Understanding Strategy and Dimensions of Strategic Decisions

 

What is a Strategy?

Before understanding the meaning and dimensions of strategic management, we need to figure out what a strategy is?

At the business level, a strategy refers to a plan of actions concerned with competing successfully in different markets, it answers a major administrative question: “How Can the Company Afford to Structure the Overall Business in Order to Create More Value and Reflect Both its Mission and Vision?”. Some researchers believe it is better to analyze the current situation of the company, anticipate market fluctuations so we can set futuristic business-level plans, known as strategy. 

Thus, the broader definition of strategy is “the top management large-scale, future-oriented plan dedicated for interacting with competitive environment to achieve the enterprise goals and objectives”.

 

Dimensions of Strategic Management

Every manager wants their business to flourish, but this is not easy without understanding the business environment of the company. Strategic decisions may be relevant to product line, business location, a group of customers, market niche or assets acquiring. Every strategic decision helps the enterprise to grow its operations and make good use of its resources. Strategic decisions are related to day to day operations which gives it major impact on different aspects of the organization. It must take into consideration different dimensions, which we summarize as follows:

 

1)    Strategic management implementation requires top management decisions

2)    Strategic issues require exploitation of the company resources and budget in order to fulfill strategic decisions

3)    Strategic management process is future-oriented

4)    Strategic management depends on multi-business or multifunctional consequences

5)    Strategic management keeps an eye on the company external environment 

Strategic management process can be noticed to be relevant to matters like customer mix, competitive advantage, organizational structure and the interaction among different business units.

 

Strategic Management Definition and Nature

 

The Nature of Strategic Management

By definition, strategic management is the group of decisions made by the enterprise upper management that, eventually, can result in formulating and implementing the plans designed to achieve the business objectives. Because it involves futuristic, advanced and long-term decision-making, the relevant resources needed for implementation will be essential. Strategic management is generally thought to mirror the ongoing monitoring, analysis, planning and assessment of what the company needs to meet its goals and objectives. For the company to constantly assess their strategies for success, strategic management process helps in changing the business environment through configuring required plans for its future existence, fulfilling a chief responsibility of a board of directors, and setting a direction for the organization and its employees. It is, mainly, based around the clear understanding of the company futuristic mission and vision, and the values that guide its actions. Therefore, the process depends on how far the upper management commits to strategic planning, which is involved to the company ability to meet both short and long term goals. It is a three-tier process that involves planners from corporate, business and functional levels.

Definition of Strategic Management

Different studies defined strategic management as the group of actions and decisions made by top management that result in plans formulation and implementation to achieve the company objectives and long-term goals. It is the planned use of business resources based on ongoing evaluation of procedures and processes to reach the company objectives. Strategic management is all about the identification of strategies carried by managers to enhance performance and achieve the company competitive advantage. It takes the form of a bundle of acts and decisions that managers undertake to reach the desired results of the company performance.

Strategic Management, as a process, implies nothing but planning for the appropriate exploitation of the company resources. It gives a broader perspective to all employees so they can understand how their jobs fit into the overall organizational plan and how it is related to the organizational members.

Strategic Management Critical Tasks

From the previous section, we find that strategic management involves the formulation and implementation of the company main goals, based on the appropriate usage of available resources in the company. It gives direction to the company by specifying its objectives, plans and policies. To appropriately perform its mission, strategic management comprises the achievement and fulfillment of major tasks:

1. Setting different aspects of the company mission, including its statements about the current philosophy and goals of the company
2. Evaluate the firm’s external environment, including both competitors and prospect customers
3. Perform an analysis that reflects the internal resources and available capabilities of the firm
4. Deciding in which business the company will be in and create a strategic vision that can clarify when the organization needs to be headed 
5. Create measureable objectives using the company vision and mission. For general objectives, there are two types needed: financial and strategic objectives.
6. Analyze different available options by matching the company resources with its external environment.
7. Select a bundle of long-term grand strategies that are capable of achieving its most favorable options.
8. Exploit the available budgeted and human resources to match the company tasks, technologies and structure, while emphasizing its rewarding system.
9. Estimate how far the company successfully reached its strategic plans through input processing, for future decision making.