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Nature of Strategic Management (Summary)
Nature of Strategic Management (Summary)
Palaca
BSBA OM4
Strategic management can be defined as the art and science of formulating, implementing and
evaluating cross functional decision that enable an organization to achieve the objective or the on-going
process of formulating, implementing and controlling broad plans guide the organizational in achieving
the strategic goods given its internal and external environment. Why is strategic management so
important that it needs to be given attention? Here are the following reasons. First is globalization, global
considerations impact virtually all strategic decisions! The boundaries of countries no longer can define
the limits of our imaginations. To see and appreciate the world from the perspective of others has become
a matter of survival for businesses. The underpinnings of strategic management hinge upon managers'
shareholders, and customers worldwide. The price and quality of a firm's products and services must be
competitive on a worldwide basis, not just a local basis. The distance between the business sectors are
becoming less due to the provisions of certain facilities. Although political boundaries are there but in
Commerce. It is a business tool that has become a vital strategic-management tool. An increasing number
of companies are gaining competitive advantage by using the Internet for direct selling and for
communication with suppliers, customers, creditors, partners, shareholders, clients, and competitors who
may be dispersed globally. It allows firms to sell products, advertise, purchase supplies, bypass
intermediaries, track inventory, eliminate paperwork, and share information. To sum up it minimize the
expense and cumbersomeness of time, distance and space in doing business, which yields better customer
service, greater efficiency, improved products and higher profitability. The Internet and personal
computers are changing the way we organize our lives; inhabit our homes; and relate to and interact with
people and even ourselves. The Internet promotes endless comparison shopping which enables consumers
worldwide to band together to demand discounts. It has transferred power from businesses to individuals
so swiftly that in another decade there may be imposed on groups of consumers. Politicians may one day
debate the need for regulation on consumers rather than on big business because of the Internet's
empowerment of individuals. Buyers used to face big obstacles to getting the best price and service, such
as limited time and data to compare, but now consumers can quickly scan hundreds of vendors offerings.
Or they can go to Web sites such as CompareNet.com that offers detailed information on more than
100,000 consumer products. The Internet has changed the very nature and core of buying and selling in
nearly all industries. It has fundamentally changed the economics of business in every single industry
worldwide. Third is Earth environment has become a major strategic issue. With the demise of
communism and the end of the Cold War, perhaps there is now no greater threat to business and society
than the continuous exploitation and decimation of our natural environment. The resources are scarce but
the wants are unlimited. In order to meet the wants of the world, the resources should be efficiently
utilized. Example would be the use of oil resources or energy resources will make the people to use these
resources for a long time. The study of strategic management integrates different topics. Different courses
are integrated due to the study of this course so that businesses become successful in every sector. It
integrates the following, Marketing Management Finance Research and development the management
and marketing are essential part of a business sectors. They should be integrated. Just like other sections
of the business are integrated under this study. The history of strategic management develops in 1950s.
Due to the detailed planning of the business circumstances it became hit. In 1960s and 70s it was
consider to be panacea for problems. But in 1980s two important revolutions occur in business world.
One is computers, second is mobiles. The invention of these things has decreased the importance of
strategic management. But at the end of 1980, the business involves in computers and mobiles business
realized that they still need to adopt the policies for strategic management. In early time the management
takes institution decisions. But now the management has to take decision by a specific process.
Organizational layers become more complex now a days and management divided into layers.
Environment change also evaluates the strategic management. There are three stages of strategic
consisting of the following strategy formulation (strategy planning), strategy implementations and
strategy evaluation. Strategic formulation means a strategy formulate to execute the business activities.
It includes developing the following, vision and mission (the target of the business), strength and
weakness (strong points of business and also weaknesses) opportunities and threats (these are related with
external environment for the business). It is also concerned with setting long term goals and objectives,
generating alternative strategies to achieve that long term goals and choosing particular strategy to pursue.
The considerations for the best strategy formulation should be as follows, allocation of resources,
business to enter or retain, business to divest or liquidate, joint ventures or mergers, whether to expand or
not, moving into foreign markets and trying to avoid take over. Strategy implementation requires a firm
to establish annual objectives, devise policies, motivating employees and allocate resources so that
formulated strategies can be executed. It includes developing strategy supportive culture, creating an
effective organizational structure, redirecting marketing efforts, preparing budgets, developing and
often called the action stage of strategic management. Implementing means mobilizing employees and
managers in order to put formulated strategies into action. It is often considered to be most difficult stage
of strategic management. It requires personal discipline, commitment and sacrifice. Strategy formulated
but not implemented serve no useful purpose. Strategy evaluation is the final stage in the strategic
management process. Management desperately needs to know when particular strategies are not working
well. It is the primary means for obtaining this information. All strategies are subject to future
modification because external and internal forces are constantly changing. The nature of strategic
management process does not end when the firm decides what strategy or strategies to pursue. There must
be a translation of strategic thought into strategic action. This translation is much easier if managers and
employees of the firm understand the business, feel a part of the company, and through involvement in
strategy-formulation activities have become committed to helping the organization succeed. Without
business. It is beyond the purpose and scope of this text to examine all the business administration
concepts and tools important in strategy implementation. Even the most technically perfect strategic plan
will serve little purpose if it is not implemented. Many organizations tend to spend an inordinate amount
of time, money, and effort on developing the strategic plan, treating the means and circumstances under
which it will be implemented as afterthoughts! Change comes through implementation and evaluation, not
through the plan. A technically imperfect plan that is implemented well will achieve more than the perfect
plan that never gets off the paper on which it is typed. Intuition and analysis Strategic management tries