The Concept of Strategic Management

 Strategic management
provides better guidelines to the entire organisation on the crucial point of
“what is it we are trying to do and to achieve”?

It
makes managers more alert to the winds of change, new opportunities and threatening developments. It also provides managers with
a rationale for evaluating competing budget requests for investment capital and
new staff. It helps to unify the strategy-related decisions by managers across
the organisation and creates a more productive management posture and
counteracting tendencies for decisions to be creative and defensive.

Thus, among the entire things managers do, few affect a company’s performance more fundamentally than how
well its management team charts the company’s long-term direction. This is
where strategic management becomes a disposable factor.

The concept of strategy is central to understanding the
process of strategic management.  According
to Quinn and Rogers, strategy comes from the Greek word, “strategos”
meaning “generalship” and which described the role of the general in the command of
the army From there, the term strategic planning evolved at about the end of World
War II as an alternative course of action. Later, this term came to mean the
art of the general, i.e. the psychological and behavioural skills with which he
performs his role. By the time of Alexander, it referred to the skill or
employment of forces to overcome opposition and to create a unified system of
global governance. As time went by, it turned out to mean managerial skills in
terms of administration, leadership, oration and power.

The end of the Cold War brought about the globalisation era,
gradually turning the world into a global village and a single market where the
tenets of strategic planning as in “strategos” or “the commanding army” could
not withstand the tidal waves of stiff competition of the managerial skills.
This situation paved the way for and/or gave rise to strategic management.
Thus, the concept of strategy is central to strategic management.

Definitions of
Strategy

Since the word “Strategy”
is central to strategic management it is quite in tune and proper to get the
meaning of strategy clear before advancing to strategic management. Certainly, strategy is not an exact science and organisations can apply their individual
rules. The best strategy does not emerge from the cookbook approach and there are
no formulae for calculating the strategy. Strategy is defined in many ways
based on the views and experiences of the authors. The definitions include:

Ansoff (1965) defines strategy as a rule for making
decisions under conditions of partial ignorance whereas policy is a contingent
decision. Business strategy is the broad collection of decisions, rules and guidelines that define the business scope and growth direction.

Steiner and Miner (1977),
define a strategy to mean the formulation of basic organisation missions, purposes
and objectives, policies and programme strategies to achieve them, and the
methods needed to ensure that strategies are implemented to achieve the organisation’s end.

Mintzberg (1979) refers to strategy as the interpretation of
the environment and the development of consistent patterns in streams of
organisational decisions. On the other hand, Porter (1980) sees strategy as a
broad-based formula for how a business is going to compete, what its goals should
be and what policies will be needed to carry out those goals. The essence of
formulating a competitive strategy is relating a company to its environment. Also
(1980), Quinns describes strategic decisions as “those that determine the
overall direction of an enterprise and its ultimate viability in light of the
predictable and unpredictable and the unknowable changes that may occur in its
most important surroundings environment”. 

However, Hax (1987) adequately
relates strategy to strategic management when he states “the essence of
strategy is for a firm to achieve a long term sustainable advantage over its
competitors in every business in which it participates”. A firm”s strategic
management has, as its ultimate objective, the development of its corporate
values, managerial capabilities, organisational responsibilities, and
operational decision making, at all hierarchical levels and across all business
and functional lines of authority.

From
these definitions, one can, like Quinn and Mintzberg (1991) state that there is
no single universally accepted definition of strategy and there is no one best
way to create a strategy, nor is there anyone best form of organisation.

Strategic
Management

Strategic management has
been defined in many ways by different authors and authorities. There is no
absolute consensus on the definition of strategic management. The following are
some of the definitions:

i.                 
Strategic
management is that set of managerial decisions and actions that determines the
long-run performance of a corporation. It includes environmental scanning,
strategy formulation, strategy implementation and evaluation. 

ii.              
Strategic
management is a stream of decisions and actions which leads to the development
of an effective strategy or strategies to help achieve corporate objectives
(Gleck and Juanxh, 1984).

iii.            
Strategic
management is concerned with the overall long-range

direction of organizations and consequently provides a
framework for operational management (Greenley, 1989).

iv.             
Strategic
management is a systematic approach to a major and

increasing the important responsibility of general
management to position and relate the firm to its environment in a way that will assure its continued success and make it secure from surprises (Ansoff,
1990).

v.               
Strategic
management is concerned with deciding on strategy and planning how that
strategy is to be put into effect via strategic analysis, strategic choice and
strategic implementation (Johnson and Scholes, 1993).

vi.             
Strategic
management is the decision process that aligns the organisation’s internal
capability with the opportunities and threats it faces in its environment (Rowe
et al, 1994).

From all these, strategic
management can be seen as the art or science of formulating, implementing and
evaluating cross-functional decisions that enable an organisation to achieve
its objectives. Other concepts in management that are used sometimes or
interchangeably with strategic management are strategic planning, business
policy and long-range planning.

Strategic management
techniques can be viewed in two major ways. The first is the bottom-up or
collaborative processes. Using this approach, the employees initiate a proposal
which they subsequently submit to their managers or their superiors, who put
the idea further up in the establishment. These proposals may be assessed based
on financial criteria and other concrete economic terms such as cost-benefit
evaluation and returns on investment. The second is the top-down approach which
is more common than any other method. Here, the chief executive officer and his
team decide on the overall direction in which the organisation should go.

Although there are
diverse opinions on strategic management, it has to do with deriving and
describing the strategy, which is common to all organisations whether large,
medium, small, public, private, profit or non-profit making organisations.
Strategic management, therefore, encompasses the entire enterprise. It looks
beyond the mere day-to-day operations of the business and focuses on the long-term
prospects and development of the establishment. 

In a small business, the single
owner may not formalise all of these and may do everything including strategic
management. In a large business such as a multinational, strategic
management is handled at the senior management level. Also in large
establishments, there may be a number of interdependent areas of strategy,
usually referred to as corporate strategy. This differs a bit from the business
strategy which deals mainly with a particular strategic business unit (SBU).

From the analysis so far,
an organisation’s strategy must be appropriate for its resources, environmental
circumstances, the core objectives or goals. This involves identifying the
organisation’s strategic advantage and matching items to the organisation’s
business environment. So we integrate on organisation’s goals, policies,
missions, profiles and actions effectively and efficiently in order to achieve
the organisation’s objectives. Strategic management aims at creating the
future as well as reacting to the changing times. This includes creative
leadership, entrepreneurial and innovative dimensions. Strategic management
in the 21st century must innovation and good leadership

Conclusion

The concepts of strategy and strategic management are
applied in business as the pattern or plan that integrates an organisation’s
goals, policies and actions together to attain the desired objectives. There is
no single model or theory that can incorporate all the factors that influence
major business decisions or all the possible combinations of factors that any
business may face.