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Strategic Management - Features, Importance and Four Phases

Strategic Management
 Contents -

  1. Introduction and Definitions of Strategic Management.
  2. Characteristics or Features of Strategic Management.
  3. Four Phases in Strategic Management Process.
  4. Limitations of Strategic Management.
  5. Importance of Strategic Management.
  6. Differences between Strategic Management & Operational Management.
  • Introduction -
The word "Strategy" and "Management" combined to from Strategic Management. 
Strategic management begins with the formulation of mission statement and setting up of objectives for the organisation. Then a portfolio of business or business model is prepared and ends at conducting functional activities to achieve the pre-established objectives and goals.
Strategic Management is concerned with the formulation of vision, objective, strategy formulation, strategic implementation and making changes in the strategic intent according to the changing requirements of the organisation.
The concept of strategic management have developed over the year. Strategic management is not a one-time process but it re-evaluated and implemented periodically. It is a holistic approach that ensure that there is harmony between the organisation and its environment. Strategic Management is concerned with different organisation wide activities such as analysing the environment, providing direction, developing and implementing strategies and applying strategic control measures.

  • Definitions -

According to Lloyd L. Byars :
"Strategic Management is concerned with making decisions about organisation future direction and implementing those decisions".

According to Glueck :
"Strategic management is a stream of decisions and action which leads to the development of an effective strategy or strategies to help achieve corporate objectives".

According to Ansoffs :
"Strategic management is a systematic approach to a major and increasingly important responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises".

  • Characteristics / Features of Strategic Management -
Strategic management is a decision making process that is depicted by the following features :

1. Facilitates Strategy Implementation -
Strategic management makes sure that strategies are effectively executed and implemented with the help of action oriented plans.

2. Long - Term Implications -
 The concept of strategic management are concerned with mission, vision and objectives of the organisation. The implication of strategic management are long-term and do not affect the routine operations of the organisation.

3. Long - Term Issues -
The issues which strategic management handles are usually of long-term in nature. These issue is not necessarily affect the organisation immediately but will benefit the organisation in the future.

4. Uncertain and Future Oriented -
Managers are ignorant about the after effect of their decision because of the dynamic and uncertain business environment. Strategic management makes decisions regarding situation that would occur in the future and are not a part of the day to day activities.

5. Organization-Wide -
The implementation of strategic management of the entire organisation and not merely the operation on which strategic management principles are applied. It entails strategic choices and is a systematic approach.

6. Complex -
Manager come across situations related to the business environment that are not easy to understand. There is a need for analysing internal and external environment. Strategic management is uncertain it becomes complex as well.

7. Impact on Operations -
An effective strategic management process affect the operation is shoes positively. For example, if increase in salary and performance are correlated then this will increase the operation productivity as the employees will be motivated to put more efforts in their work. Operation decisions are the ones that involve topics like deciding the best way to handle sales with particular segment of customers are making decision regarding selling products on credit. Decision concerned with operational issues are made by lower level managers.

8. Competitive Advantage -
Strategic management principles are applied regularly in the proceeding of the organisation, managers can increase the number of satisfied customers provide goods and services at economical prices and can develop a highly satisfied workforce. Strategic management assists the manager in looking for fresh revenues for achieving sustainable competitive advantage.
  • Four Phases in Strategic Management Process -
Strategic management is distinct process which the management uses to select strategies that will help the organisation in improving its performance. The process of strategic management focuses on developing the strategy of the organisation. It is a never ending process that evaluates the companies and industries that are associated with the organisation and its opponents. Strategic management also enables the organisation to set realistic goals so that it is able to compete with existing and potential competitors. Process of strategic management is as follows :

1. Environmental Scanning -
The purpose of environmental scanning is to identify strategic factors, those internal and external elements that will determine the future of the corporation. Environmental scanning is the monitoring, evaluating and disseminating of information from the external and internal environment to key people within the corporation. The simplest way to conduct environmental scanning is through SWOT analysis. SWOT is an acronym used to describe those particular strengths, weaknesses, opportunities and threats that at strategic factors for a specific company.

i) Internal Environment -
Strength and Weaknesses variables form the context in which work is done. They include the corporation structure, culture and resources. Internal environment of a corporate consist of variable (strength and weaknesses) that are within the organisation itself and are not usually within the short run control of top level management. Key strengths form a set of core competencies that the corporation can use to gain competitive advantage.

ii) External Environment -
Opportunity and Threats variables form to context within which the corporation exists. External environment consists of variable (opportunity and threats) that are outside the organisation and not typically within the short run control of top management.

2. Strategy Formulation -
Strategy formulation is essential for optimum functioning of the organisation. In this stage strategies are framed by envisioning the future of the organisation in the long run. Strategy formulation means formulation of long-term organisation plans that would assist in carrying out or organisation activities in the best possible way.
Strategies define the course of action an organisation would choose to reach its goals. An organisation strategy should be formulated in a way that the analysis of the environment can be studied, vision of the organisation can be accomplished and the set objective can be attained. Once the current and future situation of the organisation have been determined by the strategies, SWOT analysis is used to identify the core competencies and strategic capabilities and also to set objectives in the order in which they have to be achieved. These objectives are further used in developing the strategy.
Strategy formulation involves administering the external opportunities and threats effectively while keeping in mind the strength and weaknesses of the organisation by formulating long term plans. This involves developing the corporation vision, identifying corporate mission, setting realistic objective, formulating strategies and establishing policy guideline which are as follows :

i) Mission of the Organisation -
A mission statement specifies the organisational culture and values and also set the guideline points for carrying out the activities of the business organisation.
A mission statement describe the reason for existing of the organisation. A mission is a unique statement that defines the product market and geographical scope of the business market price etc. At the business level this statement becomes exclusive and focuses solely on the details. Strategy of the organisation is formulated on the basis of the mission statement. The factets of the mission statement denote the vision of the organisation towards strategy formulation aims of the organisation and the perfection required in order to attain market leadership.

ii) Vision of the Organisation -
A vision statement is developed by the top level Management which may include President, Managing Director, chairman etc. An organisation vision statement can be explained as a position that the organisation aspires to achieve in the future. A vision statement conveys the future state of being the respect to objectives scope and competitive leadership to the individual was that are in some way or the other associated with organisation. It helps in formulating general objectives related to performance of the organisation and its expansion in different industries and essential for the development of the organisation. It creates an outline for facilitating the growth of mutual leadership between the organisation and stakeholders and other entities directly or indirectly associated with your organisation.
This statement provides employees with a common goal and stimulates them for conducting their routine operations effectively. It encourages the employees to perform ethically and morally in line with the organisation expectations.
The basic idea behind formulating a vision statement is to provide a concerted view of the organisation. It is a combination statement and also a challenging tasks for the entire organisation and all the diverse sectors that work on achieving their respective objectives.

iii) Strategies -
Strategies are formulated for achieving competitive advantage and minimising the factor that result in lowering the position of the organisation. Strategy of an organisation is a detailed plan which helps the organisation in realising its mission and objectives. For example, when Tata Group of Companies comparehended that it is not able to meet its objectives with its current strategy to diversify, it sold its subsidiary companies like Tempo, Lakme etc. to Hindustan Lever Limited. It decided to carry on with its more basic businesses like automobiles and steel where it had better prospects for growth and development.

iv) Objectives -
The objectives of an organisation symbolise that the management is committed to what achieving the desired result under a specific time period. They also help in setting performance standards on the basis of which the performance is evaluated. These objectives help in developing strategies by creating harmony between the decision and decision makers.
The objectives of the organisation should be challenging yet realistic. Objectives are the result that one expect out of the business activities. These objectives envelope area like organisation profitability, competitive position, public image, return on investment, productivity growth of employees etc. These objective should not be vague and should be clearly defined and in quantifiable terms. Organisational plans are usually long term and their craft long term objectives.

v) Policies -
Policies are formulated by companies so that an organisation mission, objective and strategies are kept in mind while making decisions. Policies are a set of comprehensive instructions that are used for making decisions and for relating strategy formulation with strategic implementation. Policies also focus on achieving corporate goals by ensuring optimum allocation of resources. A business policy is related to duties and responsibilities of corporate level managers, long-term strategic decisions and factor influencing the success of the organisation.

3. Strategy Implementation -
Once strategies are formulated and a sound strategic plan has been developed the next step in the process of strategic management is to ensure effective implementation of formulated strategies. 
 without successful implementation well-deserved strategy is of no use. Strategists need to take into account various facets of implementation as the selected strategy must be effectively put into action for realising corporate objective of the organisation. Strategic implementation is the process that facilitates in successful execution of the selected strategy.
The process of strategy implementation is generally conducted by the middle and lower management after being assessed by the top level management.
Strategies are implemented with the help of programmes, budgets and procedures. This process may also result in modifying organisation culture, structure and management system.
Following plans help in successful implementation of this strategy :

i) Procedures -
A procedure is a step by step explanation of the order in which it is to be carried out. Procedures generally provide an explanation regarding number of operation that are necessary for completion of programmes.

ii) Programmes -
Programs helps in putting the strategies into action. Activities like corporate restructuring, changing organisational culture or initiating a new research project etc. are a new example of programmes. The action or step needed to implement a single use plan is called programmes.

iii) Budgets -
A budget represents in details the cost entailed in each programme. Declaration of organisation program is monetary terms is called a budget. Budgets are generally used in the purpose of planning and control. A budget along with providing a comprehensive plan of the selected strategy to be implemented also illustrates the anticipated impact on the organisation financial future with the help of financial statements.

4. Evaluation and Control -
Evaluation must be incorporated in the process of strategic management as an essential element of strategy implementation as it helps in monitoring the whole procedure. After a strategy is implemented successfully it is important that it is evaluated on a regular basis. Strategic objectives and performance measures are used as a base for evaluating the effectiveness of the implemented strategy. It is the managers duty to monitor at the expected responses from the different organisational sectors and business units where the strategies are put into action. It is an important step for attending a impartial assessment between expected and actual results. Analysing the market response is also a significant part of strategic evaluation and control.
Strategic management process has become widely accepted as it enhances the performance of the organisations. Performance is the final outcome of all the activities involved in the process of strategic management. Managers need comprehensible timely and impartial information from their subordinates in order to successfully carry out their activities related to strategic evaluation and control. This information enable the managers to compare the actual outcome with the expected result laid down while formulating the strategy.
The effectiveness of strategy evaluation depend on the information provided by the subordinates. It plays a significant role in monitoring the soundness of the chosen strategy. Successful evaluation of strategy is based on suitable and promote feedback. If evaluation is done continuously it would provide a regular feedback on the performance of the strategy that was initially formulated.
The process of strategic management also has a feedback activity which enable the management to attain feedback essential for evaluation of results and for taking the required remedial actions. When an organisation devises strategies, programmes etc. it should analyse its decision and take corrective actions regarding any wrong decision made in the past.

  • Limitations of Strategic Management -
Several drawbacks of strategic management are explained by following points :

1. Limited to Set of Rules -
An organisation cannot apply the process of strategic management according to some prescribed norms, programmes and schedules. It is based on a theory that deals with every situation in prescribed manner. This becomes a hindrance in strategic formulation. This make strategic management a belief or dogma of business and management rather that a practical approach.

2. Time Consuming -
An organisation has to put immense effort and resources for implementing the process of strategic management. Strategic management process is extremely time consuming.

3. Poor Adaptability -
Strategic management may create inflexibility and bureaucracy in an organisation and takes away the ability of the organisation to react to the changes in the environment. As a result, the organisation is not able to exploit the environmental opportunity and steer clear of the threats.

4. Challenging Process -
Strategic management takes a highly skilled and specialised workforce to craft and execute strategy. Implementing the process of strategic management is quite difficult. A master or doctorate degree in the same discipline is needed to become a strategists. Appointing these strategists or working with the organisation providing strategic assistance in general quite expensive for an organisation.

5. Unexpected Outcomes -
Any significant political or financial change in the environment may lead to result that would be totally different from those that were projected while formulating a strategy. Many concept of strategic management are related to making future predictions. But practically future cannot always be foretold. It is very challenging to predict future business outcome due to the dynamic nature of the environment. In such circumstances strategic management can prove to be a bane for the organisation.

6. Absence of Short Term Benefits - 
At times strategic management causes short-term losses for the organisation in order to deliver long-term benefits. These short term losses can diminish the value of the organisation that may cause it to shut down. Although the investors are interested in achieving quick return, the rewards for applying strategic management principles can be realised only the long run.

  • Importance of Strategic Management -
The importance of strategic management can be explain with the help of the following points :

1. Helps in Measuring the Progress -
In order to establish success measures it is important that the organisation analyses the factors that are crucial to its current success. Then the organisation needs to revise, re-evaluate or update and then implemented its objectives.
By implementing the process of strategic management the organisation is forced to establish objectives and set measures of organisational success. It is also important that the board members and corporate level managers are also aware of these performance measures.

2. Improves Stability -
Strategic management aims at helping the organisation in acquiring more customers so that the business is no longer dependent on only few clients. There are certain strategies that provide strength to the organisation by opening more avenues of growth. By implementing strategic management an organisation can enhance its stability by executing strategies like, developing a new product line, acquiring a new company, catering a new customer segment etc.

3. Fulfillment the Responsibilities of the Board Member -
One of the most important reasons for implementing the process of strategic management in an organisation is that it relieves the board members from their duties 

4. Provides an Organisational Viewpoint -
Strategic management considers the organisation viewpoint and also lays stress on the interrelated sector so that a strategy that is beneficial for the entire organisation is developed. While handling the operational issues manager generally tend to overlook the inter-departmental issues for the issue relating to the organisation as a whole.

5. Helps in Assessing the Objectives -
Disciplines of strategic management help the organisation to gain a wider perespective instead of putting all their efforts in meeting short-term challenges. Strategic management relieves the board and senior management from their daily tasks to some extent so that they can focus on securing the future of the organisation.

6. Strengthens Brand Management -
Strategic management keeps in mind the objectives of brand management while making organisational decision. A companys brand  image can be damaged by introducing a new product in the product line or by acquiring a company that does not match with the market image of the organisation.

7. Identifies SWOT -
Once SWOT are identified it becomes easy to find out the issues relating to the product line, marketing channels, marketing practices, pricing method, staffing practices, e-commerce activities etc. Strategic management scans the organisation environment for identifying the strengths, weaknesses, opportunities and threats that are faced by the organisation as a whole, as well as by its separate department.

8. Strong Labour Supply -
A strong workforce can be developed by prepairing organisation chart, providing employees with comprehensive job description, refining recruitment policy, organising training session, taking measures to lower employee turnover rate, preparing succession plan, developing competitive compensation plans and avoiding by the law and regulation relating to central and state government. Strategic management helps in conducting hands-on staffing practices so that quality and quantity of labour can be improved.

9. Develops Decision Making Framework -
Strategy helps in setting the vision, checks reasons for existence and values of the organisation, defines its objectives, differentiates between threats and opportunities, identifies techniques to enhance organization strength and minimize the weaknesses. With the help of an appropriate strategy employees are able to make routine decisions within a framework while ensuring that those decisions are contributing to the progress of the organisation in one direction.
  • Strategic Management vs Operational Management -
Strategic management is a wide-spread area with include handling the challenges of activities for effective organisational process. A strategic manager needs to consider the overall organisation rather than its single part. Unlike strategic manager and individual manager is concerned with the performance of routine activities and solving the problem concerned with them. He is responsible for a particular functional area of the organisation such as marketing, sales, production etc. All these areas are significant and play a vital role but for the effective and efficient operation, it is important to formulate strategy. Thus it can be said that managing operational activities is important for implementing the strategy but it is not equivalent the strategic management.
Therefore, a common difference is that the scope of stategic management is broader than that one the operational management. Strategic management deals with problems that have impact on the entire organisation rather than on one particular department. It is the responsibility of the strategic manager to keep in mind the holistic view of the organisation and how this strategic decsion will affect the overall working of the organisation. Apart from these, there are many differences between strategic management of operational management some of them are as follows :

Basis Of Differences

Strategic Management

Operational Management


Strategic management deals with utilising the organisation resources in a way that can lead to success in competition.

Operational management is all about getting the work done through the employees by formulating a team or group.


The perspective of strategy management is analytical and balanced. It requires proper vision statement, creative thinking and ability to predict the future.

The perspective of operational management is practical and its dedicated towards the successful implementation of the strategy.


Strategic management answer the questions like, what are the capability and resources of an organisation or what strategies should to be made to succeed and provide value to customers.

Operational management answer the question like how to conduct business operations or how to successfully achieve the target.

Time Frame

Strategic management involves long term planning.

Operational planning involves medium to short term planning.


Strategic management consider overall organisation.

Operational management considers a specific area of an organisation 

Internal and External View

Strategic management combines both the internal and external views to improve the performance of organisation. In other words strategic management holds a holistic view.

Operational management views the organisation from the internal view only. The responsibility of the operational management is generally limited to only one department.



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