Strategic management — function of management (management), which applies to long-term objectives and actions of the company. The wording of the strategy (course of action) and its precise tools are the core of management and a key sign of good management.
Strategic management — development and implementation of actions leading to long-term excess of the level of performance of the company over level of competition.
Strategic management is a concept of survival in a particular environment. It gives more or less concrete idea of what should be the organization in the future: the environment in which it will operate, what position to take on the market which have a competitive advantage, what changes in the organization to be implemented.
Strategic management is a field of management activities, consisting in the implementation of future objectives of the company through the implementation of changes in the organization. Strategic management acts as a process whereby the interaction of the organization with its environment.
At the same time, strategic management is a field of scientific knowledge that studies the techniques, tools, and methods for making strategic decisions and their implementation. Activities in strategic management, really, about the aims and objectives of the organization and maintaining relations between organization and environment to achieve its goals, consistent with its internal capabilities and allows you to remain receptive to the demands of the external environment.
Strategic management is the management of socio-economic systems, highlighting the functional, process and element side. Functional – where the management is considered as a set of activities aimed at achieving certain results. Process – in the framework of its management is considered as an action to identify and solve problems, i.e. the process of preparation and decision-making. Element – management is considered as an organization of the relationships of specific structural elements.
The effectiveness of the system of strategic management lies in the.
– provides a comprehensive and systemic view of the enterprise and its external environment; – facilitates strategic decision making through the use of special concepts, methods and approaches to the collection and processing of information; – provides coordination and communication both horizontally and vertically: – helps to cope with changes and lead change; – ability to foresee trends in business development.
– it helps make a strategic choice and to implement the strategy.
The essence of strategic management.
The essence of strategic management is to answer three major questions.
– The situation in which the enterprise is currently? – In what position it would like to be in three, five, ten years? – How to achieve the desired position.
To answer the first question managers need to understand the current situation of the enterprise before deciding where to go. And this requires an information basis for the process of strategic decision-making relevant data for analysis of past, present and future situations. The second question reflects this important feature of strategic management as its focus for the future. To answer this question it is necessary to clearly define something to strive for, what goals to set. The third question of strategic management associated with implementation of the chosen strategy, which can occur adjustment of the two previous stages. Essential elements or limitations of this stage are available, or available resources, management system, organizational structure and personnel who will implement the chosen strategy.
At its substantive contents strategic management refers only to the main underlying processes in the enterprise and beyond, focusing not so much available resources and processes, as the possibilities of increasing the strategic potential of enterprise. The basis of strategic management are strategic decisions.
Strategic solutions is a management decision. which.
1) focus on the future and lay the basis for making operational management decisions; 2) are subject to considerable uncertainties, as they take into account uncontrollable external factors affecting the company; 3) are associated with the involvement of significant resources and may have extremely serious long-term consequences for the enterprise.
Among the strategic decisions can be attributed.
– reconstruction of the enterprise; – innovation (new products, new technologies); organizational changes (change of organizational-legal forms of enterprises structure of production and management, new forms of organization and remuneration of labour, interaction with suppliers and customers); – new markets; – acquisition, merger of enterprises, etc.
The development of strategic management.
Central to strategic management theory is the concept of “strategy.
The word strategy is very ancient and it comes from the Greek strategia – the art or science of being General. The value of generals in Ancient Greece was obvious. History shows that the most talented and successful generals of the great importance attached to the proper construction of the army, as well as the decisions when to fight and when to negotiate with the people, politicians, diplomats. They were the strategists.
However, the use of the concept of strategy is not the exclusive prerogative of the ancient Greeks. In Ancient China in the period between 480 and 221 BC were already written book called “the Art of strategy”. Disputes over whom to ascribe the authorship to one person or is it the so-called folk art – continue to this day.
Thus, already in ancient times the strategy was given a meaning which can today be called the norm of the optimal behavior of the firm or the individual. Sun Tzu, for example, wrote: “the One who has won hundreds of victories in hundreds of conflicts, is unlikely to have high skill. The one who owns high skills use the strategy of conquering others, not engaging with them in conflict.
This concept is so multifaceted that to give him an unambiguous definition is difficult.
1. Strategy is a means of achieving the end result. At the same time it unites all parts of the organization together and covers all major aspects of the organization.
2. Strategy is a long – term comprehensive plan for the implementation of the mission and the achievement of the economic goals of the organization. The strategy defines the goals and the main ways of achieving them so that the organization receives a single course of action.
3. The strategy is the result of the analysis of strengths and weaknesses of the organization and identify opportunities and obstacles for its development. It determines the boundaries of possible actions organizations and management decisions.
The main objective of the strategy is to convert the organization from its present state to the desired leadership future state.
The stages of development of strategic management.
Business historians usually distinguish four stages in the development of strategic management: budgeting. long-term planning, strategic planning and finally strategic management.
1. Budgeting. In the era of the formation of giant corporations before world war II, special services planning in companies not created. Senior managers of corporations are regularly made plans for the development of its business, however, formal planning was limited to preparation of annual budgets – budgets of expenditure for different purposes.
A feature of fiscal methods is their short-term nature and internal focus, i.e., the organization in this case is considered as closed system.
2. Long-term planning. In the 1950s – early 1960s, the typical operating conditions of the companies were high growth rates of commodity markets and the relatively high predictability of trends in the development of the national economy.
These factors created the conditions for the development of long-term planning.
The method is based are forecasts of the company for several years. While long-term planning was based on extrapolation of the past trends of development of the company. The main task of managers was to identify financial problems which create obstacle to the growth of the firm.
This approach, better known to us as a method of “planning from the reached”, is widely used in the conditions of centralized management of the Soviet economy.
3. Strategic planning. In the late 1960-ies the growth of the crisis and increasing international competition. predictions based on the extrapolation began to disperse with the actual figures. To overcome the outlined drawbacks began to develop the concept of strategic planning. It is based on an analysis of how the internal capabilities of the organisation and external competitive forces and finding ways for the use of external opportunities taking into account the specifics of the organization. Thus, the purpose of strategic planning is to improve the reaction of the enterprise on the dynamics of the market and behaviour of competitors.