Strategic management comprises of two words strategy and Management. Simply put, Strategy is a company’s game plan. Strategy can be defined as large-scale, future-oriented plans for inter-acting with the competitive environment to achieve company objectives while management is defined as the act of getting activities completed efficiently and effectively with and through other peoples. Strategic Management can therefore be defined as the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives. This process therefore comprises of three critical tasks and they are as follows:
* Design the company’s mission, vision, purpose, philosophy and goals. * Conduct an analysis that reflects the company’s internal conditions and capabilities. * Comparison of the company’s resources with the external environment. * Identification of the most desirable options by evaluating each point in light of the company’s mission. * Choose a set of long-term objectives and strategies that will achieve the most desired options. * Develop annual objectives and short-term strategies that are relevant to the selected set of long term objectives and strategies * Implementation of these chosen strategies with the allocations budgeted not forgetting the emphasis of tasks, people, structure, technology and rewards systems. * Evaluation of the success of the strategic process a s an input and reference for future use in decision making process. Looking at these nine tasks, strategic management involves: Planning, Organizing, Directing, Communicating and Controlling of a company’s strategy-related decisions and actions. LEVELS OF STRATEGY
In a firm, the decision-making hierarchy comprises of three levels: The Corporate Level: This is the level that tops the hierarchy of a firm. It is principally composed of the board of directors, chief executives and the administrative officers. They are responsible for the achievement of the firm’s financial and non-financial goals such as fulfilling the social responsibilities of the company. The Business Level: This fall in the middle of the hierarchy. It is principally composed of business and corporate managers; they translate the statements of direction and intent generated from the corporate level into concrete objectives and strategies for individual business divisions. The Functional Level: This is the lowest of the decision-making hierarchy and it comprises of managers of product, geographic and managers. Their principal responsibility is to implement and execute the firm’s strategic plans.
CHARACTERISTICS OF STRATEGIC MANAGEMENT DECISIONS
* At the corporate level, strategic decisions tend to be more value-oriented, more conceptual and less concrete than decisions at the business or functional level. * Corporate level decisions are characterized by greater risk, cost, profit potential, greater need for flexibility and longer time horizons. * Functional-level decisions implement the overall strategy formulated at the corporate and business levels. They involve action-oriented operations which are short range and low risk. * Functional level decisions receive critical attention and analysis due to its relatively concrete and quantifiable nature. * Business-level decisions help bridge decisions at the corporate and functional level. Such decisions are less costly, risky and potentially profitable than corporate level decisions but they are more costly, risky and potentially profitable than functional level decisions. * Common business level decisions include decisions on plant location, marketing segmentation and geographic location, and distribution channels.
THE STRATEGY MAKERS
The ideal strategy management team includes decision makers from all the three company levels (the corporate, business and functional) the CEO, the product managers and the...