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Management coordinates and manages the people in the organization. Management is based on planning, organizing, leading, directing etc. in the organization. An effective management structure is required to direct the organization towards achieving the organizational goals. Strategic management is the practice of management based on strategies and planning. It includes the collection of processes and activities that are required by the organization so that all the organizational objectives can be achieved. Strategic management provides a clear way to mission, vision to the organization.
Strategic management is the art which include formulation, implementation and evaluation of many actions and decision which can enable an organization towards achieving organizational objectives. Organizations need strategic management to identify and develop required actions and decisions. It gives an overall direction to the organization. There are many models and structural frameworks developed by managers and management experts which help the organization in building and developing strategic management.
The foundation of strategic management depends on strategic planning and strategic thinking. Strategic planning a management activity. It is used to frame organizational priorities. It recognizes energy and resources. It focuses on strengthening the organizational operations. Strategic planning ensures that the plans and decisions have to be executed in a direction to achieve the organizational objectives. Strategic thinking is a cognitive activity. Strategic thinking is thinking effective plans in the direction of organizational growth. It helps in performing long term planning. Strategic thinking set goals. It determines the organizational priorities so that strategic planning can be implemented. With the help of strategic thinking, organizations can identify and eliminate the potential risks, helping in a better risk management structure.
It is said that the concept of strategic management came into existence around 1950s – 1060s. Many people postulated theories and principles on strategic management. Out of them, significant role is of Peter Drucker, Bruce Henderson, and Alfred Chandler etc.
Concepts and Frameworks of Strategic Management
Created by Boston Consulting Group in 1966, is a hypothetical curve. It is a consistent relationship between the cumulative production and cost of production.
SWOT Analysis: A structured planning method which is used to identify and evaluate strengths, weaknesses, opportunities and threats in the business.
Corporate Strategy: Corporate strategy is all about the way a corporation works. Corporate strategy is the direction of a corporation. It is the way in which the operations functions together to accomplish the organizational objectives.
Portfolio Theory: It is a strategy which is based on the diversification. It brings diversification with help of acquisition.
Competitive Advantages: Competitive advantage is a type of profit/advantage which organization gain over the competitors. According to Michael Porter, there are two types of competitive advantages, lower cost or differentiation.
Generic Competitive Strategies: Michael Porter gave generic competitive strategy. He identified three generic strategies, lower cost, differentiation and focus.
Strategic management is a very wide discipline which encompasses several other disciplines. It includes various plans and procedures which are framed and structured to target the organizational objectives. Strategic management is a key policy as it has the potential to drive the best results within the organization. It is essentially concerned with the decisions and actions which are planned and taken for the future direction and development. It is generic, emergent and integrated planning.
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