Strategic Management
It is art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objective. It is a process of formulating objective of an organization and developing method to achieve them.
According to Glueck – It is a Stream of decision and actions which leads to the development of an effective strategy to help achieve corporate objective. It has three aspects
- Determination of basic long-term goals and objective
- Adoption of courses of action to achieve these objective
- Allocation of resource of action.
Nature of Strategic management
- It involves wide ramification – its activities are related to the total system or a significant segment of these activities may be a change in organization goals.
- It involves a long-time perspective – the directional decision in strategic management can be expected to have effects on the organization for more than 1 year.
- It Use critical resource towards perceived – opportunities or threats in a changing environment the most important human, financial and other resources bear in certain situation which provided the organization.
- It is an intellectual process – in it individual perceive, analyses & choose between alternative interrelating such elements as definition of business, objective, functional strategies.
- It is a continuing dynamic social process – it not just a to be undertaken a few times each year when top management meets to decide critical issues. rather, it continually implements and revise strategies in the organization as changes occur in resource & environment.
Function and Importance of Strategic management
- Pattern in stream of decision and action
- Provide framework for thinking about business.
- Creates a fit between the organization and its external environment.
- Forward looking and it has orientation towards future.
- Determination of basic long-term objective of the organization
- Recognize which competitor's action need critical attention.
- Carefully crafted plan with steam of decision and action over a tome.
- Adopting course of action necessary for allocation of resources.
- Adopting of course of action to achieve Organization's objective.
- Developing the company from its position to the desired future position.
Strategy at Different Levels of a Business
Strategies exist at several levels in any organization - ranging from the overall business through to individuals working in it.
- Corporate Strategy – It is believed that strategic decision making is the responsibility of top management. It is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business. At the corporate level, the board of directors and chief executive officers are involved in strategy making. Corporate planners and consultants may also be involved. Mostly, corporate level strategies are futuristic, innovative and pervasive in nature.
- Business Unit Strategy - It is concerned more with how a business competes successfully in a particular market. Managers are involved at this level in taking strategic decisions. These strategies relate to a unit within an organization. It concerns strategic decisions about choice of products, meeting needs of customers, creating new opportunities etc. It is more specific and action oriented. It relates mainly with “how” aspect. The corporate level strategy is related to “what” aspect of corporate strategy.
- Operational Strategy – This level of strategy is at the operating end of the organization. It is also known as functional level strategy. It is concerned with how each part of the business is organized to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc. These decisions relate to training, investment in plant, advertising, sales promotion, total quality management, market segmentation etc. They deal with a relatively restricted plan providing objectives for specific function, allocation of resources among different operations within the functional area and coordination between them.
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