Talking of strategy, it does not sound strange to many and is often times used widely in our day-to-day vocabulary. But pointing out what exactly it is and how we can use it in business, many will start to give general statements that may actually not reflect our clear understanding of what it is. Today, we begin a series of our articles on strategy and how it can support your business. In the first issue, we shall give a general overview of strategy and strategic management in general.
With a rich history of strategy, the area of study has evolved overtime and is not only instrumental in business but notably also in military and biological sciences to mention but a few. With an interest in corporate strategy, a leading strategy guru, Michael Porter, refers to it as a means towards achieving competitive advantage through being different – delivering a unique value added to the customer, having a clear and exactable view of how to position yourself uniquely in your industry. From other scholars and industry practitioners, corporate strategy is concerned with how companies create value across different businesses units.
What then, is strategic management?
Strategic management is a broader term than strategy and is a process that includes top management’s analysis of the environment in which the organization operates prior to formulating a strategy, as well as the plan for implementation and control of the strategy. The difference between a strategy and the strategic management process is that the latter includes considering what must be done before a strategy is formulated through assessing whether or not the success of an implemented strategy was successful.
Strategic management involves the formulation, implementation and evaluation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organisation competes. It provides the overall direction to the enterprise and involves specifying the organisation’s objectives, developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans.
Why your organisation is better off engaging in strategic management?
From the marking talk of a business’ role to serve the client, we appreciate that the client is served in exchange of a payment which is not only intended to sustain the business but also increase the shareholders wealth. Strategic management has proved to enhance the financial performance of organisations. Different research findings over the last four decades indicate that formalised strategic management (strategic planning) results in superior performance by organizations. The studies were able to provide convincing evidence of the profitability of strategy formulation and implementation. The formalised strategic management process makes a difference in the recorded measurements of profits, sales, and return on assets. Organisations that adopt a strategic management approach can expect that the news system will lead to improved financial performance.
The base of this financial improvement is based on the following behavioral effects;
1. It provides a way to anticipate future problems and opportunities.
2. It provides employees with clear objectives and directions for the future of the organization.
3. It results in more effective execution
4. It results in faster and better decision making and
5. It allows for identification, prioritization, and exploitation of opportunities.
6. It provides an objective view of management problems.
7. It represents a framework for improved coordination and control of activities.
8. It minimises the effects of adverse conditions and changes.
9. It allows more effective allocation of time and resources to identified opportunities.
10. It allows fewer resources and less time to be devoted to correcting erroneous or adhoc decisions.
11. It creates an appropriate framework for internal communication among personnel.
12. It helps to integrate the behavior of individuals into a total effort.
13. It provides a basic for the clarification of individual responsibilities.
14. It gives encouragement to forward thinking.
15. It provides a cooperative, integrated, and enthusiastic approach to tackling problems and opportunities.
16. It encourages a favorable attitude towards change.
17. It gives a degree of discipline and formality to the management of a business.
In the next article we shall give you a detailed breakdown on how you can formulate this strategy for the benefit of your business.