Principles for Effective Strategic Management

Strategic management is the process of defining objectives, strategic initiatives, and goals to make a company more competitive. Strategic management includes strategy evaluation, analysis of the company’s internal environment, and strategy execution.

Strategic management is, therefore, the systematic identification, planning, monitoring, analysis, and evaluation of everything a company needs to achieve its objectives and goals. Changes in the business environment require that companies constantly evaluate their strategies. The strategic management process helps companies to diagnose the current situation, develop strategies, implement them, and then analyze the effectiveness of implemented strategies.

Properly developed strategic management brings numerous financial and non-financial benefits. A strategic management process helps the company and its senior management envision and plan its future existence. It defines a direction for the company and its employees. Different from previously undertaken strategic plans, effective strategic management continuously plans, monitors, and evaluates the activities developed in a company, resulting in greater operational efficiency, market share, and profitability.

Strategic management is based on the company’s clear understanding of its business, mission, vision, and the values—all of which will guide its actions—and requires a commitment to strategic planning, involving a its ability to set short- and long-term goals. Strategic planning also includes planning strategic decisions, activities, and allocating resources needed to achieve these objectives.

Having a defined process to manage strategies will help the company make coherent decisions and develop initiatives to achieve results in pace with the evolution of technology, the market and business conditions. Strategic management can thus help a company gain competitive advantage, grow market share, and plan its future.

Among its principles of strategic management, according to Liam Fahey in “Strategic Management: Today’s Most Important Business Challenge,”[1] we should emphasize the following:

  • It involves the management of market strategy, the company, and the relationship between the two;
  • Its core assignment is the management of the interface between the company and its environment;
  • It involves anticipating, adapting to, and developing change;
  • It is guided by the search for and identification of opportunities;
  • It recognizes that opportunities may arise in the external environment or may be developed within the company, but in both cases are realized in the market;
  • It requires risk-taking, in that the company must commit to pursuing opportunities before they have materialized;
  • It is concerned with creating the competitive future of the company and adapting to this vision of the future;
  • It interprets the company’s market objective as something external to its own borders;
  • It is the task of everyone in the company and cannot be delegated to a specific group.
  • It demands integration between the near and far horizons, as the future influences the decisions of the present, and the decisions of the present lead to future states.

Strategic management includes management of the environment, the market, the company, and the links between them. It represents the main challenge of executives. There is no ready-made or complete formula. It consists of developing new ways to win in the market and new ways to reconfigure the company to ensure the achievement of its objectives.

[1] Fahey, Liam, and Randall, Robert, eds. The Portable MBA in Strategy. New York: John Wiley & Sons. Pp. 3-50.

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