Strategic management is more than just a buzzword in the business world. It is a crucial process that helps companies define and implement procedures and objectives that set them apart from the competition. But what exactly is strategic management, and how can it benefit your career? In this article, we will explore the ins and outs of strategic management, including its benefits, process, and the career paths it opens up for ambitious professionals like you.
What is strategic management?
Strategic management involves developing and implementing plans to help an organization achieve its goals and objectives. This process includes formulating strategies, planning organizational structure and resource allocation, leading change initiatives, and controlling processes and resources. Strategic planning goes beyond simple goal-setting; it requires a deep understanding of the organization’s internal and external environment.
Strategic management can happen at different levels within an organization, from the top leadership down to individual departments or teams. It is not limited to the business sector; it also applies to non-profit organizations, government agencies, and the public sector.
Approaches to strategic management
There are two main approaches to strategic management: prescriptive and descriptive. The prescriptive approach focuses on how strategies should be developed, while the descriptive approach focuses on how strategies should be put into practice. The prescriptive model takes a top-down approach, relying on tools like SWOT analysis to identify strengths, weaknesses, opportunities, and threats. On the other hand, the descriptive model is more experimental, using Agile methodology to learn from experience and find innovative solutions.
Benefits of strategic management
Strategic management offers numerous benefits to organizations of all sizes and sectors. Here are some of the key advantages:
Financial benefits:
- Increase market share and profitability.
- Prevent legal risk.
- Improve revenue and cash flow.
Non-financial benefits:
- Relieve the board of directors of responsibilities.
- Enable an objective review and assessment.
- Measure progress over time.
- Provide a big-picture perspective of the organization’s future.
5 steps of the strategic management process
To effectively implement strategic management, organizations typically follow a five-step process:
1. Define the direction.
Identify the organization’s goals and determine what needs to happen to achieve them. This step sets the foundation for the entire strategic management process.
2. Analyze the current situation.
Conduct a thorough analysis of the organization’s internal and external environment. This includes using tools like SWOT analysis to assess strengths, weaknesses, opportunities, and threats. By understanding the current situation, organizations can better leverage their resources and make informed decisions.
3. Outline the strategy and plan of action.
Formulate a clear strategy and plan of action based on the analysis conducted in the previous step. This involves setting specific and realistic goals, determining the necessary resources, and identifying the steps required to achieve the desired outcomes.
4. Execute the plan.
Put the strategy into action and monitor its progress. This step may require adjustments along the way, especially if organizations take a more descriptive approach to strategy. Flexibility and adaptability are key to successful execution.
5. Evaluate the plan.
Regularly assess the effectiveness of the strategy and its impact on the organization’s goals. By evaluating the plan, organizations can identify areas for improvement and make necessary adjustments to ensure long-term success.
Examples of strategic management in practice
Strategic management is not just a theoretical concept; it is a practical approach that organizations use to stay competitive and achieve their objectives. Here are a few examples of strategic management in action:
Implementing and overhauling information systems and technology
Let’s say Company A is a rapidly growing startup. They brought in a strategy consultant who discovered that the company was paying for unused apps and tools. Through survey research and careful analysis, the consultant identified 20 unnecessary apps that could be discontinued, resulting in significant cost savings without negatively impacting productivity.
Shifting resources (budget) toward more successful revenue streams
Company B’s marketing department assessed its brand marketing strategy and found that email marketing was generating the highest conversions. As a result, they reallocated budget from print advertising to expand the email marketing team. With a well-crafted strategy and targeting new audience segments, the email marketing efforts resulted in even greater success, leading to further budget allocation.
Careers that apply strategic management
Strategic management skills are highly sought after in various careers. While strategy plays a role in many management and leadership positions, some roles specifically focus on strategic management as a core responsibility. Here are a few career paths that apply strategic management:
- Management consultant
- Corporate strategy advisor
- Business analyst
- Strategy manager
- Business development manager
- Entrepreneur
Pursue strategic management with Coursera
If you’re interested in pursuing a career in strategic management or want to enhance your strategic thinking skills, Coursera offers a range of courses to help you achieve your goals. One such course is the Strategic Management and Innovation Specialization offered by the Copenhagen Business School. This program covers everything from formulating and executing a business strategy to analyzing case studies.
For entrepreneurs looking to incorporate strategic management into their business practices, the University of New Mexico offers a free Entrepreneurial Strategic Management course that can provide valuable insights.
With the right knowledge and skills in strategic management, you can become a valuable asset to any organization and drive its success.