What Is Strategic Management? Approaches, Benefits, and Careers

Strategic management involves identifying and implementing a company's resources to successfully achieve its business goals. Strategic management is also a skill you can develop as well as a standard course of study in any graduate business degree program.

In this article, you will learn all about strategic management, including approaches, processes, and possible careers. Afterward, if you'd like to develop your skills in strategic management, consider enrolling in the University of Illinois' Strategic Leadership and Management Specialization, where you'll learn about fundamental tools to analyze key business situations.

What is strategic management?

Strategic management involves developing and implementing plans to help a company achieve its business objectives. This can include building an annual strategy, planning organizational structure and resource allocation, leading change initiatives, and controlling processes and resources. 

Strategic planning involves identifying business challenges, choosing the best strategy, monitoring progress, and then making adjustments to the executed strategy to improve performance. Tools like SWOT (strengths, weaknesses, opportunities, and threats) analysis are used to assess where opportunities and threats lie between the organization, its competition, and the overall market.

Strategic management happens at broader levels, like organization-wide leadership, but it can also be implemented at a department- or team-level.

Read more: The Change Management Process: What Is It and Who Is It For?

Benefits of strategic management

The strategic management process helps a company's leadership plan for the future. With that big picture in mind, they can set a roadmap that includes actionable steps to help employees see where they're going and understand how to get there in the most efficient and cost-effective manner.

Because it's iterative, a strategic plan can (and should) be continuously evaluated and adjusted as the market outlook changes.

Some of the financial benefits of strategic management include:

• Increase market share and profitability.

• Prevent legal risk.

• Improve revenue and cash flow.

Some of the non-financial benefits of strategic management include:

• Relieves the board of directors of responsibilities.

• Allows for an objective review and assessment.

• Enables an organization to measure progress throughout time.

• Provides a big-picture perspective of the organization's future.

Approaches to strategic management

There are two main approaches to strategic management: prescriptive and descriptive. Let's review the difference.

• A prescriptive approach to strategic management focuses on how strategies should be developed. The prescriptive model is more top-down and based on SWOT analysis.

• A descriptive approach focuses on how strategies should be implemented. The descriptive model is guided more by experimenting with different methods to find solutions and learning from experience. It applies Agile methodology to strategic management.

Types of strategy

One way of thinking about strategic management is to classify the management focus into three types of strategy:

• Business strategy is a high-level plan where you outline how your organization will achieve its objectives.

• Operational strategies are much more specific plans where you detail what actions to take to achieve the desired results.

• Transformational strategies involve making radical changes to your organization to achieve significant improvements.

5 steps of the strategic management process

It's common to view the strategic management process as five steps: identification, analysis, formation, execution, and evaluation.

1. Define the direction.

The initial stage of the strategic management process involves identifying the direction and specific goals and determining what needs to happen to achieve them.

2. Analyze the current situation.

The second step is analysis and research. By using tools like SWOT analysis and examining the organization's resources, including budget, time, staff, and more, you'll gain a better understanding of how to leverage what's working and eliminate what's not.

3. Outline the strategy and plan of action.

Next is formulating a strategy and plan of action based on situational analysis. This step involves crafting a specific and realistic plan to help the organization achieve its goals.

4. Execute the plan.

Executing the plan is the fourth step in the strategic management process. This step involves implementing the plan and monitoring its progress. If you take a more descriptive approach to strategy, you may have to adjust the plan as circumstances change.

5. Evaluate the plan.

Evaluation is the fifth and final step in the strategic management process. Here, you'll assess whether the organization has achieved its goals. If not, you can adjust your plan and implement it in innovative ways. Feedback and analysis are essential to evaluating and preparing for an optimal business future.

Here's a video on OKR (objectives and key results), an important process in strategic management:

2 examples of strategic management in practice

Below, we've summarized two examples of strategic management in action.

1. Implementing and overhauling information systems and technology

Let's say Company A is a startup that has been scaling rapidly. They hired a strategy consultant to come in and conduct an audit. The consultant finds that the company is paying for apps and tools that it doesn't use. They conduct survey research to understand employee needs and compile a list of 20 apps (out of 100) that can be discontinued with little negative impact. After implementation, the company surveys employees again in two months to gauge their needs. Overall it turned out to be an efficient, cost-cutting strategy.

2. Shifting resources (budget) toward more successful revenue streams

Company B's Chief Marketing Officer asked its department to assess its brand marketing strategy. The head of marketing found that their email marketing efforts were generating more conversions than any other channel, so they diverted some of their print budget toward investing in expanding the email marketing team. The email marketing team developed a strategy and plan to reach new audience segments. After six months, more budget was shifted toward email to support the program's success.

Careers that apply strategic management

To a varying extent, strategy is necessary for many management and leadership roles across all industries. However, strategic management is slightly different since it involves managing the evolution of strategies that are important to an organization's success. These are a few careers that apply strategic management as a core part of the role:

• Management consultant

• Corporate strategy advisor

• Business analyst

• Strategy manager

• Business development manager

• Entrepreneur

What industries use strategic management?

Strategy managers, and roles that use the strategic management framework, such as management consultants, may work in different industries. Companies seek out strategic management professionals because they deeply understand business, finance, corporate planning, and more. Sectors may include: finance, insurance, technology, public administration, manufacturing, health care, government, and more.

Build your strategic management skills with Coursera

A career in strategic management can be challenging and rewarding, offering a unique perspective on how businesses operate. Build or advance your skill set in this area from industry leaders and esteemed university partners on Coursera.

• Get comfortable with the many factors that go into a successful business strategy with the University of Virginia's Business Strategy Specialization.

• Gain a firm foundation in successful management strategies with the University of Illinois' Strategic Leadership and Management Specialization.

• Build a strong skill set with the IBM Business Analyst Professional Certificate.