A correct strategy can simplify the complexity of business equations. When you work on a pre-planned strategy, you stay more confident and organize while performing any task. This assures that you can meet your target in the desired time limit.
Before digging the advanced bricks in it, let us first understand what exactly strategic management is all about.
Strategic management is based upon analyzing the major initiatives taken by the top brass of the company on behalf of its owners. The professionals practicing strategic management have their involvement into resources and internal & external company matters. It entails specifying the following major aspects related to the company-
1. Organization’s mission,
3. Objectives, developing policies and plans, usually in terms of projects and programs, which are designed to achieve these objectives, and
4. Allocation of resources to implement the policies and plans, projects and programs.
Importance of Strategic Management in business –
• Strategic management helps you to identify the potential of each individual in the organization, so that, you can help them in improving and bring out the best in them to benefit the organization. With this, the level of alertness among the employees increases ensuring fast and effective completion of the objectives or targets.
• It determines the long run performance of the organization by keeping a check on the internal and external elements to affect the growth of the organization.
• It makes you a pro in utilizing limited resources to their maximum efficiency and make maximum profit out of them to increase the profitability of your business.
Approaches to Strategic management –
Approaches to strategic management can be classified into following three major categories –
• In the bottom-up approach, employees submit proposals to their managers who funnel the best ideas up the ladder. It’s usually a part of capital budgeting procedure, in which, proposals are based upon financial benefits. Hence, approved proposals under this kind of management form the substance of the business strategy.
• The top-down approach is widely popular and practiced so far. In this, the top brass of the company, the CEO and the Board of Directors take decisions regarding the growth direction for the company. The strategy flows down and each employee works on the same.
• There is a third method of strategy formation which is collaborative techniques. It generates new ideas in the process leveraging advances in information technology. Collaborative management believes in common goals between management and employees and emphasizes the use of knowledge management systems to share information and create common goals.
Recent trends in Strategic management –
Currently, two management theories are greatly being practiced all across the globe-
1. Theory Z management (Ouchi’s Theory)
2. Achieving Excellence
• The Theory Z management is created by a careful analysis of the success of Japanese Organizations. The theory is widely being practiced in the world everywhere. Z. Ouchi’s theory is based upon seven parameters related to employees, evaluation, responsibilities and control mechanism etc. These parameters also define the basic principle differences between Japanese and American Companies.
• Achieving Excellence is a theory which is developed by Peter and Waterman depending upon eight basic principles of excellent companies, which lays emphasis on the value system, action-driven working, simple structure and lean staff etc.
Future of strategic management –
Strategies play a pivotal role in taking an organization ahead. Strategic management becomes a serious concern for companies in an increasingly competitive environment. It broadens the horizon of imagination and innovation for an organization and makes it stand unique with respect to work, services, and performance. No doubt strategic management secures a great future in the rapidly advancing scenario. Companies are always in dire need of creative minds to draft the blueprint for success to them.