Key Elements of Strategic Management
Strategic management is defined as a process of specifying the objectives of the organization, developing policies and planning to achieve the objectives, and then allocating resources so that plans can be implemented. Strategic management is considered to be the highest level of managerial activity that the top management of the organization performs and also the executive team. Strategic management normally provides the overall direction of the entire organization. Strategic management is a set of actions and decisions that result to the formulation and implementation of approaches designed to achieve the objectives of the organization. This is a continuous process that is normally involved with the attempt of matching the organization with the changing environment in a manner that is advantageous. Strategic management is extremely critical in the survival of the organization.
Elements of Strategic Management
Organizations are supposed to select the directions in which it will move towards. Strategic management has three major elements, which include strategic analysis, strategic choice, and strategy implementation.
1. Strategy Analysis
Strategy analysis is usually concerned with understanding the organizations strategic position. This is an element that is concerned with the changes that are going on in the environment and how the changes are going to affect the activities of the organization. Other factors that are considered in this element are the strength of the resources in the organization, in the context of the changes. It also focuses on what the associated groups in the organization aspire to and how the changes affect the present position and the future position of the organization. Strategic analysis usually aims at creating a view of the factors that can have an impact on the future and present performance of the organization. When strategic management is performed in the right manner, it helps in selecting the correct strategy.
There are certain factors that should be considered during strategic analysis. The first factor includes the business environment. It is hard for organizations to exist without interacting with a complex, political, commercial, economic, social, cultural, and technological environment. The environmental changes are sometimes complex for certain organizations than others. Therefore, when organizations are faced with the environmental changes, they should have a clear understanding of the impacts so that to be able to formulate a strategic plan. The central importance of strategic analysis is to understand the environmental effects to the organization. It is necessary to consider the environmental effects on the business and also the present and expected changes in the environment.
The second factor is the organization resources, which are internal influences. When thinking about the strategic capability of the organization, it is necessary to consider the weaknesses and strengths. The weakness and strengths of organizations can be identified by considering the organization resource areas like its management, physical plant, products, and its financial structure. This aims at forming an observation of the internal influences and restriction on the strategic choice.
The final factor is the prospects of the different stakeholders in that the development of the organizations depends a lot on the expectations of the stakeholders. The assumption and beliefs of the stakeholders greatly constitute them culture of the organization. A lot of influence in decision making concerning the strategy is normally influenced by the organizations stakeholders and degree of the stakeholders impact on the strategy depend on the respective power of every group of stakeholders. The beliefs and assumptions of the stakeholders are usually influenced by the resource and environmental implications. The influence that tends to prevail normally depends on the group that has the greatest power. It is extremely necessary to understand this as it helps in recognizing why the organization is following a particular strategy.
Consideration of the resources, expectations, environment, and objectives in the political and cultural framework of the organization provide the foundation for strategic analysis in the organization. In order to be able to understand the strategic position that the organization is in, it is essential to examine the extent of the implication and direction of the current strategy and the objectives the organization is following if they are in line with and can manage with the strategic analysis implications.
2. Strategic Choice
Strategic analysis usually creates a foundation for strategic choice. After strategic analysis has been done, it is now ready to make a strategic choice. Strategic choice is normally defined as the practice of selecting the best possible course of action, and it is usually based on the evaluation of the available strategic options. Strategic choice has three parts that include the generation of strategic options, evaluation of the options, and selection of the strategy. During strategic choice, there may be many strategic options; therefore, it is necessary to ensure that the selected option is the best.
The second part of strategic choice is the evaluation of the strategic options. Examination of the strategic option can be done in the strategic analysis so that to assess their relative merits. When the organization is deciding on any of the options, it might decide to ask several questions. The first questions that might be considered is the option built upon strengths, one that will take advantage of opportunities, and overcome weaknesses while it is minimizing threats that the business is faced with. By focusing on the following factors, it is referred to as searching for the suitability of the strategy. There are several questions that the organizations may consider when it is evaluating the strategic options.
The third part is the selection of the strategy which is the process of selection the options that the organization is going to pursue. Sometimes the selected choice is usually a matter of the management judgment. It is extremely essential to understand that, in the selection process, it cannot always be viewed as a purely logical, objective act. During strategic choice, the selected strategy is normally strongly influenced by the managers values and other groups with an interest in the organization. This at one point reflects the power structure of the organization.
3. Strategy Implementation
This is the third major element of strategic management that is concerned with strategy translation into action. This is the stage where the strategy is translated to action. The implementation of the strategy requires proper deployment of the organization resources, effective change management, careful handling of the possible changes in the structure of the organization, and also careful planning. There are several parts that are involved in strategy implementation. The first part is in planning and allocation of resources. During implementation, it is involved with resource planning that includes the logistic of implementation. The second part is organization design and structure. During strategy implementation, there are certain changes in organization structure that should be done. It is also likely for the need to arise for adapting the system used in managing the organization. The third part is the management of the strategic change.
When a strategy is being implemented, it also requires that the strategic change to be managed. Action from the managers is required in the way the change process will be managed and the mechanism that they are going to use. The mechanisms that the managers use are concerned with the redesign of the organization, changing daily routines and organization cultural aspects, and the political barriers to change.
To conclude. the three elements of strategic management are interconnected in that in order for a strategic choice to be selected, there must be an analysis of options so that to determine the strategy that is going to be effective and efficient for the organization. Strategic implementation normally depends on strategic choice. The implementation of a strategy is normally done after different strategies have been considered so that a conclusion is arrived at on the choice that the organization will implement. This is a choice that will accomplish the expected goal.