management remains ineffective as a result and can be classified as a mere "intellectual game".

Importance of strategy for business

The business strategy is possibly the most important factor to consider when choosing a company to invest our savings. The choice of strategy will determine the long-term goals of a company as well as measures and use of resources to achieve those goals. The main objective of the strategy is to ensure survival and prosperity of the company's long-term. If a company succeeds and thrives in an industry, it can establish a competitive advantage over rivals. Therefore, the business strategy also called competitive strategy.

Importance future oriented plan

Usually there are two levels of strategy: the strategy and competitive strategy. The overall strategy of the company requires research information on the evolution of its environment and analysis of various sectors is concerned. This analysis allows the company to better manage its business portfolio interests in deciding to stabilize or to invest in this sector, to withdraw from another (Nag, R.; Hambrick, D. C.; Chen, M.-J, 2007, pp. 10).

Organization's vision, mission, purpose, philosophy, or goals

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