Strategic management is the continuous planning, monitoring, analysis and evaluation of all the essentials an organization needs to achieve its goals and objectives. Changes in business environments will require organizations to constantly evaluate their strategies for success.
The strategic management process helps organizations assess their current situation, formulate and deploy strategies and analyze the effectiveness of implemented management strategies.
Evolution of the concept of strategic management
The first seed for the development of strategic management was in a field called business policies, which began at Harvard Business School by teaching its students this topic in a case study style, to address problems related to various policies (productivity, marketing, human and financial resources).
This field has come to be called strategic management, and interest in strategic management has shifted to focus on the level of the organization as a whole.
This prompted universities and colleges of management to teach business students the concept of the environment, its types, and its impact on business organizations, in terms of decision-making and in formulating its mission and objectives.
What is the concept of strategy?
The word strategy is derived from the Greek word strategos, which means the art of leadership or the art of moving troops and equipment to and from the battlefield, in order to gain a competitive advantage that enables it to win over enemies.
The uses of the strategy were so numerous that it included many sciences and fields, and its use is no longer limited to military operations, but we find that it has extended to all social sciences such as politics, economics, sociology and management.
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What is the definition of strategy
The organization defines its long-term goals and objectives, and allocates resources to achieve these goals and objectives.
It is the organization's perception of the nature of the expected relationship with the external environment, in the light of which it determines the type of work that should be carried out in the long term.
As for the definition of strategic management
Thompson and Stirkland defined strategic management as meaning "developing future plans for the organization, defining its long-term goals, and choosing the appropriate pattern for implementing the strategy [s]."
Glueck defined strategic management as “a series of decisions and actions that lead to the development of an effective strategy or strategies to achieve the objectives of the organization” [s].
As for Thomas, he defined it as “those activities and plans that the organization develops in the long term, in order to ensure compatibility between the organization and its mission.”
Elements of strategic management
Achieving successful strategic management requires a number of key ingredients, including:
- Integrated strategic plan.
- An integrated system of policies that govern and regulate the work of the organization and guide those responsible for performance and work ethics to achieve excellence.
- Foundations, rules and criteria for decision-making.
- Flexible organizational structures that are commensurate with performance requirements and are scalable and adaptable to external and internal changes and challenges for the organization.
Strategic management differs from strategic planning and operational planning. Strategic management is the result of the development of the concept of strategic planning, expanding its scope and enriching its dimensions.
Strategic planning is an element of strategic management. Strategic management also means managing organizational change, managing organizational culture, managing resources and managing the environment at the same time.
Strategic management is concerned with the present and the future at the same time, while strategic planning is a process of forecasting for a long-term period, anticipating what will happen and allocating resources.
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The importance of strategic management
The importance of strategic management stems from monitoring and evaluating the performance of the organization as an integrated system consisting of an interactive structure of functional sub-systems, along with analyzing the performance of the sub-systems, organizational climate and organizational culture.
These areas and systems include elements of strength and weakness. The strategic management renews the organization's strategic position, and evaluates performance as a whole by defining the role of each system in creating specific value for the organization.
The added value chain, which has a direct impact on providing opportunities for survival or growth and development in the industry, must be pursued.
Strategic integration is an essential condition for efficiency and effectiveness.
In sum, strategic management is a creative, rational, analytical process, a dynamic and continuous process that seeks to achieve the mission of the organization, through managing and directing available resources in an efficient and effective manner.
It also has the ability to face the challenges of the changing business environment in terms of threats, opportunities, competition and risks to achieve a better future based on a basic focal point in the present.
levels of strategic management
Strategic management consists of three levels:
1. Corporate Strategy
It describes the organization's overall orientation, reflecting its general directions for growth, business management and product lines to achieve balance in its product mix.
An organization's strategy is a set of decisions that determine the type of business the organization should be associated with, as well as the flow of resources and money into and out of the organization's departments. and finally the organization's relationships with the major groups in the environment.
2. Business strategy
It is sometimes called the Competitive Strategy and is usually placed at the level of Strategic Business Units (SBUs).
It focuses on improving the competitive position of an organization's products or services in a particular industry or market segment.
3. Functional strategy
It is mainly related to maximizing production efficiency by collecting and utilizing the available resources efficiently and effectively.
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Success factors for applying strategic management
To implement strategic management successfully, a number of factors are required, the most important of which are:
1. Availability of strategic thinking:
Where strategic thinking refers to the availability of the capabilities and skills necessary for the individual to exercise the tasks of strategic management.
The most important characteristics of individuals with strategic thinking are:
- The ability to analyze the external environment, including the opportunities it provides or the resulting risks.
- The ability to choose the appropriate strategy.
- The ability to allocate available resources and capabilities and use them efficiently.
- The ability to make strategic decisions.
2. Availability of strategic information systems:
Information has a fundamental role in all stages of strategic management. Information related to the results of the analysis of internal and external environmental variables.
For example, it supports the efforts of strategic managers in setting goals and formulating strategies, and it also contributes to the implementation, review and oversight of the strategy.
3. Availability of an incentive system:
The incentive system usually aims to ensure that there is a match between what is required for the effective implementation of strategic plans, and the legitimate needs and demands of the workers in the organization who carry out the implementation.
The incentive system must be appropriately and effectively linked to the organization's strategy at the various administrative levels.
To achieve this, a tight and fair system of rewards and incentives must be designed so that it plays a stimulating and encouraging role to reward the desired performance.
4. Availability of a financial system:
The organization must have a good financial management system. If it is not available, it is preferable to address this before applying strategic management, as it requires large financial, human and technical resources.
5. Availability of proper administrative organization:
There should be an accurate and flexible administrative organization capable of adapting to the variables of the strategy, accommodating the strategic objectives, and providing the necessary information.