Discover what strategic management is, its benefits to an organisation, the five-step process, and careers to choose from.
Strategic management is the process of defining and implementing procedures and objectives that set a company apart from its competition. Strategic management is also a skill you can develop as you gain experience and adopt a strategic mindset. Considered part of business acumen, it can also apply to fields like non-profit, government, and the public sector.
Read on to gain further insight into strategic management, including its benefits, process, career paths, and steps for becoming a strategy manager.
Strategic management involves developing and implementing plans to help an organisation achieve its goals and objectives. This process can include formulating strategy, planning organisational 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 adjusting the executed strategy to improve performance. It involves using tools like SWOT (strengths, weaknesses, opportunities, and threats) analysis to assess where opportunities and threats lie between the organisation, its competition, and the overall market.
Strategic management happens at broader levels, such as organisation-wide leadership, but it also works at a department or team level.
The two main approaches to strategic management are prescriptive and descriptive. A prescriptive approach focuses on developing strategies, while a descriptive approach focuses on implementing them. The prescriptive model is more top-down and based on SWOT analysis. The descriptive model is more guided by experimenting with different methods to find solutions and learning from experience. It applies Agile methodology to strategic management.
One way of thinking about strategic management is to classify the management focus into three types of strategy: Business, operational, and transformational.
• Business strategies are high-level plans outlining how your organisation 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 radically changing your organisation to achieve significant improvements.
The strategic management process helps an organisation's leadership plan for its future goals. Setting a roadmap and actionable plan ensures that employees and leaders know where they're going and how to get there most efficiently and cost-effectively. It is a work in progress, so stakeholders should continuously evaluate and adjust strategic plans as the market outlook changes. The tangible and non-tangible benefits of implementing strategic management are as follows:
Financial benefits:
Increases market share and profitability
Prevents legal risk
Improves revenue and cash flow
Non-financial benefits:
Relieves the board of directors of responsibilities
Allows for an objective review and assessment
Enables an organisation to measure progress throughout time
Provides a big-picture perspective of the organisation's future
It's common to view the strategic management process as five steps: identification, analysis, formation, execution, and evaluation.
The initial stage of the strategic management process involves identifying the direction and specific goals and determining what needs to happen to achieve them.
The second step is analysis and research. Using tools like SWOT analysis and examining the organisation's resources, including budget, time, people (staff), and more, you'll better understand how to leverage what's working and eliminate what's not.
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 organisation achieve its goals.
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.
Evaluation is the fifth and final step in the strategic management process. Here, you'll assess whether the organisation has achieved its goals. If not, you can adjust your plan and implement it innovatively. 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:
The following examples illustrate practical applications of strategic management principles in real-world scenarios, emphasising their impact on organisational efficiency, competitiveness, and profitability.
Implementing and overhauling information systems and technology
Suppose 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 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.
Shifting resources (budget) towards 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 generated more conversions than any other channel, so they diverted some of their print budgets towards 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 towards email to support the programme's success.
To some extent, strategy is necessary for plenty of management and leadership roles in nearly any industry. But, strategic management is slightly different since it involves managing the evolution of important strategies to an organisation's bottom line. 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
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, etc. As of July 2024, the average base salary for strategy managers in India is ₹23,00,000 annually [1].
Strategic management entails the effective allocation of resources, evaluation of internal and external dynamics that may impact organisational processes, and creation of strategies aimed at achieving predefined goals. You may find a career in strategic management stimulating and rewarding, offering a unique perspective on how businesses operate. If you're ready to take the next step in a career in strategic management, you might consider the Strategic Management and Innovation Specialisation offered by the Copenhagen Business School on Coursera.
Glassdoor. “Strategy Manager Salaries in India, https://www.glassdoor.co.in/Salaries/strategy-manager-salary-SRCH_KO0,16.htm.” Accessed 24 July 2024.
Editorial Team
Coursera’s editorial team is comprised of highly experienced professional editors, writers, and fact...
This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.