Jeany C.

Palaca
BSBA OM4

Nature of strategic management

Strategic management can be defined as the art and science of formulating, implementing and

evaluating cross functional decision that enable an organization to achieve the objective or the on-going

process of formulating, implementing and controlling broad plans guide the organizational in achieving

the strategic goods given its internal and external environment. Why is strategic management so

important that it needs to be given attention? Here are the following reasons. First is globalization, global

considerations impact virtually all strategic decisions! The boundaries of countries no longer can define

the limits of our imaginations. To see and appreciate the world from the perspective of others has become

a matter of survival for businesses. The underpinnings of strategic management hinge upon managers'

gaining an understanding of competitors, markets, prices, suppliers, distributors, governments, creditors,

shareholders, and customers worldwide. The price and quality of a firm's products and services must be

competitive on a worldwide basis, not just a local basis. The distance between the business sectors are

becoming less due to the provisions of certain facilities. Although political boundaries are there but in

order to become successful in business it is essential to laid stress on globalization. Second is E-

Commerce. It is a business tool that has become a vital strategic-management tool. An increasing number

of companies are gaining competitive advantage by using the Internet for direct selling and for

communication with suppliers, customers, creditors, partners, shareholders, clients, and competitors who

may be dispersed globally. It allows firms to sell products, advertise, purchase supplies, bypass

intermediaries, track inventory, eliminate paperwork, and share information. To sum up it minimize the

expense and cumbersomeness of time, distance and space in doing business, which yields better customer

service, greater efficiency, improved products and higher profitability. The Internet and personal

computers are changing the way we organize our lives; inhabit our homes; and relate to and interact with
people and even ourselves. The Internet promotes endless comparison shopping which enables consumers

worldwide to band together to demand discounts. It has transferred power from businesses to individuals

so swiftly that in another decade there may be imposed on groups of consumers. Politicians may one day

debate the need for regulation on consumers rather than on big business because of the Internet's

empowerment of individuals. Buyers used to face big obstacles to getting the best price and service, such

as limited time and data to compare, but now consumers can quickly scan hundreds of vendors offerings.

Or they can go to Web sites such as CompareNet.com that offers detailed information on more than

100,000 consumer products. The Internet has changed the very nature and core of buying and selling in

nearly all industries. It has fundamentally changed the economics of business in every single industry

worldwide. Third is Earth environment has become a major strategic issue. With the demise of

communism and the end of the Cold War, perhaps there is now no greater threat to business and society

than the continuous exploitation and decimation of our natural environment. The resources are scarce but

the wants are unlimited. In order to meet the wants of the world, the resources should be efficiently

utilized. Example would be the use of oil resources or energy resources will make the people to use these

resources for a long time. The study of strategic management integrates different topics. Different courses

are integrated due to the study of this course so that businesses become successful in every sector. It

integrates the following, Marketing Management Finance Research and development the management

and marketing are essential part of a business sectors. They should be integrated. Just like other sections

of the business are integrated under this study. The history of strategic management develops in 1950s.

Due to the detailed planning of the business circumstances it became hit. In 1960s and 70s it was

consider to be panacea for problems. But in 1980s two important revolutions occur in business world.

One is computers, second is mobiles. The invention of these things has decreased the importance of

strategic management. But at the end of 1980, the business involves in computers and mobiles business

realized that they still need to adopt the policies for strategic management. In early time the management

takes institution decisions. But now the management has to take decision by a specific process.

Organizational layers become more complex now a days and management divided into layers.
Environment change also evaluates the strategic management. There are three stages of strategic

consisting of the following strategy formulation (strategy planning), strategy implementations and

strategy evaluation. Strategic formulation means a strategy formulate to execute the business activities.

It includes developing the following, vision and mission (the target of the business), strength and

weakness (strong points of business and also weaknesses) opportunities and threats (these are related with

external environment for the business). It is also concerned with setting long term goals and objectives,

generating alternative strategies to achieve that long term goals and choosing particular strategy to pursue.

The considerations for the best strategy formulation should be as follows, allocation of resources,

business to enter or retain, business to divest or liquidate, joint ventures or mergers, whether to expand or

not, moving into foreign markets and trying to avoid take over. Strategy implementation requires a firm

to establish annual objectives, devise policies, motivating employees and allocate resources so that

formulated strategies can be executed. It includes developing strategy supportive culture, creating an

effective organizational structure, redirecting marketing efforts, preparing budgets, developing and

utilizing information system and linking employee compensation to organizational performance. It is

often called the action stage of strategic management. Implementing means mobilizing employees and

managers in order to put formulated strategies into action. It is often considered to be most difficult stage

of strategic management. It requires personal discipline, commitment and sacrifice. Strategy formulated

but not implemented serve no useful purpose. Strategy evaluation is the final stage in the strategic

management process. Management desperately needs to know when particular strategies are not working

well. It is the primary means for obtaining this information. All strategies are subject to future

modification because external and internal forces are constantly changing. The nature of strategic

management process does not end when the firm decides what strategy or strategies to pursue. There must

be a translation of strategic thought into strategic action. This translation is much easier if managers and

employees of the firm understand the business, feel a part of the company, and through involvement in

strategy-formulation activities have become committed to helping the organization succeed. Without

understanding and commitment, strategy-implementation efforts face major problems. Implementing

strategy affects an organization from top to bottom; it impacts all the functional and divisional areas of a

business. It is beyond the purpose and scope of this text to examine all the business administration

concepts and tools important in strategy implementation. Even the most technically perfect strategic plan

will serve little purpose if it is not implemented. Many organizations tend to spend an inordinate amount

of time, money, and effort on developing the strategic plan, treating the means and circumstances under

which it will be implemented as afterthoughts! Change comes through implementation and evaluation, not

through the plan. A technically imperfect plan that is implemented well will achieve more than the perfect

plan that never gets off the paper on which it is typed. Intuition and analysis Strategic management tries

to bring together qualitative and qualitative information.