Strategic Management Identification and Description

Question: Discuss about the Strategic Management for Identification and Description. Answer: Introduction: The term strategic management can be defined as the identification and description of the strategies, which enables the managers to execute high performance and gain a competitive benefit for their organisation. An organisation is only considered to be having a competitive advantage unless its productivity is superior to the standard profit for all the companies prevailing in its industry. Strategic management can as well be considered as the group of judgments and activities, which an administrator assumes and derives the outcomes of, firms performance (De Waal 2013). The manager should have a complete acquaintance and understanding of the general and competitive surroundings of the organisation to make correct decisions. They must perform a SWOT Analysis (Strength, weakness, opportunities and threats), i.e., the managers must make the best possible utilisation of the strength and reduce the weakness of the organisation, by employing the arising opportunities from the business activities without ignoring the threats. Hence, strategic management is nothing short of planning for the predictable and unfeasible contingencies. It can be implemented on both small and large organisation as the smallest organisation also faces the competition. By developing and implementing correct strategies they can achieve competitive advantage of their business. It is a tools for setting up the objectives and proceeding ahead with them to attain them. It is concerned with making and implementing decision to regarding the future directions of a corporation. Strategic management helps the manager to recognize the course in which an organisation is moving. Therefore, strategic management is a constant procedure, which assesses and controls the industry and the business under which an organisation functions by evaluating its competitors, setting goals and strategies to meet the needs of the organisation. Concept of strategic management: The word strategies have been derived from greek word which means Stratcgos. Hence, strategies are an action, which the managers undertake to achieve multiple goals of the organisation (Hill et al. 2014). It is a general direction, which is set for a business entity and its diversity of mechanism to attain a needed position in future prospect. It is mainly concerning of incorporating commercial activities by utilising and allotting the limited resources within the context of business environment in order to convene the current objectives. While formulating strategies it is to be noted that verdicts are not taken in a vacuity and any act by the organisation will be assemble a reaction from those affected are competitors, consumers, workforce and suppliers. Strategy is understood as the acquaintance of goals , uncertainty of events and the need to take into account the most probable and actual performance of others. It is the features of judgments in a business entity which reflects the objectives and aims, reducing the key strategies and programmes for attaining such ambitions by defining the business which an organisation carries, the kind of financial and individual organisation it desires to be and the involvement it strategizes to make to its shareholders, consumers and civilization at large. Vision and mission of strategic management: One of the primary features observed according to the perceptions of management is the thought and practice weather an organisation has any vision or mission. In addition to this, the first thing one learns in the school of business is the significance of vision and mission statements. It has been discovered in the learnings that organisations having well-spoken, coherent and objective oriented vision and mission statement generates double the amount of benefits for its shareholders in contrast to the firms having no vision or mission. Some of the advantages of having a vision and mission assertions are listed below; Above the whole thing else a vision report provides harmony of objectives to a business firm and injects the employees with the sense and belongings of identity. Perhaps vision and mission statements are symbols of organisational identity, which carries the firms creed and motto (Eden and Ackermann 2013). This sort of features enables them to be known as statement of creed. The mission and vision statement states out the context under which an organisation functions and offers the workforce with a tendency that is to be pursued under the climate of business entity. Such tools not only defines the existence of the organisation but also acts as a indicators of the directions under which an organisation should proceed to realise the goals set in the vision and mission statements. The vision and mission statement works as a point of focus for individuals in order to identify them with the process of the business entity and which gives a business entity a sense of direction. On the other hand, strategic management also deterring to those who does not wishes to follow them from taking part in the organisations activities. It is also noted that the mission and vision statement helps an organisation to interpret the objectives into labour structures by assigning task to the aspects of the business firm with the responsibility of implementing in practice. To spell out the main objectives on which the structure of the organisation functions depends and executing the actionable cost involved in the conversion of objectives into the presentation and time associated instruments. Finally, the vision and mission statements provides a beliefs of survival to the workforce, which is of utmost importance for humans. The vision and mission statement is concerned with the essential sense for functioning in a particular organisation. As it can be observed from the above stated a meaning vision and mission statement is destined to go extended way by setting up the foundation for presentation and actionable framework to exemplify the strength of the organisation. On the other hand, vision and mission statement is a matter of significance relevance as numerous identities an individuals have during their daily lives (Schilke 2014). It is to be believed that business entities spends a huge amount of time in significant of their vision and mission statement and ensures that a business entity comes with the declarations that provides importance as an alternative of being meagre judgments that are devoid of any implications. Features of strategy 1. Strategy is relevance as it is not feasible to determine future for the foreseeable amount of time. Without a perfect forecast a business entity should be ready to deal with the uncertainties concerning the business environment. 2. Strategic management of an organisation should be concerned with the long-term aspects rather than operating at a routine level. It deals with the likelihood of operations and novelties or new products, innovative process of manufacturing and new markets to be explored in the future course of time (Lasserre 2012). 3. Strategy is established to take into the account the possible behaviour of the consumers and competitors. Strategies concerning with the workers will forecast the employees performance. 4. Strategies are well organised matrix of an organisation. It defines the general mission, vision and directions of a business entity. The objectives of strategic management are to increase an organisations strength and to minimise the strength of the rival firms. Competitive advantage of strategic management: Understanding competitive advantage: It is a tool that strategic management is concerned with attaining and preserving competitive advantage over its rival and competitive firms. Competitive advantage can be defined as anything, which a business entity does especially when compared with the rival firms (De Waal 2013). It is to be noted that stresses on comparison with competing firms serves as a competitive advantage and it is all about how the best competitors stay economically competitive in the market. Competitive advantage mounts up to business entity when it does something, which the other competing firms are unable to do, or owns something that the competitors wishes. For example, for some business entities the competitive advantage signifies that a firm lesser - fixed assets when it is compared with the competitor firms, which is again beneficial during the financial slump. Sustained competitive advantage: It has already been defined that what competitive advantage holds in relation to the strategic management and the sources arising from competitive advantage differing from organisation to organisation. However, it is also evident that a business entity can have a basis of competitive advantage for only a definite period because other competing firms copy and duplicates the successful organisation strategies leading the original firm losing its source of competitive advantage over the long-term basis (Stead and Stead 2013). Therefore, it is very important for business entity to establish and develop continued competitive benefit. This can be done by following ways; Constantly adapting to the evolving external business landscape and matching with the internal strengths and capabilities by channelling the possessions and competencies in a smooth manner. By formulating, executing and assessing the strategies in an efficient way, which makes the utilisation of the above stated factors. The truth that business entities loses their competitive source of advantage during longer term is borne out by figures which shows that the top organisation in Malaysia had over 80 per cent of the marker share during the year 1978 which has significantly came down to less than 50 per cent. Introduction of internet and competitive advantage: With the introduction of internet, gaining of competitive advantage has develop into easier concept as business entities directly sell to the customers and the interconnected suppliers, consumers, outstanding creditors and other relevant stakeholders involved in its value chain. Due to the taking away of mediators, organisations can lower the cost and enhance the productivity (De Waal 2013). Nevertheless, internet has transformed the regulations of conducting business and acts as elements of competitive advantage in this era of digitization. Internet is now about how well organisations utilise the digital stage and social media to increase advantage over other competing firms. Finally, it is evident that competitive advantage should be earned, gained and defended as the above stated conversation illustrates. Organisations which are alert and quick to respond to the evolving market circumstances and whose interior potentials are associated with the external opportunities are those who would sustain themselves in the commercial landscape of the 21st century (Schilke 2014). As it can be observed from the characterisation of competitive benefit, it is ethereal and subjective to change as business entities should always look out for the new source of opportunities for competitive advantage and should always be aware of the competitors next moves. Benefits of strategic management: According to Grant (2016) there are numerous benefits of strategic management and it consists of recognition, prioritization and examination of opportunities. For example, newer products, new markets and innovations into the business firms are only achievable if firms are indulgent in strategic planning. On the other hand, premeditated administration facilitates a firm to undertake a purposeful view of the activities being performed by it and performing a cost benefit analysis as to whether the firm is conductive business in a profitable manner or not. It is to be noted that one does not mean financial benefit alone but also includes the evaluation of productivity that is concerned with the assessment of the business entity tactically aligning to its aims and objectives. An important point to be considered in this context is that strategic management enables a firm to familiarize itself to its marketplace and customers by ensuring that it realises the right strategies. Benefits of strategic management are listed below; Financial benefits: According to Goetsch and Davis, (2014) it has been learned that business entities that indulge in strategic management are capable of earning more profit and successful than those that does not have the advantage of strategic planning and strategic management. When a firm indulges into forward looking forecast and cautious assessment of their main concern, they have power over the potential outlook, which is essential in the fast changing business landscape of the 21st century. Strategic management concept shows that numerous business fails every year and most of these failures accounts for lack of strategic focus and strategic directions. Furthermore, it is noted that business entities with high performance is likely to create more informed decision because they consider both the aspects of long term and short term consequences and have designed their approach consequently. In contrast to this, business entity that does not indulge them in consequential premeditated forecast are usually beaten down by internal struggle and insufficient focus show the way of failure. Nonfinancial benefits: Under these section tangible benefits of the premeditated administration is discussed. Apart from these benefits, business organisations that indulge in premeditated administration are more conscious of the outside threats, a better understanding of rivals firms strengths and weakness helps in increasing the productivity of the employees (Bradley 2016). Improved understanding leads to lower resistance to transformation and clear understanding of the connections among performance and rewards. The vital elements of strategic management is that it is dilemma solving and problems thwarting capacities of a business entity is improved through implementing premeditated administration. Strategic management is necessary since it helps an organisation to decrease the change and converse the need to modify better to its employees. At last, premeditated administration assists a business firms to bring order and discipline to the activities of the firms in its both internal process and external activities. Closing thoughts: In the modern era, almost all the organisation has understood the vitality of strategic management. However, the important distinction exists amid those who do well and those who does not succeed is the way in which strategic management is performed and strategic planning is executed out by the business entity to create a disparity between success and failures. Nevertheless, there are still business firms that does not engage in premeditated scheduling or where the planners are not offered support by the management. These firms must realise the benefits offered by strategic management and must make sure the long-term feasibility and achievement in the market place. Process of strategic management: The process of strategic management defines the strategy of organisations. It is also defined as the procedure through which the executives make a choice of a set of strategies for the business entity, which will enable them to accomplish better performance. Strategic management is a permanent process that appraises the trade and industries in which the organisation is concerned; evaluates its competitors by fixing the ambitions in order to meet all the current and future competitors and then re-evaluate each strategy. Strategic management process consists of the following steps; 1. Environment scanning: Environmental scanning is defined a process of gathering, inspecting and providing information for the purpose of strategic management. It helps in interior and exterior elements, which influences an organisation (Watson 2013). After carrying out the environmental examination procedure, management must assess it on a regular interval and strive to progress it. 2. Formulation of strategy: Formulation of strategy is the procedure of making a decision best possible act for achieving objective of the organisation and thus, attaining the purpose of the organisation. After performing environment scanning, managers formulate functional strategies of corporate business. 3. Implementation of strategy: Implementation of strategy defines that making the strategy work as desired or placing the organisations selected strategy into the action. Strategy implementation includes designing the structure of business entity, distribution of resources, developing the process of decision making and human resource management. 4. Evaluation of strategy: Evaluation of strategy is the last process of strategy administration. The important strategy assessment activities consists of; judging internal and external aspects that are source of the current strategies employed by the organisation, measuring the performance and taking remedial or corrective actions (Hrebiniak 2013). Evaluations make sure that the organisations strategy as well as the implementations meets the organisational needs and objectives. These mechanisms are steps that are executed in sequential order, when establishing a new tactical plan. Modern day business that has previously established a strategic management plan will relapse to these procedures according to the current state of affairs in order to make the necessary changes. Figure 1 Components of strategic management (Source Kapferer 2012) Components of strategic management procedure: Strategic management is an fragmentary procedure, therefore, it should be realised that each components interrelates with the other elements and that this organisation frequently occurs in chorus. Techniques of strategic management process: Techniques of strategic management process refer to selecting the most suitable route of act for the apprehension of the goals of organisation and objectives and simultaneously accomplishing the vision of business entity. The techniques of strategic management principally consists six main techniques that does not pursue a unbending sequential order however they are very logical and can be effortlessly pursued in the following ways; 1. Setting up the organisational objectives: The important techniques for any type of strategy statement are by setting up the objectives, which are of long term for organisation. It is understood that approach is usually intermediate for attaining the objectives of business entity. Objectives emphasises the stress upon the situation of being there while strategy focuses ahead the procedure of getting there (Langley et al. 2013). Strategy consists of both fixations of both objectives as well as the medium to used to apprehend those objectives. Thus, strategy is broader approach, which considers in the utilisation of resources and achieving the objectives of business entity. 2. Evaluation of business entity environment: The next technique is to determine the universal monetary and industrial surroundings under which an organisational functions. This consists of the business entity competitive situation. It is vital to carry out a qualitative and quantitative re-evaluation of the business firm existing the product line. The objectives of such re-examination are to ensure that techniques, which are significant for competitive success in the market, can be discovered so that the management can recognize their own strength and weakness. After locating the strength and weakness, a business firm must keep a watch on the competitors moves and actions in order to discover likelihood opportunities of threats to its markets and sources of supply. 3. Setting up the quantitative targets: Under these techniques, a business firm should virtually fix the quantitative targets principles for a number of the organisational objectives (Barney and Hesterly 2015). The concept following this is to assess with the long term consumers, so as to assess the contribution that may be made by a variety of merchandise zones or functioning department. 4. Aiming in context with the divisional plans: Under this technique, the contribution made by each of the subdivision or division or merchandise class within the business entity is recognized and appropriate strategies are performed for each sub-unit. This involves a cautious examination of macroeconomic trends. 5. Performance analysis: Performance examination consists of determination and analyzing the opening connecting the planned or required presentation. A significant assessment of the business entity past presentation, current condition and the required future conditions should be performed by the organisations (Morden 2016). This decisive assessment recognizes the amount of gap that exists among the authentic reality and the long-term ambitions of the organisation. An effort is made by the establishment to calculate approximately its possible outlook if the trends persists. 6. Choice of strategy: This is the final techniques in the process of techniques involved in strategic management. The best course of action is actually chooses after considering the goals of the organisation, its strengths and potential limitations along with the external opportunities. Factors influencing the choice of strategy: Strategic management is the methodical procedure of analyzing, co-ordinating and employing decisions and actions plans to accomplish sustainable spirited advantage (Riding and Rayner 2013). There are certain factors, which consist of the management functions, transformation in structure, competition, social-economic factors, laws and technology. Management functions: Alteration in the structure of the administration or the board of directors or exit of the administrative officers influences alteration in strategy. The inward associates of the management team might need to reconsider the present strategies with the objective of enforcing innovative ideas to take the business to improved level. Structural transformations: Structural transformation consists of mergers acquisition and expansion into the global markets, which helps, in necessitating the strategic realignment. Such transformation changes the management, structure of capital and markets structure of business firms, which makes strategic management inevitable (Watson 2013). An organisation should adjust according to the current strategies and formulating new strategies in order to re align the mission and objectives of the organisation. Competition With rise in the competition of the target markets, imperative reassessment of strategies in an effort to improve the competitive benefit has become vital for very business organisations. Business firms employees such strategic tools like SWOT analysis to analyse the strength, weakness, opportunities and threats and change the present strategies (Schilke 2014). For instance, challenges such as simulations of product by the rival firms possess threats to the competitive advantage of a business firms. Altering strategies will enable a business entity to change the course of operations by concentrating on the inherent weakness and threats. Socio-cultural factors: The social and the cultural factors of a business entity must make quick changes in the strategic management process. Every business organisation must ensure that strategic process is realigned to description for the demographic and cultural simulations, particularly while penetrating into the new markets or scheming new products for a particular marketplace sections. Laws: Alteration in regulations such as the tax, environment and healthcare laws influences the procedure of strategic management. An organisation must adjust according to the current needs of their business to integrate the requirement of the new laws. For example if law directs an organisation lower the carbon footprint it may require the review process of production or the supply chain management approach so that it can comply with the new requirements. Technology: A business entity might change its approach due to the accessibility or lack of sufficient technology. The acquirement of capital resources such as mechanical and advanced equipment may enable an organisation to amplify the amount of production in order to adjust to the needs of the supply chain function (Ward and Peppard 2016). Hence, the information technology trends also influence the changes in strategic management. Conclusion: Strategic management is one of the key tools that is available with the management of the organisation to develop the organisational management systems. The report has examined the key elements of strategic management to improve the understanding of managers by placing a major emphasis on the process of strategic decision-making. The volatility of the environment is the circumstances, which hinders the development process by introducing a great deal of uncertainty. 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