Nature of strategic management
| Nature of strategic management |
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| See also |
Nature of strategic management can be described in following points:
- strategic management is based on quantitative and qualitative data
- uncertainty about the future and quality of data acquires is relatively high
- selecting management strategy is based on various methods, processes, rules and theories
- there is not one best way to develop a strategy
- management strategy should take into account deductive or empirical methods and techniques
- resources of organization is one of most important strategic issues
- people and knowledge is key success factor of business
Strategic management involves the formulation and implementation of the main goals and initiatives taken by an organization's management. Strategic management provides general direction to an enterprise. Involves also specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models to assist in strategic decision-making in the context of complex environments and competitive dynamics[1].
Definition
Strategy is defined as the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.
Strategic management involves the concepts:
- Of strategics planning
- Of strategics thinking
Strategic planning has analytical nature and refers to formalized procedures to produce the data and analyses used as inputs for strategic thinking.Strategic planning happens around the strategic thinking or strategy making activity[2]
Strategic management is involving two main processes:
- formulation of strategy
- implementation of strategy
Nature of Strategy
According Professor Ellen Earle-Chaffee, the main elements of strategic management are:
- Involves adapting the organization to its business environment
- Affects the entire organization by providing direction
- Involves also strategy formulation processes and implementation of the content of the strategy
- May be planned and unplanned
- Is done at levels: overall corporate strategy and individual business strategies
- Involves both conceptual and analytical thought processes.
Research up to that point covered three models of strategy:
- Linear strategy: A planned determination of goals, initiatives, and allocation of resources (It may have a long planning horizon).
- Adaptive strategy: In this model, the organization's activities and goals are primarily concerned with adaptation to the environment.
- Interpretive strategy: The aim of interpretive strategy is credibility or legitimacy in the mind of stakeholders. It places emphasis on symbols and language to influence the minds of customers[3].
Strategic Managers
Managers play a key role in the strategy-making process. They must take responsibility for formulating strategies, which the aim is to attain a competitive advantage and to putting those strategies into effect.
There are two mains types of managers:
- general managers - they are bear responsibility for the overall performance of the company
- functional managers - they are responsible for supervising a particular function, for example: a task, activity, or operation.
General managers have profit and loss responsibility for a product, a business, or the company as a whole. They are responsible for deciding how to create a competitive advantage and achieve high profitability thanks the resources and capital[4].
References
- Barney J. B. (2001) Is the resource-based “view” a useful perspective for strategic management research? Yes. Academy of Management Review, 26(1)
- Chaffee E. (1985) 'Three models of strategy’, Academy of Management Review, nr 1
- Graetz F. (2002) ‘Strategic thinking versus strategic planning: towards understanding the complementarities’ Management decision, 40(5)
- Hill C., Jones G., Schilling M. (2014).'Strategic management: theory’, Cengage Learning.
- Nag R., Hambrick D. C., Chen M.J. (2007). ‘"What is strategic management, really? Inductive derivation of a consensus definition of the field"’ Strategic Management Journal, 28 (9).
Footnotes
Author: Karolina Piotrowska
