Strategic management principles
| Strategic management principles |
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| See also |
Strategic management principles include a wide range of policies, guidelines and best practices to strategic management. Strategic management with the use of these principles leads to better results, faster development and strong market position.
Principles connected to strategic goals
- The principle of expediency - the construction of the system of goal, according to the values that have been approved by the owners and management, the development of the mission and vision of the company, effective action while respecting the principles of business ethics.
- The principle of system approach - the application of the methodology of general systems theory, treating the company as a multi-dimensional system, the desire to achieve and maintain the integrity of all components due to the targets and by obtaining synergies.
- The principle of strategic choice - the use of such criteria for the selection of strategies, which determine the aggregate economic efficiency of the company.
- The principle of the situational approach - creating the appropriate relationship between the company and the environment, the elimination of external conflicts by legally sanctioned competition and rivalry, respect for the adaptive formulas external conditions.
- The principle of global business planning - gives the highest significance for global operations, methods for forecasting, coordination of plans and programs.
- The principle of globalization - switching to the global system of trade and finance, globalization and product research and development.
- The principle of strategic complementarity - maintaining complementarity purposes, eliminating the factors of production with low productivity.
Principles connected to strategic thinking and creativity
- The principle of strategic thinking - the use of a comprehensive strategic analysis, submission of perspective on current objectives, making strategic choices in the context of global business, the implementation of the "4F": Focus, First, Fast, Flexibility.
- The principle of strategic behaviour - using the experience, setting preferences in the selection and order of implementation strategy, anticipation in preparing the organization to changes in the environment.
- The principle of creativity - creating company's own concept of the market, an active impact on the environment.
- The principle of the development of human knowledge - the implementation of the concept of a learning organization, improvement of management methods.
- The principle of using key competencies - seeking to fully exploit the skills of managers and employees, the use of the concept of project management, knowledge management.
Principles connected to strategic change
- The principle of strategic change - fighting the resistance to change, improve organizational culture, the application of modern concepts and research approaches.
- The principle of competitive advantage - productive use of resources, good customer needs, the search for outstanding talent.
- Principle of integration - empowering employees to identify with the company, expanding the autonomy of decision-making at lower levels, the development of a system of responsibility in the area of costs, investments and profits.
- The principle of the development of social ties - the use of social marketing to create a positive image of the company.
Principles connected to information gathering and analysis
- The principle of collecting information about competitors and allies - the creation of a monitoring system in different areas of strategic management.
- The principle of positional analysis - assessment of strategic and competitive position, implementing the concept of benchmarking.
- The principle of reaction in exceptional circumstances - to minimize the loss in critical situations, creating legal and economic security, the use of management by exceptions technique.
- The principle of control - testing the company's financial condition, the use of an early warning system, controlling the implementation of the strategic model.
Examples of Strategic management principles
- Create a Vision and Mission: This is the first and most important step in strategic management. Organizations must clearly define their purpose, values and goals in order to effectively plan and execute strategies.
- Set Strategic Objectives: Organizations should also set specific objectives to achieve their vision and mission. These should be measurable and attainable goals which will help the organization move towards its desired future.
- Develop Strategies: Once the vision and mission are clear and objectives are set, the organization can develop strategies to reach those objectives.
- Monitor and Evaluate Progress: Organizations should constantly monitor and evaluate progress to ensure that the strategies are effective and in-line with the overall mission.
- Adapt and Adjust: The organization should be willing to adapt and adjust their strategies as needed in order to stay competitive in their industry.
- Encourage Innovation: Organizations should also encourage innovation in order to stay competitive and develop new products and services.
- Foster Collaboration: Organizations should foster collaboration between different departments and teams to ensure that all resources are being utilized efficiently.
- Manage Risk: Risk management is an important aspect of strategic management. Organizations should identify potential risks, analyze the impact of those risks, and develop strategies to mitigate them.
Advantages of Strategic management principles
Introduction: Strategic management principles provide a comprehensive set of best practices for effectively managing an organization in order to achieve its objectives.
- Strategic management principles help to make an organization more efficient by providing an understanding of the key elements for success and how to apply them.
- They offer a framework for decision making and setting objectives that can be used to identify and prioritize resources, goals and objectives.
- Strategic management principles help to identify potential opportunities and risks in the organization’s environment.
- By helping organizations to understand their competitive position in the market, they can be used to design strategies to capitalize on their strengths and minimize weaknesses.
- Strategic management principles also help to define and measure the success of strategies and make necessary changes to ensure the success of the organization.
- They provide a guide for setting and measuring performance goals and objectives, ensuring that resources are effectively allocated.
- Strategic management principles also help to ensure that the organization’s strategies are in line with its mission, vision and values.
Limitations of Strategic management principles
- Strategic management principles are limited by human resources, as the managers must be able to understand and implement the principles in order to develop effective strategies.
- Strategic management principles can be difficult to implement in different business environments, as each environment has its own unique characteristics and goals.
- Strategic management principles are also limited by the complexity of the external environment, as rapid changes in the industry can impact the strategies developed.
- Strategic management principles can also be limited by a lack of resources, as certain strategies may require additional investment of time and money to be effective.
- Strategic management principles may also be limited by organizational culture, as certain strategies may be incompatible with the values and beliefs of the organization.
- Strategic management principles can also be limited by the lack of knowledge and understanding of the principles, as well as the lack of experience in implementing them.
- Introduction:
Strategic management principles are not limited to the policies, guidelines and best practices discussed above. There are several other approaches to strategic management that should also be taken into consideration.
- Analytical Thinking:
Analytical thinking is a critical aspect of strategic management, as it involves looking at data and making decisions based on the results. Analytical thinking allows for an objective assessment of a situation and helps to identify potential solutions.
- Strategic Planning:
Strategic planning involves the process of setting objectives and creating a plan to achieve them. It is important to have a detailed plan that outlines goals and action steps to ensure the organization reaches its targets.
- Resource Management:
Resource management is an essential part of strategic management, as it involves the management of resources such as people, money, and time. Resource management is critical to ensuring that resources are used efficiently and effectively to achieve the organizations goals.
- Risk Management:
Risk management is another important aspect of strategic management, as it involves identifying, assessing, and managing potential risks to the organization. Risk management helps to ensure that the organization is prepared for any potential risks and can respond effectively.
- Leadership:
Leadership is a key component of strategic management, as it involves setting a vision and inspiring the team to work towards it. Leadership is important to ensure the organization is focused on the goals and that the team is motivated to achieve them.
Summary:
Strategic management principles include analytical thinking, strategic planning, resource management, risk management, and leadership. These principles are essential to ensure that the organization is focused on its goals and is prepared to handle any potential risks. By implementing these principles, organizations can create a competitive advantage and achieve success.
References
- Pearce, J. A., Robinson, R. B., & Subramanian, R. (2000). Strategic management: Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill.
- Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.
- Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
- Mintzberg, H. (1990). The design school: reconsidering the basic premises of strategic management. Strategic management journal, 11(3), 171-195.
- Porter, M. E. (1981). The contributions of industrial organization to strategic management. Academy of management review, 6(4), 609-620.
