A Study On Strategic Management

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Strategic Management simply refers to the science (some would say art) of coming up with, evaluating and using strategic (long range) plans in the workplace. Primarily used to manage how different departments in a business work together, strategic management is the way smart companies who want to grow do business. It's an art form that a lot attempt, but very few are successful at pulling off. Looking at the business world, though, you can see what companies employ strategic management in all aspects of their business.

Strategic management can be thought of as the upper tier of management where the big picture decisions take place. By looking at all the aspects of a business (all the different departments at work - both separately and interacting together), it's easier to effectively manage resources to get the biggest bang for your buck. This is the smallest level of the management pyramid, with very few making these decisions, but the use of strategy at this level is vital.

Strategic Planning:

To manage with strategy, you need a strategic plan. In the simplest terms, this refers to the process of looking at all the various aspects and departments of your business, figuring out how they could best work together, coming up with goals, and writing out a plan together to reach those goals. There's more to it, of course, but this is the basic concept.

It sounds like a simple thing, but even when you're dealing with a medium sized business of a few dozen or more employees; it can be difficult to get different departments to work together effectively. The ability to see the big picture and visualize the future, though, is an important part of actually being able to get there.  Strategic planning helps with seeing the big picture and making it a reality by breaking it up into easily managed chunks.


Strategic management refers to the art of planning your business at the highest possible level. It is the duty of the company's leader (or leaders). Strategic management focuses on building a solid underlying structure to your business that will subsequently be fleshed out through the combined efforts of every individual you employ.

Strategic management hinges upon answering three key questions:

What are my business's objectives?

What are the best ways to achieve those objectives?

What resources are required to make that happen?

Answering the first question requires serious thought about what your ultimate goals are for the business. What are you trying to make happen? What are you attempting to facilitate or enable? What is the best possible outcome your company can aspire to?

Drilling down to uncover a company's core objectives can have several phases:

Assessing the landscape within which the company will operate, and formulating how the company sees its role within that landscape. This is commonly known as a mission statement.

Establishing objectives to answer some of the unmet needs, taking both a long- and short-term view of what the company can offer. This is commonly known as a vision statement.

Stipulating the goals the company has for itself, both in terms of financial and strategic objectives.

Once these steps have been taken, a strategic plan should begin to emerge - effectively setting the stage for answering the second question above, or "How best can we reach our goals?" Phase two of successful strategic management is formulating a plan by which the company can accomplish what it sets out to do.

Within this phase, a chain of command should be put in place, pairing individuals with the right skills, knowledge, and experience with the business's needs and objectives. From there, responsibilities for processes and tasks should be distributed across the full chain of command, delegating work to teams and individuals so that they company's goals can be attained through the combined efforts of all employees. This includes communicating responsibilities and deliverables (what needs to be done, and how the results of those tasks will be measured).

Finally, strategic management entails allocating the right amount of resources to the different parts of your business so that those assigned to particular goals have what they need to meet their objectives. This ranges from providing your workers with the right supplies to enacting systems by which employees receive the necessary training, all work processes are tested, and all information and data generated is documented. To effectively manage your business strategically, every inch of your company must have its needs met in these ways, so all parts can work together as a seamless, highly functioning whole.

A critical but often overlooked aspect of strategic management is the need for it to be both planned and unplanned. Company leaders must take the initiative in setting out how the company should function and operate, but they must also be dynamic in responding to needs and requirements as they arise. Strategic management is not a static process that can be limited to a linear process. Often, unforeseen results ensue (which can be both positive and negative) and strategic managers must be able to respond to occurrences that cannot be predicted.

Effective strategic management is lithe and nimble, enabling companies to move quickly in response to new challenges, and replace outmoded ideas and practices with processes that can help meet new needs as they present themselves.

Global Strategic Management

Discusses the sources of competitive advantage, the nature of competitive advantage in global industries, types of international strategy, analysis of global cost structures, globalization of service businesses, emerging economies, global knowledge management, and country management.

Birth of strategic management (Wikipedia)

Strategic management as a discipline originated in the 1950s and 60s. Although there were numerous early contributors to the literature, the most influential pioneers were Alfred D. Chandler, Philip Selznick, Igor Ansoff, and Peter Drucker.

Alfred Chandler recognized the importance of coordinating the various aspects of management under one all-encompassing strategy. Prior to this time the various functions of management were separate with little overall coordination or strategy. Interactions between functions or between departments were typically handled by a boundary position, that is, there were one or two managers that relayed information back and forth between two departments. Chandler also stressed the importance of taking a long term perspective when looking to the future. In his 1962 groundbreaking work Strategy and Structure, Chandler showed that a long-term coordinated strategy was necessary to give a company structure, direction, and focus. He says it concisely, "structure follows strategy."

In 1957, Philip Selznick introduced the idea of matching the organization's internal factors with external environmental circumstances. This core idea was developed into what we now call SWOT analysis by Learned, Andrews, and others at the Harvard Business School General Management Group. Strengths and weaknesses of the firm are assessed in light of the opportunities and threats from the business environment.

Igor Ansoff built on Chandler's work by adding a range of strategic concepts and inventing a whole new vocabulary. He developed a strategy grid that compared market penetration strategies, product development strategies, market development strategies and horizontal and vertical integration and diversification strategies. He felt that management could use these strategies to systematically prepare for future opportunities and challenges. In his 1965 classic Corporate Strategy, he developed the gap analysis still used today in which we must understand the gap between where we are currently and where we would like to be, then develop what he called "gap reducing actions".

Peter Drucker was a prolific strategy theorist, author of dozens of management books, with a career spanning five decades. His contributions to strategic management were many but two are most important. Firstly, he stressed the importance of objectives. An organization without clear objectives is like a ship without a rudder. As early as 1954 he was developing a theory of management based on objectives. This evolved into his theory of management by objectives (MBO). According to Drucker, the procedure of setting objectives and monitoring your progress towards them should permeate the entire organization, top to bottom. His other seminal contribution was in predicting the importance of what today we would call intellectual capital. He predicted the rise of what he called the "knowledge worker" and explained the consequences of this for management. He said that knowledge work is non-hierarchical. Work would be carried out in teams with the person most knowledgeable in the task at hand being the temporary leader.

In 1985, Ellen-Earle Chaffee summarized what she thought were the main elements of strategic management theory by the 1970s.

Strategic management involves adapting the organization to its business environment.

Strategic management is fluid and complex. Change creates novel combinations of circumstances requiring unstructured non-repetitive responses.

Strategic management affects the entire organization by providing direction.

Strategic management involves both strategy formation (she called it content) and also strategy implementation (she called it process).

Strategic management is partially planned and partially unplanned.

Strategic management is done at several levels: overall corporate strategy, and individual business strategies.

Strategic management involves both conceptual and analytical thought processes.


Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments.[1] It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders.

Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency." According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context." Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. It depends on the organizational structure.

"Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment." (Lamb, 1984:ix)[2]


In general terms, there are two main approaches, which are opposite but complement each other in some ways, to strategic management:

The Industrial Organizational Approach

based on economic theory - deals with issues like competitive rivalry, resource allocation, economies of scale

assumptions - rationality, self discipline behaviour, profit maximization

The Sociological Approach

deals primarily with human interactions

assumptions - bounded rationality, satisfying behaviour, profit sub-optimality. An example of a company that currently operates this way is Google. The stakeholder focused approach is an example of this modern approach to strategy.

Strategic management techniques can be viewed as bottom-up, top-down, or collaborative processes. In the bottom-up approach, employees submit proposals to their managers who, in turn, funnel the best ideas further up the organization. This is often accomplished by a capital budgeting process. Proposals are assessed using financial criteria such as return on investment or cost-benefit analysis. Cost underestimation and benefit overestimation are major sources of error. The proposals that are approved form the substance of a new strategy, all of which is done without a grand strategic design or a strategic architect. The top-down approach is the most common by far. In it, the CEO, possibly with the assistance of a strategic planning team, decides on the overall direction the company should take. Some organizations are starting to experiment with collaborative strategic planning techniques that recognize the emergent nature of strategic decisions.

Strategic decisions should focus on Outcome, Time remaining, and current Value/priority. The outcome comprises both the desired ending goal and the plan designed to reach that goal. Managing strategically requires paying attention to the time remaining to reach a particular level or goal and adjusting the pace and options accordingly. Value/priority relates to the shifting, relative concept of value-add. Strategic decisions should be based on the understanding that the value-add of whatever you are managing is a constantly changing reference point. An objective that begins with a high level of value-add may change due to influence of internal and external factors. Strategic management by definition, is managing with a heads-up approach to outcome, time and relative value, and actively making course corrections as needed.

The strategy hierarchy

In most (large) corporations there are several levels of management. Strategic management is the highest of these levels in the sense that it is the broadest - applying to all parts of the firm - while also incorporating the longest time horizon. It gives direction to corporate values, corporate culture, corporate goals, and corporate missions. Under this broad corporate strategy there are typically business-level competitive strategies and functional unit strategies.

Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the questions of "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?" Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation. According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation, or focus to achieve a sustainable competitive advantage and long-term success. Alternatively, according to W. Chan Kim and Renée Mauborgne, an organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous value-cost trade off by simultaneously pursuing both differentiation and low cost.

Functional strategies include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, supply-chain strategies, and information technology management strategies. The emphasis is on short and medium term plans and is limited to the domain of each department's functional responsibility. Each functional department attempts to do its part in meeting overall corporate objectives, and hence to some extent their strategies are derived from broader corporate strategies.

Many companies feel that a functional organizational structure is not an efficient way to organize activities so they have reengineered according to processes or SBUs. A strategic business unit is a semi-autonomous unit that is usually responsible for its own budgeting, new product decisions, hiring decisions, and price setting. An SBU is treated as an internal profit centre by corporate headquarters. A technology strategy, for example, although it is focused on technology as a means of achieving an organization's overall objective(s), may include dimensions that are beyond the scope of a single business unit, engineering organization or IT department.

An additional level of strategy called operational strategy was encouraged by Peter Drucker in his theory of management by objectives (MBO). It is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria. It must operate within a budget but is not at liberty to adjust or create that budget. Operational level strategies are informed by business level strategies which, in turn, are informed by corporate level strategies.

Since the turn of the millennium, some firms have reverted to a simpler strategic structure driven by advances in information technology. It is felt that knowledge management systems should be used to share information and create common goals. Strategic divisions are thought to hamper this process. This notion of strategy has been captured under the rubric of dynamic strategy, popularized by Carpenter and Sanders's textbook [1]. This work builds on that of Brown and Eisenhart as well as Christensen and portrays firm strategy, both business and corporate, as necessarily embracing ongoing strategic change, and the seamless integration of strategy formulation and implementation. Such change and implementation are usually built into the strategy through the staging and pacing facets.


The strategic management process is important to set up the company's mission, goals and procedures. Typically created by the owner or top management in a company, the strategic management plan offers direction and guidance to the employees, sets up measurable goals and time lines and designates duties of all personnel. Marketing and sales projections are included in the strategic plan as well as plans to review the achievements of each department.


The mission statement is a company's main reason for existing. It should clearly define the goals and purposes of the company. Creating the mission statement is the first phase in the strategic management process; all other work in formulating the strategic plan comes out of the core mission. Company goals should be formulated once the mission is defined. Goals include financial expectations that project sales figures, profit margins, customer attraction and retention and spending parameters. Goals defined in the strategic planning process should be measurable; timetables should be erected to review each aspect of the goals.


Once the goals have been created, the strategic management planning team can enter the information-gathering phase. Successful strategic planning processes bring in employees and consultants to add input into each phase of the plan. Sales and marketing teams bring information about the current landscape in which the company is operating. Human resource managers provide statistics on retention, health care costs and employee performance evaluations. An outside consultant may bring in market surveys and competitive intelligence to provide a total picture of the current business environment. As all the information is presented, the strategic management team needs to analyze the reports and classify the company's strengths and weaknesses to devise a final strategic plan.

The Plan

Plans can be formulated once all the information is available. Advertising and marketing strategies can be identified and implemented. Cutbacks and cost cutting measures may be instituted to bring profit margins in line with the company goals. New services and products may be developed to tap into niche markets that show promise. All the opportunities to increase revenue should be explored and defined or discarded, and leadership should be put into place to implement the various strategies. Leaders need to be given time lines, expectations, budget parameters and authority.


All strategic management plans must have controls and regular reviews built into the process. Changes should be made as needed following each review stage. Reporting deadlines should be honored and feedback should be presented to the various stakeholders periodically. The strategic planning team should meet annually to review the entire strategic planning process. Business climates, market trends and technological advancements demand current and regularly updated strategic planning to allow a company to be competitive and successful.


Information systems are implemented within an organization for the purpose of improving the effectiveness and efficiency of that organization. Capabilities of the information system and characteristics of the organization, its work systems, its people, and its development and implementation methodologies together determine the extent to which that purpose is achieved.

The largest growth in most economies is coming from 'information' industries. The success of such knowledge-based organisations lies in their information systems. Also, forced by technological change and globalisation of markets, many manufacturing industries are also placing increasing emphasis upon information systems. Information systems are more than just computer programs. Though information and communications technologies are playing an increasing role in meeting organisations' information needs, an information system is a much more general concept. It refers to the wider systems of people, data and activities, both computer-based and manual, that effectively gather, process, store and disseminate organisations' information.

An understanding of the effective and responsible use and management of information systems and technologies is important for managers, business professionals, and other knowledge workers in today's internetworked enterprises. Information systems play a vital role in the e-business and e-commerce operations, enterprise collaboration and management, and strategic success of businesses that must operate in an internetworked global environment. Thus, the field of information systems has become a major functional area of business administration.

Information systems are the means by which people and organisations, utilising technologies,

Gather, process, store, use and disseminate information.

An information system is an organized collection, storage, and presentation system of data and other knowledge for decision making, progress reporting, and for planning and evaluation of programs.

There are various types of information systems, for example: transaction processing systems, office systems, decision support systems, knowledge management systems, database management systems, and office information systems. Critical to most information systems are information technologies, which are typically designed to enable humans to perform tasks for which the human brain is not well suited, such as: handling large amounts of information, performing complex calculations, and controlling many simultaneous processes.

Information technologies are a very important and malleable resource available to executives.[21] Many companies have created a position of Chief Information Officer (CIO) that sits on the executive board with the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO) and Chief Technical Officer (CTO).The CTO may also serve as CIO, and vice versa. The Chief Information Security Officer (CISO), who focuses on information security management.

Types of information systems

A four level pyramid model of different types of Information Systems based on the different levels of hierarchy in an organization

The 'classic' view of Information systems found in the textbooks[30] of the 1980s was of a pyramid of systems that reflected the hierarchy of the organization, usually Transaction processing systems at the bottom of the pyramid, followed by Management information systems, Decision support systems and ending with Executive information systems at the top. Although the pyramid model remains useful, since it was first formulated a number of new technologies have been developed and new categories of information systems have emerged, some of which no longer fit easily into the original pyramid model.

Some examples of such systems are:

Data warehouses

Enterprise resource planning

Enterprise systems

Expert systems

Geographic information system

Global information system

Information Systems have a number of different areas of work:

Information systems strategy

Information systems management

Information systems development

Information systems security

Information systems iteration

Information system organization

Information systems development

Information technology departments in larger organizations tend to strongly influence information technology development, use, and application in the organizations, which may be a business or corporation. A series of methodologies and processes can be used in order to develop and use an information system. Many developers have turned and used a more engineering approach such as the System Development Life Cycle (SDLC) which is a systematic procedure of developing an information system through stages that occur in sequence. An Information system can be developed in house (within the organization) or outsourced. This can be accomplished by outsourcing certain components or the entire system.[32] A specific case is the geographical distribution of the development team (Offshoring, Global Information System).

A computer based information system, following a definition of Langefors,[33] is:

a technologically implemented medium for recording, storing, and disseminating linguistic expressions,

as well as for drawing conclusions from such expressions.

which can be formulated as a generalized information systems design mathematical program

Information systems research

Information systems research is generally interdisciplinary concerned with the study of the effects of information systems on the behavior of individuals, groups, and organizations.[35][36] Hevner et al. (2004) [37] categorized research in IS into two scientific paradigms including behavioral science which is to develop and verify theories that explain or predict human or organizational behavior and design science which extends the boundaries of human and organizational capabilities by creating new and innovative artifacts.

Salvatore March and Gerald Smith [38] proposed a framework for researching different aspects of Information Technology including outputs of the research (research outputs) and activities to carry out this research (research activities). They identified research outputs as follows:

Constructs which are concepts that form the vocabulary of a domain. They constitute a conceptualization used to describe problems within the domain and to specify their solutions.

A model which is a set of propositions or statements expressing relationships among constructs.

A method which is a set of steps (an algorithm or guideline) used to perform a task. Methods are based on a set of underlying constructs and a representation (model) of the solution space.

An instantiation is the realization of an artefact in its environment.