In the 20o1 movie Lagaan, when Bhuvan’s team won against the British in a game of cricket, they not only showed great teamwork but also a strategic approach. In life, we need effective strategies to meet our goals. Similarly, organizations need a strategic management process in place to survive in a dynamic world—full of social, economic, political and technical changes.
Several theories and models of strategic management have emerged over time, each instrumental in informing organizations how to plan for growth and profitability. Before we look at any strategic management process model, let’s understand the meaning and importance of strategic management first.
What Do You Mean By Strategic Management?
Strategic management is a process by which managers create and implement a strategy that’s instrumental in driving growth and competitive advantage in the market. It’s an important step in the management process as it helps you develop a sustainable business model. It helps you set organizational goals, perform a competitive analysis, reflect on an organization’s internal structure and evaluate current strategies.
The need for strategic management can be understood by looking toward the future of a company. Management is responsible for planning and preparing for continuous changes to navigate any undesirable situation. A clear and focused effort by upper management goes a long way in calibrating internal strengths with external deviations. Even the most basic model of strategic management can help businesses keep pace with internal and external changes.
If you’re a manager or leader, here’s why you should focus your efforts on creating an effective strategic management process model:
- You’ll be able to tap into opportunities and identify strengths and weaknesses by studying the internal structure of your organization. Within every team, there’s unrealized potential that needs your attention.
- A business environment is dynamic and fast-paced. By evolving and adapting your strategies, you can keep abreast of vital changes in the business sphere. Goal-setting is a key element while preparing for the future.
- You can reflect on your organization’s internal structure and make changes wherever you feel necessary. Only a strong organizational structure can endure testing times.
Let’s explore the importance of strategic management in greater detail through different models of strategic management.
What Are The Various Models Of Strategic Management?
Constructing a strategic vision with long-term objectives in mind is useful for achieving organizational goals. Consider these models of strategic management while creating your future-ready plan:
1. SWOT Analysis Model
A basic model of strategic management, SWOT stands for Strengths, Weaknesses, Opportunities and Threats. This technique is instrumental in determining growth strategies. By gauging available opportunities and addressing weaknesses, organizations can leverage strengths and circumvent threats. By utilizing this basic model of strategic management, organizations can gain a competitive advantage over others.
2. PEST Model
This type of business model in strategic management is a macro-level plan that helps organizations assess future changes based on four factors—Political, Economic, Social and Technological. It helps you analyze market growth, standing and position with respect to your competitors and customers in addition to assessing growth strategies to expand your business. It helps you strategize based on different geographies, demographics and products/services.
3. Porter’s Five Forces Model
According to Porter’s Five Forces Model, there are five forces that can strengthen or weaken your organization’s position in the market. These are industry competition, new entrants in the market, supplier power, buyer power and threat of substitutes. This model helps in assessing an organization’s competitive environment. You can create, modify and update your business strategy based on these five competitive forces.
Putting The Models Of Strategic Management To Use
If you want to make the most of the various models of strategic management, you need to create a plan that’ll aid the process. Set short-term and long-term goals as they form the basis of strategic management. Gather and assess data to identify trends and potential problems. The next step is to formulate the strategy. The penultimate step is to implement it and finally, you need to evaluate it. By tracking your progress, you can make necessary revisions.
The purpose of strategic management is to endure uncertainties and accomplish goals despite challenges. It requires you to think critically and make important decisions in the process. Harappa’s Making Decisions course will teach you how to process, reflect and include multiple perspectives for informed decision-making. Frameworks such as Good Decision Process and The PRISM framework will help you seek multiple viewpoints on situations before making final decisions. Try Harappa and become an effective decision-maker!
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