What is Strategic Management?
Strategic management is a business approach that is utilized to make the most efficient use of available resources in the process of operating a company. The idea behind any strategic management process is to evaluate the current status of the operation and all its individual components, identify whether those components are being utilized to best effect, and to develop and implement changes when and as necessary. When utilized properly, this approach can improve the overall performance of the company, move the business closer toward reaching its stated goals, and keep the cost of raw materials and other resources in balance with the returns generated by the business effort.
The foundation of any strategic management approach is to define the basic reason for the existence of the operation. This means developing a workable mission statement for the company, defining objectives that are in line with that mission statement, and developing policies and procedures that move the company closer to achieving those objectives. As part of the process, companies must take into account the resources on hand and those that can be acquired when and as needed, and determine how to use those resources to best effect.
Once the structure is in place, strategic management calls for making sure the defined policies and procedures are being observed in every area of the operation. Here, managers, overseers, and supervisors must be well-versed in the essentials of strategic management, and learn how to use the resources placed into their care to best effect. This often translates into knowing how to communicate with employees effectively, understanding the production process thoroughly and being able to articulate why a given process is important to the overall success of the operation. When this is the case, the task of allocating tasks and resources to best advantage is easier to accomplish, and enhances the chances for the business to perform at optimum efficiency.
Strategic management is not a concept that applies only in large companies. Even small businesses that employ no more than one or two people can benefit from the basics of this approach. While the exact nature of the processes and tasks required for operation will be different between a mom-and-pop retailer and a multi-national corporation, the general idea behind this management process will still be valid. By applying the principals to the real-life situation of the business, it is often possible to maximize use of available resources, minimize waste in the workplace, and ultimately have a positive effect on the bottom line of the company.
@hamje32 - Good strategic management planning involves policies and procedures. It doesn’t matter whether you have the greatest talent in the world or know what your mission is, you need a plan to get there, and you need it in writing.
And when those policies and procedures change, you need to update the documentation. I think this is very important. I was hired on at one Fortune 500 company where my sole function was to be be the policies and procedures coordinator.
I didn’t write most of the procedures, but I did help edit them and vet them to ensure that they were accurate. I met with various analysts who performed the functions in the procedures so that they could elaborate on their job functions and make sure existing documentation was up to date.
@nony - The most important aspect of strategic planning and management in my opinion is properly allocating resources, whether you are talking about people or physical capital.
One of the biggest complaints that employees have had in the company I work at is that they feel underutilized. Tasks are spread out too thin, and people are not able to make the best use of their talents and abilities.
Especially in IT, if you aren’t challenged you will be bored in a hurry, and it won’t be long before you’re heading out the door and moving on to another job.
I think managers should periodically conduct a skills assessment, where they catalog what their employees are able to do and more importantly, ask them what they would like to do. This would help retention rates and improve morale in my opinion.
I think that it’s never too late to start implementing the strategic management concepts described in this article.
I work for a small software development company that has been in business for twenty years, and it was only three years ago that we finally sat down to draw up a mission statement. In all fairness, I think this was more procedural than anything else; they all knew what the basic mission was, but it’s different when you only have ten employees than when you expand to over thirty.
It was a very useful exercise to draw up the statement and everyone was able to chip in, based on their understanding of how the business operated and what its objectives were.
Post your comments