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Strategic management is the set of managerial decision and action that determines the long-run performance of a corporation. It includes environmental scanning both external and internal), strategy formulation strategic or long range planning), strategy implementation, and evaluation and control. The study of strategic management therefore emphasizes the monitoring and evaluating of external opportunities and threats in lights of a corporation's strengths and weaknesses.
STRETEGIC MANAGEMENT SEEKS TO ACHIEVE :
It seeks to achieve better operational control by trying to meet budgets.
It seeks a competitive advantage and a successful future by managing all resources.
It seeks to increase responsiveness to markets and competition by trying to think strategically.
It seeks for more effective planning for growth by trying to predict the future beyond the next year.
IMPORTANCE OF STRETEGIC MANAGEMENT IN ORGANIZATIONS:
Strategic management is commonly used by large multinational corporations as well as small and medium sized enterprises. The popularity of strategic management indicates that it likely has merit, but the true benefits of strategic management are not always clear. Managers, business owners and top executives should understand the benefits that strategic management can offer a business.Strategy can bring various benefits to the organization in present as well as in future.
Strategic management offers benefits to the firm and its management, but also to investors who choose to purchase the firm's securities. A strategic management system shows investors that the organization not only has clear goals, but it has a clear plan for achieving these goals. Strategic management can, therefore, increase the confidence of investors, thereby leading to an increase in the firm's overall share price. This can, in turn, provide the business with greater access to capital, which makes it easier to grow and expand operations.
Strategic management focuses on proactive approach which enables organization to grasp every opportunity that is available in the market.
Strategic management looks at the threats present in the external environment and thus companies can either work to get rid of them or else neutralizes the threats in such a way that they become an opportunity for their success.
Strategic management also adds to the reputation of the organization because of consistency that results from organizations success.
Strategic management takes into account the future and anticipates for it.
Strategic management reduces frustration because it has been planned in such a way that it follows a procedure.
STEPS INVOLVED IN STRATEGIC MANAGEMENT PROCESS:
ENVIRONMENTSCANNING:Environmental scanning refers to a process of collecting and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it.
STRATEGY FORMULATION:Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose.
STRATEGY IMPLEMENTATION:Strategy implementation includes designing the organization's structure, distributing resources, developing decision making process, and managing human resources.
STRETEGY EVALUATION:Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking corrective actions. Evaluation makes sure that the organizational strategy as well as it's implementation meets the organizational objectives.
COMPONENTS OF MISSION STATEMENT:A mission statement is a statement of the purpose of a company, organization or person, its reason for existing
According to Bart,the mission statement consists of 3 essential components:
Key market - who is your target client/customer? (generalize if needed)
Contribution - what product or service do you provide to that client?
Distinction - what makes your product or service unique, so that the client would choose you?
Example of mission statements that clearly include the 3 essential components:
Key Market: The fast food customer world-wide
Contribution: tasty and reasonably-priced food prepared in a high-quality manner
Distinction: delivered consistently (world-wide) in a low-key décor and friendly atmosphere.
SWOT Analysis:Â Is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. It is the foundation for evaluating the internal potential and limitations and the probable opportunities and threats from the external environment. It views all positive and negative factors inside and outside the firm that affect the success.
A SWOT analysis allows you to assess the strengths, weaknesses, opportunities and threats of a situation.By doing a SWOT analysis, you can analyze a situation and figure out if you may reach the desired outcome and if it is worth trying.
Identify strong points of the company by comparing resource advantages to competitors within the market segment.
Evaluate strong points of the company in comparison to competitors in same market segment.
List as many identifiable strengths as possible.
Identify weak points of the organization from an internal perspective.
Identify weak points of the organization from a customer's point of view (reasons customers may favor a competitor over your firm)
List as many identifiable weaknesses as possible in the Weaknesses section of the SWOT analysis.
Analyze external factors that may positively effect the company ("market segment, changes in competitive or regulatory circumstances, technological changes, and improved buyer or supplier relationships could represent opportunities for the firm").
Theorize about realistic concepts that may stimulate financial growth or expansion of the organization as a result of external factors.
List opportunities in the Opportunities section of the SWOT analysis.
Analyze external factors (market segment, changes in competitive or regulatory circumstances, technological changes, and improved buyer or supplier relationships) that could negatively affect the firm.
Forecast potential market stimulation opportunities of competitors in relation to your own organizations opportunities.
Evaluate current position in the market segment (leader, middle of the pack) and potential that competitors may negatively affect that positioning.
List realistic threats in the Threats section of the SWOT analysis.
So according to above information we can say that strategic management plays a very important role in any organization.it can bring various benefits to the organization in present as well as in future.