What is Strategic Management? 

Strategic management refers to a continuous process of identifying, planning, analyzing and evaluating the organizational needs which are necessary for the business to achieve its goals and objectives in the long term. As the technology changes very rapidly in the market, it is necessary for the organization to monitor its strategic planning on a regular basis for the successful implementation of its strategy. Strategies of Strategic management include five strategies and their implementation depends upon either the nature of the business or the situation of the environment. 

Benefits of Strategic Management 

An effective Strategic management process helps the companies to achieve their goals in an efficient and effective manner. So, here are some points explaining about the benefits of strategic planning which can be useful for the companies: 

• Competitive advantage: If the business has a proper strategy formulation, then it helps the business to stand out in the competition against its competitors, as it makes the business aware in advance about the changes that can take place in near future. 
• Achieving goals: A clear and dynamic analysis of strategic planning helps the business to get a clear picture of the organizational goals which helps the business to formulate the plan in such a way that it helps in attaining such goals. 
• Increasing profitability: If a business has a very dynamic and focused strategic planning, then it helps the business to understand the needs of the market and the taste and preference of the customer. So, it helps the business to increase its share in the market by making the products according to the need of the customer due to which the sales increases which ultimately results in higher profit. 
• Sustainable growth: A proper strategic management process helps the organization to become more efficient while performing organizational activities, it helps the organization to grow in a manageable way. 
• Help in increasing managerial awareness: Strategy formulation is mainly done by the company to look at the future of the company. If the strategic management process is done on a continuous basis, then it helps the business to become more aware of the challenges and trends of the future. 

Importance of Strategic Management 

• It helps the company to take actions or move in a particular direction. Strategic planning helps in achieving organizational goals and helps in fixing clear cut objectives which are helpful for the organization. 
• It helps the firm to become forward-looking, instead of forthcoming, so that the firm can analyze the actions of the competitors and can take the steps according to the analysis that has been done in order to stand out in the market against the competitors. 
• It helps the business to make itself ready for the upcoming challenges. 
• It ensures the development of the business over its competitors that helps the business in its survival and growth. 
• It helps the firm to survive for the long term as strategic management helps the firm to cope up with the dynamic nature in an effective manner. 

How does Strategic Management Work? 

Firstly, the strategic management process requires setting up objectives for the company, detailed analysis on the actions of the competitors, reviewing the organizational internal structure, evaluation of current strategic plan and at last making sure that the strategic plan has been implemented in a proper manner by the company. 

Strategic management can be either prescriptive or descriptive in nature. Under prescriptive strategic management, the management of a company makes the strategic plan or strategies in advance based on the organizational issues or problems. While under descriptive strategic management, the management of a company uses the strategic plan or strategies whenever there is a need to put those strategies according to the organizational needs. 

The idea regarding strategic management is implemented by the top-level manager. But in some companies, they employ only one person whose work is to analyze the environment and make strategic planning based on the analysis which helps the companies in achieving their goals and objectives in the long term. 

Limitations of Strategic Management 

• Strategic management is based on certain premises but in case that premises do not hold valid, the strategic planning by the organization on those premises would not be effective. 
• SWOT (Strength, weakness, opportunity, threat)  analysis plays a very important role in the strategic formulation of any strategic planning. Obviously, if the analysis of SWOT is not right, the strategy made by the company on the basis of that SWOT analysis may go wrong. Making SWOT analysis effective, requires a lot of expertise and information. But, if these two things are missing, then it may result in the formation of ineffective strategies. 

Steps of Strategic Management 

Generally, the process of strategic management is inclusive of 5 steps

• Identification: The very first step in strategic management is the identification of the company’s current needs, like identifying the organizational goals, mission, and vision of the business. Proper identification of the companies is needed to be made easier for the business which can be used in making plans to attain organizational goals. 
• Analysis: Once you are familiar with the needs of the organization, you must analyze the details deeply and must gather as much information as possible which will help the organization in accomplishing goals. A SWOT analysis must be done by the companies, that is, identification of strengths, weaknesses, opportunities, and threats. 
• Formation: Once the analysis of information is done, after that there is a need to create a plan, which will help the organizations in moving towards their goals. Determine the current resources that the companies have and what the companies need in the future to reach their goals in a defined period of time. 
• Execution: In this step, the organization must implement its plan in a way that can lead to gaining maximum benefits. 
• Evaluation: In the last step, the final product that has been produced by the companies is evaluated. The result of that evaluation helps the organization to identify whether there is a need for revision of the plan or not. 

Reasons for Failure of Strategic Management 

• Presence of Bureaucratize- Lack of autonomy while implementing strategy is one of the reasons for the failure of strategic management. 
• Scarce Resources for Implementing Strategic Decisions: As it is known by every organization, that resources are limited in nature. For example, no company can use unlimited shares to raise capital. That is why it is not necessary for the companies to adopt all the strategies which seem to benefit the organization. 
• Closed-Mindedness of the People Involved in Strategy Implementation: An effective implementation of strategy management needs open-mindedness. But the people of the organization are not ready to involve new information, new viewpoints, new ideas, and new possibilities. To remove this flaw, all members of the organization must be trained about the benefits of strategic management which are capable of providing benefits to the organization. 

Context and Applications 

This topic is significant in the professional exams for both undergraduate and graduate courses, especially for 

• BBA 
• MBA