The term ‘Strategy’ can be defined in many ways but the concept is the same - “Achieving Maximum profit/success/value with minimum impact/cost/time”. Though theoretically it can be defined as-

  • A way of achieving an organization’s objectives and implementing its missions.
  • Large scale, future-oriented plans for interacting with the competitive environment to optimize the achievement of organizational objectives.
  • The pattern of organizations responses to their environment over time.
  • Long term objective or purpose of an organization.
  • Execution of day to day activities with maximum returns.

Strategic Management is all about the process of formulation and implementation of these strategies which are designed to achieve specific objectives. Strategic Management is necessary for effective dealing with environmental challenges within given organizational resources.

Components of Strategic Management Process

  1. Selection of the corporate mission and major corporate goals.
  2. Analysis of the organization’s external competitive environment to identify opportunities and threats.
  3. Analysis of the organization’s internal operating environment to identify the organization’s strengths and weaknesses.
  4. The selection of strategies that build on the organization’s strengths and correct its weakness in order to take advantages of external opportunities and counter external threats.
  5. Strategy implementation.

Three Levels of Strategy

1. Corporate Level Strategy

Composed principally of members of the board of directors and chief executive and administrative officers. They are responsible for the financial performance of the corporation as a whole. Orientations at the corporate level reflect the concern of all stakeholders.

2. Business Level Strategy

Composed principally of business and corporate managers. These managers must translate the general statements of direction and intent generated at the corporate level into concrete, functional objectives and strategies for strategic business units.

3. Functional Level Strategy

Composed principally of manager of product, geographic and functional areas. They are generally short term strategies.

 Strategic Management Process

The task of analyzing the organization’s external and internal environment and then selecting an appropriate strategy is normally referred to as strategy formulation. In contrast strategy implementation involves designing appropriate organizational structure and control systems to put the organization’s chosen strategy into action.

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Strategy Implementation

Strategy implementation has four main components.

  • Designing appropriate organizational structures.
  • Designing control systems.
  • Matching the strategy, structure, and controls.
  • Managing Conflict, Politics, and change.
  • The Feed-Back Loop

1. Designing Organizational Structure

Designing a structure entails allocating task responsibility and decision making authority within an organization, how to divide the organization into sub-units, how to distribute authority among the different levels of an organization’s hierarchy and how to achieve integration between sub-units, all these are part of designing the Organizational structure.

2. Designing Control System

Through Control Systems Organization decides the best way to assess its performance and control the actions of various sub-units.

3. Managing Strategy, Structure and Control

If it wants to succeed, a company must achieve a fit among its strategy, structure, and control.

4. Managing Conflict, Politics, and Change.

Although in theory, the strategic management process is all rational decision-making process but in practice, organizational politics plays a key role. Departments may compete with each other for a bigger share of an organization’s finite resources.

5. The Feed Back Loop

In the Strategic Management Process chart, the feed back loop indicates that strategic management is an on-going process. Once a strategy is implemented, its execution must be monitored to determine the extent to which strategic objectives are actually being achieved.

Benefits of Strategic Management

  • Strategic Management enhances the problem prevention capabilities of the firm.
  • Group based strategic decisions reflect the best available alternatives.
  • Employee motivation improves as they appreciate the productivity reward relationship inherent in every strategic plan.
  • Gap and overlaps in activities among diverse individuals and groups are reduced.
  • Resistance to change is reduced.


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