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1.Strategic management concepts

The strategic management process, dynamic by nature, is formed by the set of commitments, decisions, and acts that the company needs to carry out to achieve strategic competitiveness and obtain higher than average profits.

It is defined as the art and science of formulating, implementing and evaluating multidisciplinary decisions that allow a company to achieve its objectives. As this definition describes the strategic management focuses on integrating administration, marketing, finance and accounting, production and operations, research and development and information systems, to achieve the success of an organization.

It is a set of decisions and administrative skills   that determine the long-term performance of a corporation. It includes environmental analysis (both internal and external), the formulation of the strategy (strategic or long-term planning), implementation of the strategy, as well as evaluation and control.

2. Importance of strategic management

Without plans, administrators cannot know how to organize the people and resources of a company, they may not even have a clear idea of ​​what it is that needs to be organized.

It is also important because of the nature of the organizations, which are made up of divisions, functions and work activities, which must be coordinated and focused to achieve the company’s goals. One of the most significant reasons is that it can make a difference in the performance of the organization.

3. Impact on entrepreneurial and innovative activity in companies

The entrepreneurial activity and corporate innovation are linked to strategic management and some concepts are managed in this area such as investment, innovation, and imitation. There are certain characteristics that an entrepreneur has to count on, such as aggressiveness, proactivity, and innovation.

Corporate business activity is vital in companies, since it is the set of capabilities that a company has to produce or acquire new products and services and direct the innovation process, this is nowadays something very essential in organizations, since The role of leaders is to inspire members of the organization to work in teams to obtain significant results and thus create a favorable corporate attitude for the performance of their activities.

4. Benefits of strategic management

The greatest benefit of strategic management has always been that it helps organizations to have better strategies because they use a more systematic, logical and rational approach to choose their strategies. These benefits can be divided as follows:

Financial benefits: Some research shows that organizations that apply the concepts of strategic management are more profitable and successful than those that do not.

Non-financial benefits: These are tangible benefits, for example, a greater alert to external threats, a greater understanding of strategies, etc.

Other benefits:

  • It allows us to detect opportunities, classify them by priority and exploit them.
  • It offers an objective view of administrative problems.
  • It represents a framework to better coordinate and control activities.
  • Reduce the consequences of adverse changes.
  • It allows for the improvement of resource allocation.
  • It decreases the amount of time and resources dedicated to correcting wrong decisions.
  • It constitutes a framework for internal communication.
  • It helps to incorporate the behavior of individuals to the total effort.
  • It offers a basis for delimiting individual responsibilities.
  • Promote reasoning.
  • It offers a cooperative approach.
  • It fosters a positive attitude towards changes.
  • It provides discipline and formality to business administration.

5. The strategic direction in the construction of business objectives

Here, the high-level plan translates into greater operational planning and action points. Finally, the evaluation or maintenance and/or management phase. This consists of the continuous evaluation of the performance, of the culture, of the communications, detecting problems to focus on the objectives.

A key step during the process: SWOT analysis

It is essential to perform a SWOT analysis that includes strengths, opportunities, weaknesses, and threats. This analysis is instrumental in the formulation and selection of strategies. Successful companies develop their strengths, correct their weaknesses and protect against internal weaknesses and external threats. Also, they monitor their general business environment; and recognize and exploit new opportunities faster than their competitors.

The strategic direction provides a broader perspective to the employees of your organization. It is nothing more than the art of managing employees in a way that maximizes their ability to achieve business objectives.

With a good strategic direction, employees become more reliable; Committed and satisfied. They can understand the reaction of environmental changes in the organization and the probable response of the organization with the help of strategic management.

Steps to the good strategic direction

To begin to establish a strategic framework in strategic direction, it is necessary to ask a series of key questions.

How to get where you are now?

Where do you want to go?

What will be the vision of success?

What will get in the way?

What do you have to be aware of to get around it?

What should be done to get where you want?

6. Establish your vision

A strategic vision is the image of the future of a company. The strategic direction is paramount. The focus on the customer and the market position. And obviously, the commercial activities that must be carried out and the capacities that are planned to be developed.

Gather and analyze the information

The right information will help make the right decisions. It is necessary to gather and evaluate it carefully. Where are they found as an organization and what happens in the world outside the organization? From there, you can begin to find out where you are going.

Formulate the strategy

The first step in formulating a strategy is to review the information obtained. It is necessary to determine what resources are currently available to help achieve defined objectives. Then, identify the areas in which the company should seek external resources. The problems facing the company must be prioritized to succeed.

Implement the strategy

The tactics establish specific action plans that lead to the implementation of goals and objectives. An excellent method to obtain staff acceptance is to assign a goal to each employee. Everyone should write their action plan and be responsible for ensuring that each task is accomplished.

Evaluate and control

The evaluation and control the actions of the strategy include performance measurements. Similarly, a consistent review of internal and external problems, generating corrective actions when necessary.

Nature and scope

The nature of strategic management is manifest in the following approaches:

Globalization and the ability to adapt to the new changes demanded by the environment have an impact on making appropriate strategic decisions.

The environment is a key element of the strategy.

Strategic management must be viewed from a systemic approach, that is, from a global point of view in which all the angles and points that affect the project to be developed or managed are appreciated, it is important when you are with this approach, that you analyze all the ends that we sometimes let loose, because they seem insignificant, but that are related. Then the strategic administration has a systemic scope in the development of projects, that is, it covers the entire extension from planning to completion of the execution and evaluation.

The strategic administration nowadays has generic tools, both for the formulation and for the execution, which can be applied to any organization.

Without a systemic description of the strategy, executives cannot communicate it easily, with each other, or with employees. Without a shared understanding of the strategy, executives cannot generate alignment around it.

1.2 Elements of strategic management

1. Strategic planning should be evolutionary rather than directive:

Contain a few broad-spectrum objectives. The objectives are the result of reflection and dissemination for a long period. The objectives are designed to offer the department’s priorities for institutional development.

2. Provide an organizational structure within which a wide variety of individuals can identify and solve their problems:

Effective two-way communication between the central authority and the operational units. Create an environment that strengthens trust and credibility in staff. Encourage dialogue and discussion within the organization to avoid or minimize the external threat.

3. Focus the direction on performance and continuous improvement:

It covers a means-strategies-ends approach instead of means-strategies-means.

The approach encourages immersion in staff, who will move the company to its goals. The culture of participation and evolution allows everyone to understand and commit to achieving their goals.

Challenges of strategic management

  • Threats of new competitors-entry barriers.
  • Threats of substitution.
  • Bargaining power of buyers and suppliers.
  • Presence of rivalries.
  • Adapt to change.
  • Make realistic strategic management planning (attainable plans).

Social and ethical dimensions of strategic management

According to its attitude towards strategic planning, 4 types of organizations are distinguished:

Defenders: Organizations that have a small market scope for their products, and in which top-level managers are experts in the operational area but do not tend to seek new opportunities outside their scope.

Explorers: Organizations that continually seek market opportunities and usually experiment with potential responses to environmental trends.

Analyzers: these organizations operate in two areas, one relatively stable and one changing.

Respondents: Organizations in which managers frequently realize how change and uncertainty affect their organization’s environments.

Entrepreneurial activity and corporate innovation

The strategic purpose focuses on the internal environment of the organization and involves identifying its resources, values, capabilities, and skills to give them momentum and make the most of them and thus achieve their goals in the competitive environment. It takes care of winning competitive battles and achieving global leadership. When a solid way is established, it can cause staff to perform that they never imagined.

It plays a fundamental role, since an entrepreneurial attitude goes hand in hand with the strategies, procedures, and goals to be achieved, also when innovation is required in a productive activity or simply in an institution whatever its turn is required to follow an adequate planning, according to their needs for change and above all see a perspective of what is to be improved to implement and develop a strategic administration that improves productivity, establishes an environment of complete trust among workers and improves their quality of life.

In PeopleNext we know that the execution is the link that unites the strategies that you have planned as a company and the results of success that you hope to obtain, that is why we share 5 tips for the execution of the strategy.

1. Involve senior management

It is important to remember that strategic execution is not an isolated action but a process that includes all the units of the organization, therefore a strong commitment must be generated to carry it out, starting from the highest part of the organization chart and This way by cascading the strategy through the organization. Achieving the commitment of all staff towards a common goal is a challenge, however, if the leaders of the company are involved, understand the strategy and know-how to motivate the team the execution of the initiatives will become part of the organizational culture.

2. Determine clear objectives and communicate them

From the planning of the strategy, it must be understandable at all levels, in the same way, each of the tactics and activities that compose it so that it is understandable for all organizational levels. The team must understand the relevance of the strategy and the impact it has on the company so that they feel identified and committed.

Communicating the strategy is equally important as planning it. Try to transmit it by adapting the message according to the audience, that is, the way of communicating it to senior managers or shareholders will be different than to managers or operational staff. Of course, always take care that the message is consistent throughout the organization.

3. Make sure each person knows their responsibilities

As an essential part of the execution is the correct delegation of tasks and responsibilities to each team member. Carrying out the implementation of the strategy is comparable to a project which depends on the time, resources and people who carry out each activity, therefore an important part of the success lies with each of the collaborators.

So that they can carry out their tasks promptly in a way that contributes to the success of the execution, it is of great importance that each person knows the scope of their responsibility and that there is effective communication between the subordinate and the direct boss.

4. Establish appropriate indicators

Time is a critical element in strategic execution, so it is important to use it most efficiently and profitably for your company. When establishing the indicators that you will be monitoring during the execution stage, make sure they are the ones that will give you the guidelines and clarity you need to know the progress and challenges that are being presented in the process. Make sure that the figures obtained reflect the objective for which the strategy was planned in the first place, in this way you will know if the design is being fulfilled and if this planning is yielding the expected results for the organization.

5. Check continuously and give feedback

As we have said before, the day-to-day operation can lead to plans being forgotten and left on paper only. Encourages that in the meetings of the management and management team there is a designated time to follow up the strategy. One recommendation is that the revisions and monitoring that you are carrying out to the fulfillment of the plan are in short periods, the market is dynamic and can change from one moment to another so it is very important that the approach is not lost sight of and adjustments can be made in a timely manner.

An essential part of the reviews is that you compliment them with the proper feedback to your work team so that each person can identify if they are performing their tasks in the best way and in the stipulated times or there is something that must be corrected either in costs, Times, resources or procedures.

Creating a culture of execution in your company gives you advantages such as:

  • Build a solid company that achieves goals.
  • Get a competitive advantage in the market.
  • Respond more agilely to changes in the market.

Remember that the key piece for the strategy to be carried out is human talent, therefore you must think about how it will translate into individual terms that give each of the collaborators a sense of purpose when knowing How your contribution contributes to the achievement of strategic objectives.

Advantages Of Strategic Management

Strategic management among the characteristics of the contemporary environment of companies are, among others, risk, turbulence, and instability of operating conditions. These characteristics, and in addition, the development of the market, the continuous and rapid changes in the environment, the appearance of new competitors, etc.require the managers of the companies to manage the development of the company in a way that allows them to take advantage of the opportunities and possibilities, and effectively identify and avoid threats.

Also, they create the need to get away from current dilemmas and contemplate your business from abroad and long-term point of view. For all that, it is essential to have the skills to anticipate, identify strengths and weaknesses in the company itself and competitive companies and use different research tools and methods to identify and characterize their strategic potential and formulate the best future strategy. This approach makes management possible. strategic (also called strategic management and administration) that currently becomes increasingly essential for each company.

Today, many business managers (especially SMEs) think that strategic management is only for large industrial companies. They believe that in times of constant changes, lack of working capital, great rivalry and uncertain future, it is difficult to talk about establishing and implementing strategic management. But nothing is further from the truth. Each company (micro, small, medium and large) and each organization (regardless of the nature of its activity) must establish and implement the strategic direction to stay in an increasingly competitive market.

Knowledge about strategic management allows, to a large extent, to omit the obstacles that companies encounter on their path to development, or at least, minimize the threats that come from such obstacles and see the potential possibilities to achieve development thanks to certain strategic choices.


Maintaining a prominent position in the market is a challenge, especially in the most competitive niches, and strategic quality management is a fundamental condition for the success and maintenance of a company in the market.

Strategic Management is the process that takes care of what was planned and what is being implemented. Essential to ensure that the objectives set are achieved consistently and effectively.

Now that you know the importance of Strategic Management in your company, what if you know better all the advantages and disadvantages of making a strategic plan ? We believe your curiosity awoke when we briefly talked about that.

Post Author: Bell Tarts

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