Introduction - “Strategic Management is the management of an organization’s overall purpose, to ensure that the needs and enablers of the present are balanced with those of the future.” (Witcher & Chau 2010, P.6) In another word, it is the overall management of strategy in order to match and obtain the future long-term purpose and objectives. The main application is to achieve and sustain competitive advantages to enable an organization to compete effectively with rivals which a strategy should be able to create value for that. Strategic management should be carried out and organized by the senior managers and executives of an organization. Importance - It is important since it helps the whole organization’s operation consists with its overall purpose. It also guides the lower-level operations how they develop their own objectives and plans to support senior level’s strategy and provide room for everyone in the firm to report how exactly the firm is running in every detail. It improves internal operations transparency and communication which helps an organization’s consistency to obtain its overall final long-term purpose. To have an effective strategic management in a firm, there is an 11-stages process to follow known as strategic management process as shown below.
Guidelines for management – Strategic Management Process
The first and step is to have a strategic planning which is the overall planning for the process as “how senior managers sequence decision-making achieving longer-term purpose, strategic objectives and overall strategy, and the implementation process.”(Witcher & Chau 2010 P.10) Heineken, the world top Beer Company would be provided as an example for the process. 1.Strategic Purpose
Purpose is what a firm wants to obtain as a whole in long-term and strategic management is the overall management of a firm’s long-term purpose. The importance and three roles of purpose is ‘vision, values and mission’. Vision provides a firm strategy direction for moving to a new position; values build up the whole organizational culture and mission is the business model of what the firm does now. “Heineken's core values – respect, enjoyment and passion for quality – help define our corporate culture and working methods. We believe only by being transparent about our performance and open to the concerns, insights and experiences of others, we can better understand our business environment, which will allow us to identify and face our challenges and opportunities.”(Heineken International) Its vision provides the firm how to perform better and improve in the future. Value is the understanding and expectations that describe how the people in the firm behave and Heineken’s values are the fundamental of the way it does business nowadays which the whole firm follows.
Purpose must be translated into a set of SMART strategic objectives which are the indicators on a firm’s long-term effectiveness in managing purpose. It requires the balance and consistency between short-term and long-term focus. Balanced scorecard is a tool to help firms measuring strategic objectives associated critical success factors (CSFs) to manage core activities to improve overall performance and achieve objectives. From Heineken International, it also has nine CSFs to follow and monitor the current performance. They are rule of law, quality, behavior, employees, conflicts of interest, competition, corruption, environmental issues and compliance. The firm measures these nine areas on how well the company is performing on each and keeps improving in order to fulfill its business and corporate responsibility and build the future.
3.Analysis: External Environment
An analysis on a firm’s external environment is very important for strategic management since it changes constantly and external changes influence intensity of competition. Organizations need to monitor and review strategy continually according...