DEFINITION OF ‘STRATEGIC MANAGEMENT’
The management of an organization’s resources in order to achieve its goals and objectives. Strategic management involves setting objectives, analyzing the competitive environment, analyzing the internal organization, evaluating strategies, and making sure that the strategies are rolled out across the organization.
INVESTOPEDIA EXPLAINS ‘STRATEGIC MANAGEMENT’
At its heart, strategic management involves recognizing opportunities and threats facing an organization, whether coming from within the organization or from competitors, and identifying how the organization stacks up compared to its competitors. This requires the ability to both look externally and internally.
Strategic management is divided into several schools of thought. A prescriptive approach to strategic management outlines how strategies should be developed, while a descriptive approach focuses on how strategies are made in practice. These schools differ over whether strategies are developed through an analytic process in which all threats and opportunities are accounted for, or are more like general guiding principles that have to be applied.
Business culture, the skills and competencies of employees, and organizational structure are important factors that influence how an organization can achieve its stated objectives. Companies that are inflexible may find it difficult to succeed in a changing business environment. Creating a barrier between the development of strategies and their implementation can make it difficult for managers to determine whether objectives were efficiently met.
While an organization’s upper management is ultimately responsible for its strategy, many times the strategies themselves are sparked by actions and ideas from lower level managers and employees. An organization may have several employees devoted to strategy rather than relying on the CEO. Organization leaders focus on learning from past strategies and examining the environment at large. This knowledge is then used to develop future strategies and to guide the behavior of employees to ensure that the entire organization is moving forward.