What are the benefits of strategic management
In the competition for customers and markets, companies have to make countless decisions every day in order to secure a competitive advantage. Strategic management provides methods and tools with which you can develop and implement strategies in order to be successful in the long term.
Strategic management, understood as conscious, logically structured action, concerns decisions that influence the fundamental direction of a company. They serve the goal of securing long-term corporate success by generating competitive advantages. The means for this are positioning in the market and structuring the company's resource base.
Strategic Management Process
The ideal process of strategic management consists of the steps of strategic analysis, strategy formulation and strategy implementation. These do not necessarily take place in the suggested linear sequence, but the conceptual separation makes it possible to clearly assign the available concepts and instruments.
The strategic analysis serves to collect comprehensive information as the basis for formulating the strategy. It mainly consists of the analysis and prognosis of the company's environment, i.e. the macro framework, the industry, customers and the competition (external analysis), as well as the analysis and prognosis of the company itself (internal analysis).
To formulate the strategy, first of all, based on the analyzes, strategy alternatives are developed that appear suitable for generating competitive advantages. These alternatives are then evaluated on the basis of assessment criteria. The criteria must reflect the company's goals. From among the alternatives, the one that promises the best possible achievement of the corporate goals is selected - it represents the future corporate strategy.
Once a strategy has been chosen, it is important to implement it successfully, i.e. to convert it into concrete actions that steer the company in the direction of the formulated strategy. To do this, it is first necessary to operationalize the strategy to such an extent that management at all levels combines goals that correspond to its respective area of responsibility. This hierarchical breaking down of goals is often reflected in strategic and operational planning, which is used to control resources in accordance with the strategy.
In order for strategy to be lived in a company, it must harmonize with the structures and systems in the company. The strategy implementation must therefore always be accompanied by an appropriate design of organization, processes, management information system and incentive system. In addition to these prerequisites, the employees must be won over and equipped to implement the strategy. Information, motivation and qualification of employees, i.e. change management, play an important role here.
The last important element in the strategy implementation is the control. This relates to the progress of the implementation, the effectiveness of the measures and the success of the strategy for the company. Another form of control is the continuous monitoring of the premises of the chosen strategy. If the conditions in the company's environment change, it may be necessary to adjust the strategy again. The premise control is identical to the strategic analysis, which makes it clear that the strategic management is a continuous process.
Strategic management takes place on several levels. At the company level, the main focus is on managing the portfolio of business areas. In particular, the corporate strategy ("Corporate Strategy") must ensure that the company as a whole is worth more than the sum of the individual transactions. If a company comprises several business areas, strategic management also takes place at the business area level. The focus of the business area strategy ("Business Strategy ") represents the behavior of the company in the respective market and competitive environment. One often speaks of the competitive strategy.
Kaplan / Norton: Using the Balanced Scorecard as a Strategic Management System
The article describes how one can use the balanced scorecard approach to align all of the company's activities with its strategy.
Author: Achim Sztuka
Picture above © Steve Stockmeier / PIXELIO '
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