Concept of Strategic Management and its Characteristics
Strategic management is a process that involves strategy formulation and implementation efforts that result in positive outcomes. It is the combination of managerial commitments, decisions, and actions required for a firm to achieve competitive advantage.
The first step in the process of strategic management is to analyze the external environment of an organization to assess the likely opportunities and threats. Simultaneously, the internal environment is analyzed to determine resources, capabilities, and core competencies. With this information, the firm develops its vision and mission and formulates one or more strategies. This process is maintained as ever-changing markets.
Hence, strategic management includes activities such as resource allocation, environmental analysis, and preparing the organization for change.
Strategic management is uncertain as it operates in an uncertain environment. It is complex as the uncertainty results in complexity. It covers the whole organization and is fundamentally based on long-run performance improvement.
“Strategic Management is a set of managerial decisions and actions that determine the long-run performance of an organization.” -Wheelen and Hunger
“Strategic management includes understanding the strategic position of an organization, strategic choices for the future and turning strategy into actions.” -Johnson and Scholes”
“The strategic management process is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.” Hitt, Ireland, and Hoskisson
In this way, it can be concluded that strategic management is the effective management of strategy from its formulation to implementation aiming for competitive advantage for the enhancement of long-term performance of an organization.
Characteristics of Strategic Management and Operational Management
| Strategic Management | Operational Management |
| 1. Ambiguous/Uncertain | 1. Routinized |
| 2. Complex | 2. Operationally specific |
| 3. Organization-wide, | 3. Short-term implications |
| 4. Fundamental | |
| 5. Long-term implications |
Frequently Asked Questions
What is Strategic Management?
A set of decisions and actions related to formulation, implementation, and control of strategy.
Characteristics of Strategic Management
1. Ambiguous/uncertain,
2. Complex,
3. Organization-wide,
4. Fundamental,
5. Long-term implications.
Characteristics of Operational Management
1. Routinized,
2. Operationally specific,
3. Short-term implications.
