Strategic management is a management function in business administration, which deals with the development, planning and implementation of content-related goals and orientations of organizations. The strategic management planning horizons usually include two to five years, although strategically not the same as longer-term, but strategic plans usually have a longer-term time horizon.
Objects of Strategic Management
There are three objects of strategic management :
- determine a company’s business orientation
- set long-term business goals
- determine how the company should position itself on the market
- identify and expand competitive resources
- Design of the company
- determines the type of division of labour
- coordinates the work-sharing performance of tasks
- Company infrastructure
- Instruments for the management of the company
- Management information system
- Management incentive system
Phases of strategic management
The analysis phase consists of two main parts, the analysis of the environment and the analysis of the enterprise. The former includes competitive analysis as well as industry structure and industry dynamics analysis. The latter is intended to provide an objective picture of the company’s current and future strengths and weaknesses in order to withstand risks and seize opportunities (see SWOT analysis).
Since a basic function of management is the formulation of objectives and objectives define the long-term development of the company, its formulation is of great importance in the context of strategic management. Strategic objectives serve to align and orient at strategic planning. If there are no long-term goals, strategic management runs the risk of acting only in the short term, thus losing sight of long-term strategic planning. However, since strategic objectives are not simply given, they must be planned or formulated, related and fleshed out in the strategy process. The objectives have the following functions: selection function, orientation function, control function, coordination function, motivation and incentive function, evaluation function and control function.
Strategy Formulation and Evaluation
The core area of strategic management is the phase of strategy formulation. In this phase, a strategy for achieving goals is developed that meets the information of the environmental analysis and enterprise analysis. Since there is not only a possible strategy, the strategy variants must also be evaluated according to the objective (strategy evaluation). The impact on income and corporate risk, especially the risk of insolvency, must be taken into account.
Concrete, strategy-driven action by the company members. If strategies are not implemented efficiently, strategic management will be ineffective and a mere “intellectual gimmick”. In addition, a final control phase and a process-accompanying strategic controlling is necessary.