Strategic management is an integral part of the management process of any organization. It allows you to make decisions not on the basis of the current situation, but predicting certain events. For this, various analytical methods are used that provide managers with the necessary information. There are many models of strategic management. They will be discussed later.
General definition
The management strategy is based on the potential possessed by the company's employees as its basis. This type of management allows you to flexibly respond to changing environmental conditions in which the organization operates. Strategic management is carried out by almost any company. This process allows you to get competitive advantages, improve your financial stability, profitability of production in the long term.
Such management allows us to achieve the goals set by the company, to ensure the fulfillment of our interests in the future. This has a positive effect on all indicators of the organization, so that it can survive, take the best position in the market.
Object and subject
The object of strategic management can be organizations of different levels and types, their individual business units, as well as functional areas. The subject of long-term management are the problems that arise when achieving the main goals of the company. It can also be issues that are related to external uncontrolled factors affecting the organization. The subject of management may be problems that are associated with some elements of the organization to achieve the goals.
Management strategy is a system that includes different areas of management. They may relate to production technology, personnel management, organizational issues, etc. The strategy allows you to plan in advance the company’s actions for changes in the external environment to achieve the desired performance.
Strategic planning and management answer three important questions. This allows you to determine what position the company currently occupies in the market and what place it would like to occupy in a few months, years. Strategic management also allows you to choose the ways in which the company could achieve the desired results.
Essence and Functions
The management technology that the organization’s management applies is selected based on an assessment of the resources existing in the company. The essence of strategic management is to create a well-thought-out long-term action plan, as well as its gradual implementation. For this, constant monitoring and evaluation of changes in the company’s activities is carried out. The external environment is unstable, therefore, it is necessary to carefully monitor its changes.
Management technology identifies 5 core functions for strategic management. These include long-term planning, organizing the implementation of goals, and coordinating the actions of responsible employees to accomplish tasks. At the same time, all personnel are motivated to achieve their plans. The last stage of strategic management is monitoring the implementation of strategic tasks.
At the same time, the process of long-term planning is accompanied by activities such as forecasting, developing a strategy, as well as identifying resources for its implementation (budgeting).
For this, a deep analysis of various economic indicators is carried out both inside and outside the organization. Considering them in dynamics, understanding the causes of changes in various parameters allows us to predict their changes in the future. Having determined the factors holding back the development, assessing its own position in the market, identifying ways to gain a competitive advantage, the company is developing a system of actions in the future. This allows you to choose a reasonable plan of action to achieve the main goals of the organization.
The essence of strategic management involves the application of three variables. This is the time (for what perspective the forecast is made), magnitude (quantitative expression of future changes) and direction (where development trends are directed).
Targets and goals
Choosing a goal in the process of creating a simulation of an organization’s strategy is one of the most important steps. This allows you to set the line in front of the company, the line to which it seeks. The goal of strategic management is to ensure competitiveness not only at the moment, but also in the future, in a changing environment.
To solve this goal, the company sets itself several tasks. These are the steps that lead to the achievement of the desired result. There are certain stages of strategic management. So, the organization must first form a vision for the future and develop its mission. The following is a global goal selection. Only then is a corporate strategy developed. It is aimed at achieving the goal. All actions are divided into stages. These are tasks that the manager entrusts to his employees to obtain the desired end result.
After creating the concept of development of the organization in the long term, it is implemented in the production and other processes that occur at the enterprise. In the course of fulfilling the tasks assigned, the management constantly monitors the quality and completeness of the tasks assigned to employees. It also evaluates the organization’s movement toward the goal. If necessary, make the necessary adjustments.
When developing the concept of strategic management, a number of statements are taken into account. The whole management process is based on them. Each organization is a complex economic and social system. She possesses certain traits that are unique to her. It should be borne in mind that any company is an open system. It is exposed to various external factors. Therefore, it must quickly adapt to constantly changing environmental conditions.
In a market economy, any company seeks to achieve its goals and gain competitive advantage. Therefore, you can not consider your organization separately from other players and market participants. Since each organization is unique, it is required to set goals to achieve the set goals, taking into account its features.
Thompson Model
In the process of development and establishment of the business, an understanding of the need for management activities, taking into account the constant changes in the environment, gradually developed. As a result, many models of strategic management appeared that described the mechanism for conducting strategic management. There are many similar concepts that have been applied in the past and exist today.
Thompson's strategic management model was very popular. This is one of the most detailed concepts that allows you to understand the sequence of the management process in the long term. This model reflects 4 main elements that, according to Thompson, allow you to complete the process of building company plans correctly. These components include strategic analysis, selection, implementation and monitoring.
Thompson proposed to consider the strategic management process as a dynamic community of stages that are interconnected and logically replace one another. Between each of them there is a certain logical connection. Each of these steps affects each other and the entire management process.
Other models
The model of strategic management was developed by other well-known economists. So, one of the possible views on this process is the Lynch approach. He represented the control model in two versions. The first approach did not differ from the universal method proposed by Thompson. The second approach is flexible monitoring in the development and implementation of strategic plans.
David's model includes 3 stages of management. According to this concept, a strategy is first formulated, then it is implemented. After that, an assessment of the results.
Rational model
Modern management tools allow the organization to be sensitive to changing conditions and adjust its activities. This significantly increases the qualitative and quantitative indicators of the organization. Modern concepts of strategic management are based on the classical approach to the implementation of this process. This is a rational model.
The presented concept is based on accurate and thorough research and development of the company's long-term plans. Strategic management, according to the presented approach, is carried out in 3 stages. These include strategic analysis, selection and implementation.
Each of these steps is important for choosing the right course of action. The analysis stage involves an awareness of the organization’s mission. At this stage, a vision of the direction and speed of development of the company is formed. Based on the decisions made at this stage, goals are formed. The process of their determination is based on the analysis of both external and internal environmental factors, as well as on a consolidated determination of the company's position in the market.
Strategic alternatives are formed at the selection stage. Each direction of travel is evaluated. After that, a decision is made on choosing the most rational development option.
The implementation stage is to transfer goals and objectives to the lower levels of management and the implementation of developed programs. At this stage, key indicators are determined that will be analyzed in the operational planning process.
Advantages and disadvantages of a rational model
Strategic management of personnel, production, finances and other components of the organization's activities can be carried out using different approaches. The rational model is one of the most famous and sought after today. She has both advantages and disadvantages.
The positive qualities of the presented model include its focus on corporate priorities. The transfer system of goals is developed at the highest level, and then the concept is transferred from top to bottom. The strategic planning process in this case becomes objective and transparent. In this case, all levels of management become involved in the process of designing and implementing the strategy.
The disadvantage of a rational model is its lack of flexibility. Significant efforts are required to develop a carefully thought-out strategy at all levels. This strategic management system is time consuming. It may simply not be enough to make adequate decisions in a timely manner.
It is because of these shortcomings that alternative approaches have been developed. They are more flexible. This allows you to quickly respond to all changes in the market environment and within the organization itself.
Alternative models
Choosing from a variety of options for administrative management methods, management may prefer alternative models of forming the organization’s strategy. Such approaches are based on the fact that the choice of areas of activity of the company is based not only on a thorough elaboration of plans.
Alternative strategies are divided into 2 types. The first group includes concepts that are based on strategic analysis data. Based on a specific list of coefficients, it turns out to carry out the planning procedure. This group of models is based on a rational approach. Further, after analysis and forecasting, several strategic plans are built. However, only one of them is being implemented.
The second type of model includes urgent strategies. They are not planned. Therefore, such models are not among strategic alternatives. In the course of its activities, the company may encounter unforeseen circumstances that significantly affect the achievement of the company's goals.
The second type of models does not emerge from the directives of the manual, but from the behavior of subordinate structures. This allows you to quickly respond to rapidly changing environmental conditions.
In the context of real production, managers use various management tools that they choose based on thoughtful and urgent strategies. Each of the above methods for the development and implementation of plans complements one another. The ratio of the elements of each model is determined by the characteristics of the functioning of the company, the external conditions of its environment.
Stages of model formation
The strategic management of personnel, production or the general direction of the organization goes through a certain process of formation. It takes place in several stages. At the initial stage of developing a management model, a period is determined for which the goal should be achieved.
After that, a thorough study of the environment, as well as the internal financial capabilities of the organization. Based on the information collected, an assessment of the strengths, weaknesses of the company is carried out. This determines the features of his financial activities. Reserves and opportunities for further development are also determined, and possible risks are assessed.
After that, the financial position of the organization is evaluated. They approach this process comprehensively. Only then can strategic goals be formed. The company seeks to increase its wealth, maximize its market value.
Next, the development of strategic standards in accordance with the goals. Among the many alternatives, the most optimal directions are chosen. Next, the effectiveness of the developed strategy is evaluated.
After this, conditions are created for the implementation of the created plan, optimal administrative methods for regulating and delivering information to lower structures are selected. Monitoring of the implementation of the tasks, their compliance with the main goal.
Having considered the features of the formation and application of strategic management models, you can not only understand the importance of such planning, but also the prospects that the application of such approaches opens up for any organization. Modern methods and technologies for conducting this process allow the organization to quickly respond to the changing state of the environment.