Imagine there are 2 people A and B. Both are employed with corporations but have a dream to start their own business. Person A has ideated the business proposition, identified the resources, chalked out the customer demographic and is already in talks with certain investors. Person B has a somewhat vague idea of what the business will be, and is in the middle of conducting market research, but that’s about it. Now imagine if they both leave their current jobs to pursue their own business. Who do you think will have a greater chance of succeeding? In all probability, it will be person A. Why? Person A has already sprung into action and carefully strategized, and managed his plans. This is what strategic management is all about. Let’s dive more into it.
What Is Strategic Management?
Every organization has certain end goals or objectives. These are usually in line with the organization’s capabilities, growth plans, as well as the industry. Simply formulating these goals isn’t enough—you also need a strategy to achieve them. Strategic management is how you go about handling this strategy.
So, how does a team get things done? The first logical step is to chalk out strategic management objectives. Begin by discussing the reason why the organization exists.
Strategic Management Objectives
Strategic management objectives define an organization’s big picture, and outline how it aims to achieve its mission. For example, the mission of McDonald’s is to serve delicious yet economical food that appeals to everyone. They formulate a strategy every year to improve food quality, increase the variety, and gain a competitive advantage. So, one of their strategic management objectives could be to introduce five new items on the menu to capture more customers, and offer customer delight.
The phrase ‘strategic management goals‘ is often used interchangeably with ‘strategic management objectives’. However, the former denotes what the organization desires and can be vague. In contrast, strategic management objectives are more specific and concrete.
The popular Netflix show Money Heist is a great example of strategic management. Having defined the objective—pulling off the greatest heist in history—the mastermind Professor spends a great deal of time and effort to handpick a team, hypothesize different scenarios, and train the team for every possible situation. Along the way, he carefully monitors their every move and improvises when needed.
Purpose Of Strategic Management
Strategic management is practiced to reap benefits from the normal course of business. What could possibly distinguish a small-scale company from a large, reputed company? Their strategic management practices. Big organizations are usually very clear about their objectives and the goals of strategic management. These could be:
Gaining competitive advantage
A carefully crafted strategy, and its management will enable an organization to become proactive rather than reactive. The organization can then anticipate crises and be ready to resolve them.
Achieving sustained growth
Strategic management increases efficiency and productivity, leading to sustained growth over time.
Raising managerial awareness
Formulating and implementing strategies involves managers more keenly with the organization, and keeps them updated with industry trends. This is useful when responding to industry disruptions.
Strategic Management Goals
Here are some examples of how big-picture strategies can be translated into actionable strategic management goals.
|BROAD STRATEGY||GOAL||SPECIFIC OBJECTIVES|
|Business growth||Increase revenue by 20%||New product introduction, location expansion.|
|Corporate social responsibility||Reduce carbon footprint by 15%||Adopt processes focused on water conservation and reduction of toxin emission.|
|Employee welfare||Increase workforce by 5%||Increase gender diversity, and improve employee welfare and benefits offered.|
The above table exemplifies that having specific strategic management objectives is essential to staying on top of your game.
Ingredients Needed for Strategic Management Goals
What are the main ingredients to carve out your much-needed strategic management goals? An environmental scan, strategy implementation, and evaluation will go a long way.
Environmental scanning refers to a review of the external and internal environment surrounding an organization that might positively or negatively impact its business activities. Quick capitalization of positive environmental factors can propel business growth. Lack of preparation for a negative environmental factor can lead to de-growth. For example, at the start of the COVID-19 pandemic, organizations successful in rapidly embracing digitalization were able to brace themselves for the economic impact and tide over. A good way to do this would be to conduct a Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis, and then take the next steps.
After conducting environmental scanning, how managers utilize the generated information is important. A SWOT analysis reveals the strengths and opportunities that can be leveraged to drive business success. In the aforementioned example of McDonald’s, the fast food chain was able to gain rapid acceptance and popularity when it launched an Indianized menu while entering India. It identified the opportunities and capitalized on them big time.
Periodic assessment of implemented strategies is just as important as the strategy itself. Sometimes a disruptive force might sweep in and create chaos. Regular assessments and check-ins will provide ample opportunities for management to take corrective actions that might require redefining goals and objectives.
A Little Help Goes A Long Way
Practicing strategic management, as well as defining its goals and objectives, is a skill honed over time. It requires applying sound judgment, and inculcation of certain qualities. While gaining experience in this is a gradual process, it never hurts to get a jumpstart and gain valuable, practical insights curated by experienced professionals. Harappa’s Managing Teamwork course will help in laying the groundwork for better strategic management goals. Check it out now!
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