Strategic Management

Definition

Strategic management is the process of identifying an organization's long-term goals and objectives, and then making and implementing decisions about how to allocate resources to achieve those goals. It involves analyzing the organization's internal and external environment, formulating strategies, and monitoring the implementation of those strategies to ensure the organization's success and sustainability.

5 Must Know Facts For Your Next Test

1. Strategic management is crucial for an organization's long-term success, as it helps it adapt to changing market conditions and competitive pressures.
2. The internal environment of an organization, including its resources, capabilities, and organizational culture, is a key consideration in strategic management.
3. Strategic management involves setting strategic objectives at different levels of the organization, such as corporate, business, and functional levels.
4. Formal organizational planning is an essential part of strategic management, as it helps organizations allocate resources, coordinate activities, and monitor progress towards their goals.
5. Contingency theory and systems theory are important frameworks for understanding how strategic management should be adapted to an organization's unique circumstances and environment.

Review Questions

• Explain how strategic management relates to the concept of contingency and system management.
  • Strategic management is closely tied to contingency and system management theories. Contingency theory suggests that an organization's structure and processes should be tailored to its specific circumstances and environment, which is a key consideration in strategic management. Systems theory views an organization as an interconnected system, where each part of the organization is dependent on and influences the other parts. This systems perspective is essential in strategic management, as it helps organizations understand how their internal and external environments interact and how to align their strategies accordingly.
• Describe the role of the internal environment in strategic management.
  • The internal environment of an organization is a critical factor in strategic management. An organization's resources, capabilities, and organizational culture all play a significant role in shaping its strategic options and the feasibility of its strategic plans. Strategic management involves carefully analyzing the organization's internal environment to identify its strengths, weaknesses, and core competencies, and then leveraging these to develop and implement effective strategies that align with the organization's goals and objectives.
• Evaluate the importance of strategic objectives and the different levels of strategy in the strategic management process.
  • Strategic objectives are the specific, measurable goals that an organization aims to achieve through its strategic management process. These objectives are set at different levels of the organization, including the corporate, business, and functional levels. The alignment and integration of these strategic objectives across the different levels is crucial for the overall success of the organization's strategic management efforts. Strategic management involves carefully formulating and cascading these objectives to ensure that the organization's resources and activities are focused on achieving its long-term goals and maintaining a sustainable competitive advantage.

Related terms

Contingency Theory: A management theory that suggests an organization's structure and processes should be tailored to the specific circumstances and environment in which it operates.

Systems Theory: A management theory that views an organization as an interconnected system, where each part of the organization is dependent on and influences the other parts.

Strategic Objectives: The specific, measurable goals that an organization aims to achieve through its strategic management process.