The strategy defines the long term goals of the business. Strategic management provides overall direction to the enterprise. It is the identification of the purpose of the organization and the plans and tactics required to achieve the defined strategy.
According to Wikipedia, Strategic management defines the major initiatives taken by a company’s top management on behalf of owners, involving resources and performance in internal and external environments. It includes specifying the mission, vision and objectives and developing policies and plans designed to achieve these objectives, and allocating resources to implement the policies and plans, projects and programs.
Strategic management is an ongoing process that evaluates and controls the business in which the company is involved.
It used to be the case that businesses had a one year plan, including a budget, a five year plan and a ten year plan .These defined the medium and long term goals of the company and were the strategic plan.
In today’s fast developing world, a five and ten year plan may be unrealistic – who knows what changes technological developments will have wreaked in five or ten years? So this timescale is often “telescoped “into a shorter, more appropriate, time frame to enable the strategy to be reviewed frequently.
Strategy should be reassessed regularly, perhaps annually or quarterly, to review how it has been implemented, whether it is successful or needs to be replaced by an updated strategy to meet changed economic factors, new technology, new competitors, or a new social, financial, or political environment.
Without a clear strategic vision it is extremely difficult to effectively manage, change or develop a business. Any decisions made by the management team will be entirely arbitrary without a clear Strategy, with no way to align decisions with the strategy. Decisions may be made that take the company in the wrong direction in the short term.
Well run businesses establish and review Strategy on a regular basis to ensure it fits with all external and internal factors.
Employee motivation is linked to the ability of the management team to create a Strategy and communicate it throughout the organization frequently.
Management should ensure that the current Strategy or strategic direction is embodied into the culture of their businesses and clearly understood by their employees, who are then engaged in the business and more understanding and supportive of the tactical decisions or steps taken by the management team to deliver the Strategy.
Many industrial relations disputes result from a lack of openness by the management team and lack of understanding of the motives of the managers. Communication of the Strategy and tactical plans to deliver the Strategy are critical. It is important to simplify the Strategy so that it can be clearly communicated and understood at all levels, from the boardroom to the most junior staff.
In reality Strategy is most often reviewed when a business is undergoing a change in the circumstances around it, such as a merger or acquisition or investing in new plant or machinery.
If your company is starting out, developing your business strategy will be part of the business planning exercise, and there will be uncertainty about the future prospects of the business.
Be realistic about sales targets and forecasts, and build in contingencies where cash-flow is concerned.
Success in business has much to do with having a vision, strong focus, and having some idea of the direction you need to take to realize the goals and vision.
Many companies compose short concise mission statements that claim to be their “vision, mission and values”. Sometimes these are so clichéd that they are ineffective, and so ambiguous that it is impossible to measure if the business is achieving their goals.
Having a strong vision is one thing, but to achieve growth and success, you need a team who share your passion and your dream. Successful leaders are the ones who can communicate their vision and mission to their followers, colleagues who will then support them to achieve the goals.
Turning a dream into reality needs a strategy, and a plan to drive the business forward. It will incorporate the approach you are going to take for every aspect of your business and define which products and services you are going to offer and how you are going to deliver them.
Most businesses will need a Business Strategy, and, if your company is large enough, this will flow into individual strategies for each of the business functions. The most common of these is a Marketing Strategy.
This will consider corporate identity and branding, products and markets, customer profile, pricing policy, online presence and marketing strategy, social media strategy, marketing campaigns
The business strategy needs to address the key issues of the business;-
Are we positioned to benefit from new technologies?
When a company is established there is usually a clear vision of its objectives, but as time goes by this evolves. The company may still have the same ambitions, but the vision may have changed as it evolves and grows and technology changes around the business. The plan should consider both the present and the future – what would success look like this time next year?
This is probably the most important role of the executive today. To stand still, even for an instant, is to be left behind as all around you move forward at speed to exploit new and developing technologies.
Corporate Social Responsibility
A business needs to be profitable to invest in growth and innovation, but companies should have a corporate social responsibility theme in their strategy. What does the business really care about? What principles are important to its owners and management?
What can we contribute to the world?
Presumably customers want our products or services. Market research needs to be undertaken regularly to check what consumers really value, how much are they prepared to pay for it, and what they would prefer to experience. Can the company do it better, greener, cleaner, more ethically?
Are we compromising?
Does the company’s vision clash with achieving other goals, such as achieving profit, or ensuring employment .Perhaps short term sacrifices need to be made to achieve the long-term vision.
Are we all in this together?
Is everyone on your team on board with the same belief in the vision? Are they committed, do they understand what they have to contribute? It’s important to listen to everyone to ensure the business stays on track to achieve its goals.