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Strategic management: What it is and why you need it

Posted by Admin | 1 year ago | Filed Under General

Every business owner wants to make the right decisions for their growing companies, but most are at a loss of where to begin. Identifying a problem within the company is only half the battle, but how do decision makers go about solving them?

Strategic Management is an important concept for managers, decision makers and business owners alike, and entails the action-oriented and results-driven evaluation of business goals, objectives and plans for the future, as well as a concrete strategy for addressing them.

In this article, the concept and definition of Strategic Management will be unpacked, and guidelines will be suggested for how to make use of them, no matter the size or nature of your enterprise.

A strategic management process is most often comprised of five distinct stages:

Goal setting

A company can’t decide on a good course of action without first knowing where it wants to get to – which makes goal setting a crucial initial step in the strategic management process. Goal setting is a perfect opportunity to assess and evaluate the mission or vision of your business.

It is also an opportune time to take an honest look at the things worrying you about your business’s progress, including both internal and external factors affecting your organisation. By tackling these uncertainties head-on, business owners are paving the way towards a plan of action to make real, positive change happen in the company.

A business owner’s goal-setting exercise should take both long and short term goals into account, and should also suggest ways in which the organisation might move towards those goals at each organisational level, from employees to managers and executives.

It is a great idea to end this exercise by writing a simple, succinct mission statement to match the values of your vision, and ensure you clearly communicate your company’s goals to anyone who reads it.

Analysis

This is the point where businesses gather as much information as they can on what it will take to accomplish their vision. Strategists need to take stock of any internal and external factors that might get in the way, and identify projects that may help it come closer to its goals.

The organisation’s strengths and weaknesses need to be honestly appraised, as well as threats and opportunities you might encounter along the way.

The analysis phase is also the best time to examine the business’s position in the market, deciding which markets to participate in and which not to, which products to offer the chosen target market for a strategic advantage, and which markets show good signs of profitable growth.

Strategy formulation

Having considered the information gathered, it is time to form a strategy. To determine the best way to spend a company’s resources on its pressing issues, it is a good idea to prioritise them based on their importance to the organisation’s success.

How will the business organise their operations to gain a strategic advantage over competitors? How will they turn out the best possible products and services, at the right cost? How would we need to adjust the pricing strategy? At this stage, problems are matched with potential solutions, and a plan for implementation is developed.

Strategy implementation

Now that the master-plan is in place, attention needs to be turned to making it happen. Every person within the organisation must be informed of their responsibilities and duties when it comes to taking action to implement the strategy and achieve the business’s goals.

Any funding and resources your plan requires will also need to be secured, and the company’s structure evaluated to ensure it facilitates a smooth transition.

Evaluation and control

This is the final step of the strategic management process, where an organisation determines whether their chosen strategy is bearing fruit. It is a good idea to include a third party, such as a business coach, in the evaluation to ensure an objective opinion, and solid experience and knowledge to draw upon. Performance needs to be measured, and remedial or corrective action needs to be taken if aspects of the strategy are not working as well as expected.

Evaluation and control may be the final step in the strategic management process, but in reality, a business can only reap the benefits of these exercises if they are undertaken on a continual basis. Every strategy evaluation should prompt a fresh look at the other steps in the process, where potential areas of improvement can be reassessed and tested in the real-world environment.

The strategic management process can be called into action whenever a business problem of any sort arises, and is one of the best ways to ensure that an organisation’s vague ambitions, which often go unachieved for years at a time, are laid bare and put into actionable and measurable terms that will materially drive the organisation into a prosperous future.

Article by Pieter Scholtz

Pieter Scholtz is a leading business and executive coach and SA’s Co-Master Licensee for global franchise company – ActionCOACH.

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