How does strategic management benefit a company?
There is so much significance to strategic management, but I’ll hit a couple of the most important ones here: Consider the significance of NOT using strategic management. Ask a carburetor manufacturer how fuel injectors affected their businesses back in the 1980s (hint: you wont’ find a carburetor maker – they’re all gone, because they got disrupted out of existence). Slightly more recent examples include Blockbuster Video and Netscape Navigator. Think of all the tech companies that have come and gone, the record pace of retail bankruptcies in recent years, and the struggle of professional sports to keep up with video games and fantasy sports. The first piece of strategic management is systems & strategic *thinking- looking beyond our organizations to things like Porter’s 5 Forces, or what challenges and opportunities are being placed on them by the environment *aroundour organizations? It’s not just technological changes you have to pay attention to. Geopolitical factors and demographic changes are shifting around us, and how will we adapt? Peter Senge did some great work on Systems Thinking that further demonstrates the importance of this work. It’s hard to have meaningful discussions among a leadership team about strategic priorities and objectives if you haven’t thought outside your organization. From there, it will be impossible to achieve those priorities and objectives unless you can assess your organizational readiness to go in the direction you need to go. Let’s say your tech company is making a strategic shift from hardware to software – everyone can agree on the strategy, but if your organization is still staffed by hardware or desktop experts, you won’t succeed in a software or mobile world. It requires a different skill sets and operating plans that include some form of phased transition with as-is and to-be of the path there. As you execute, strategic management enables you to understand how change in one part of the organization affects others and to connect dots between efforts in different departments or functions, or seemingly disparate work streams that that result in unintended consequences. It also enables you to continuously improve your operating tempo and forums (rhythm of business) to adapt effectively. In a more connected world, strategic management is as important as ever, even as its particulars change. I honestly don’t know how an organization would survive without it.
Strategic managment is one of the most important determinants in whether an organization is capable of setting growth targets, formulating a very comprehensive plan in pursuit of a specific goal/goals, as well as incorporating all facets of a corporations’ business model into a well defined vision of what the future could bring and how to create that dream. The science of managment is very broad and this post couldn’t possibly account for all that needs to be considered. To simplify, and to indulge my love of golf, consider this example:
Prior to the late 1980’s, Nike had absolutely nothing to do with golf. They made athletic apparrel that could be worn to play golf but they did not manufacture any equipment until Tiger Woods shook the PGA tour when he won his first Master’s at Augusta. A young Eldrick Woods fresh from Stanford University dominated professional golf for the better part of 15 years, but his greatest accomplishment many would argue is to smash apart the stereotype that the best golfers in the world had to be white or asian/european. Nike quickly signed him to a multi-million dollar endorsement deal and started manufacturing every product that the average golfer needs to hit the links. In partnerhsip with Tiger, Nike produced world class clubs, drivers, putters, shoes, apparel and even golf balls; in doing so they were able to cut into the market share of the 3 brands that are god to golfers and gain substantial market share.
If you find golf boring I don’t care because this illustrates a manageral decision making process that Nike executives and engineers executeed beautifully. They wanted to break into the golf product category because as a sporting goods giant it had eluded them for many years. Financially Nike had all the money in the world to finance their goal but it was the recognition of an incredible opportunity that formed the basis of their strategy: We’ll make a line of products and apparel that Tiger woods will promote simply by having a checkmark on every part of his body, every weekend, every swing, every tilt of his hat will showcase. In doing so, we can successfully shape the idea that Nike plays a role in Tiger’s unbelievable success and every amateur golfer won’t be able to resist trying our products and buying our clubs based solely on the assumption that in some way Nike’s brand and Tiger’s ever growing brand are all the evidence the consumer will need. This strategy also included other prized golfers like Rory McIlroy, Jason Day, and Adam Scott to name a few.
Long story short, even though Nike was a hugely successful sporting apparel company, the management formulated a strategy to mesh their brand with Tiger’s record setting dominance that lasted about a decade. In doing so, they stole market share in product category they only dreamed of participating in and they made untold sums of money, giving Tiger a 40 Million dollar endorsement deal early in his career was the gateway to convincing the average joe that Taylor Made, Titleist, Ping, and Mizuno were worth turning away from to use well build clubs made in partnership with the greatest golfer of all time.
Tiger golfs, Nike strategizes. Like a boss….er….bosses.
The term ‘strategic management’ is used to denote a branch of management that is concerned with the development of strategic vision, setting out objectives, formulating and implementing strategies and introducing corrective measures for the deviations (if any) to reach the organization’s strategic intent. It has two-fold objectives:
Importance of Strategic Management
- It guides the company to move in a specific direction. It defines an organization’s goals and fixes realistic objectives, which are in alignment with the company’s vision.
2. It assists the firm in becoming proactive, rather than reactive, to make it analyze the actions of the competitors and take necessary steps to compete in the market, instead of becoming spectators.
3. It acts as a foundation for all key decisions of the firm.
4. It attempts to prepare the organization for future challenges and play the role of pioneer in exploring opportunities and also helps in identifying ways to reach those opportunities.
5. It ensures the long-term survival of the firm while coping with competition and surviving the dynamic environment.
6. It assists in the development of core competencies and competitive advantage, that helps in business survival and growth.
Strategic management offers the following benefits:
- It allows for identification, prioritization, and exploitation of opportunities.
- It provides an objective of management problems.
- It represents a framework for improved coordination and control of activities.
- It minimizes the effects of adverse conditions and changes.
- It allows major decisions to better support established objectives.
- It allows more effective allocation of time and resources to identified opportunities.
- It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions.
- It creates a framework for internal communication among personnel.
- It helps integrate the behavior of individuals into a total effort.
- It provides a basis for clarifying individual responsibilities.
- It encourages forward thinking.
- It provides a cooperative, integrated, and enthusiastic approach to tackling problems and opportunities.
- It encourages a favorable attitude toward change.
- It gives a degree of discipline and formality to the management of a business.
What is Strategic Management?
Strategic management can be described as the identification of the purpose of the organization and the plans and actions to achieve that purpose. It is that set of managerial decisions and actions that determine the long-term performance of a business enterprise.
Read Complete Article: What is Strategic Management? Characteristics, Risk, Benefits
Benefits of Strategic Management
Today’s enterprises need strategic management to reap the benefits of business opportunities, overcome the threats and stay ahead in the race. The purpose of strategic management is to exploit and create new and different opportunities for tomorrow; while long-term planning, in contrast, tries to optimize for tomorrow the trends of today.
Strategic management has thus both financial and non-financial benefits:
1. Financial Benefits: Research indicates that organisations that engage in strategic management are more profitable and successful than those that do not. Businesses that followed strategic management concepts have shown significant improvements in sales, profitability and productivity compared to firms without systematic planning activities.
- Improvement in sales
- Improvement in profitability
- Improvement in productivity
2. Non-financial benefits: Besides financial benefits, strategic management offers other intangible benefits to a firm. They are;
- Enhanced awareness of external threats
- Improved understanding of competitors’ strategies
- Reduced resistance to change
- A clearer understanding of the performance-reward relationship
- Enhanced problem-prevention capabilities of an organisation
- Increased interaction among managers at all divisional and functional levels
- Increased order and discipline
The airfocus glossary explains the question like this: “Strategic marketing management is the process of implementing your business’ mission through specific and strategic processes in order to maximize on your current marketing plan.
Essentially, it is the act of making strategic decisions within a marketing plan in order to better that plan.
The benefits of strategic marketing management
The idea behind strategic marketing management is to adapt to your market as things change around you. The goal remains the same, but the path that leads you towards your goal can change.
The benefits of implementing strategic marketing management are fairly recognizable in the business world. Here are a few of the advantages in implementing a strategic marketing strategy:
- A better understanding of the market
The research involved in properly implementing strategic marketing management will inevitably end in a better understanding of your given market. Research regarding domestic and international markets, competition, and market trends will need to be conducted.
- Helps identify the strategic direction
Strategic marketing management involves making better decisions that align your plan with the company’s goals.
- Can have a big pay off
If implemented correctly, strategic marketing management can yield some impressive results for a business. The result could be a better handle on budget, and an overall increase in the longevity of a business.
All in all, there are many advantages to this style of management. By implementing strategic marketing management, you’re making strategic decisions to better your business and your understanding of the market as a whole.”
You’ll find more insights here: What is strategic marketing management. If you have more questions about “Analysis”, “Marketing”, “Website Models” and more they have a frequently asked questions there and a ton of more info. You can find the right tool to avoid mistakes and stay on track for free here.
Successful strategies are less about effective internal management than they are external competition. These strategies are significant because, without them, no organization can survive in a competitive environment.
Strategies, at least not successful ones, are not formed by deep thinkers at the top of an organization pyramid through some transcendental vision of reality. Real strategic decisions are not top-down, but bottom up. They are not visionary insights. They are solutions that are highly effective for the current situation.
Working strategies arise from the front lines of competition, where decisions must be every day with limited time and limited information. Most of these decisions are merely sufficient, but a few key one turn out to be strategic. These strategic decisions discover a valuable solution to a hidden opportunity. These working strategies then spread throughout their organizations, transforming them, or, they create their own, new organizations, growing from the seed of strategic success.
These strategies need not be written down or even articulated. What is important is that those strategies are understood well enough to be used and spread. In most organizations, successful strategies are spread more by example than they are by training.
Strategic management is a continuous process. Its main goal is to lead your projects through a harsh market reality.
Benefits of a strategic management:
- Don’t solve issues – prevent them. With strategic management, you can foresee issues, avoid them, and save time for important tasks that will bring you to the set target.
- Be aware of your plan. A well-thought clear strategic plan defines the direction to which you should adhere. It helps you not to get out of the way to achieve your main target.
- Be on the same page with your customers. You have ability to get valuable information of the market trends and make some immediate changes if needed.
- Sustain the market position. Today your company is #1. But what will be the next month? Next year? Using strategic management you’ll know answers to these questions.
To use these benefits from a strategic management process very important to choose a right tool. Personally I use Roadmap Planner. It allows me to work either online and offline. When I am offline, I can still work with my documents. When I have internet connection again, changes automatically synchronizes with all other devices – great for me!
With this app, I also can:
- Manage multiple projects at the same time
- Create mind maps of our team target, goals, and tasks
- Clearly see the steps and dependencies between them to achieve set goals
- Do a backlog management
- Share my strategy roadmap with all stakeholders
For me, a strategic management in tandem with Roadmap Planner works, and works wonderfully.
Wikipedia has a lovely discussion on what strategic management is and does. But it also has a lovely discussion of the many meanings of strategy and the many meanings of management. The problem, of course, is mixing two vague terms together doesn’t create one clear term.
For example, strategy can be defined as a pattern of decisions or as a ruse. Management can be defined as innovation & marketing or forecasting/planning/etc. Put them together and you get a pattern of decisions in innovation or a ruse in marketing. Strategic management is whatever anyone wants it to be. That isn’t necessarily bad, but it is true.
To me, strategy is the choice of customers, products, and business model and fitting those together to become a different firm in the future. I would call making that happen strategic management and the benefits are happier customers with better products or services (as they it) and a more efficient operation. It sum, a more successful enterprise.
You can get my book on business strategy free from jeffgilman.com.
- Financial growth. It is important that the company’s higher management pays lots of attention to evaluating company’s capabilities, especially financial ones, and gives the right direction for their appliance. All this results in increased profitability of the company.
- Endurance. Market is constantly changing and to be able to withstand its challenges it is important that companies have a clear vision of their opportunities in the future and their moves are strategically planned.
- Sagacity. When you are involved in the strategic planning, especially in the case of management, it is easier for you to understand your competitors and how to overcome them.
- Evolution. Strategic management means that you are constantly looking for ways to improve the already existing structures within your company, therefore, optimizing its activity and improving the overall performance.
It’s important to understand what strategic management is?
It’s effectively a fancy word for planning
So I’d simplify this question to ‘Does planning help?
The short answer is:
- Save time down the line
- Hours spent in planning save months wasted in development
- Acting without strategy is like running a marathon without knowing the route
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The benefit of effective strategic management is that the enterprise being managed continues to thrive in fulfilling its purpose.
This demands that the management team master four disciplines:
- Operate the enterprise: i.e. each day create and deliver the value people seek while extracting sufficient for the enterprise to pay its taxes, pay its lenders, reward its investors and secure the future;
- Transform the enterprise: i.e. guide the enterprise to achieve its strategic objectives by executing the coordinated and resourced actions set out in the approved strategic plan;
- Secure the future of the enterprise: by refining the strategy in the light of events that alter the strategic analysis that underpins the approved strategy being followed in (2);
- Run the enterprise: giving proper attention to the other three, remaining vigilant to changes outside and inside the enterprise, and trimming the enterprise so that it continues to thrive in fulfilling its purpose as each day arrives.
See more at Strategy Academy.
Enterprise strategies are laid out for future (roughly 5–10years) out. Which more often called as long term planning. Every organization (except non-profit, I wish to exclude) is in the process of making money and serving the society in making a better future. With that in perspective organization will layout growth/expansion (let’s say) strategy for next five years. Then the organization would bring these strategies into action, breaking it down into smaller segments which become more an action plan for team member who would be responsible for pursuing the same. Action plan then would trickle down into more tangible task which eventually becomes KPIs for every individuals involved with that strategy.
Having a sound process in managing the entire process from start to finish and starting over again is the key to success for any enterprise.