Business Strategic Management with Examples

Business Strategic Management with Examples

Strategic management is the process of evaluating a company's mission, establishing long-term goals, analyzing the competitive environment, gauging the organization's strengths and weaknesses, and forming strategies to move the business toward its goals. It involves making decisions about the future direction of the organization and implementing courses of action to achieve organizational objectives.

Effective strategic management is crucial for any business that wants to thrive in its industry. It enables companies to take a proactive approach to shaping their future instead of simply reacting to external forces. Companies that engage in strategic management are more likely to increase revenues, market share, and profitability.

In this article, we will provide an overview of key concepts in strategic management and illustrate them with real-world examples.

Defining Vision, Mission and Values

The first step in strategic management is defining the organization's vision, mission and values. This forms the foundation for the company's strategy.

  • Vision Statement: The vision statement describes the desired future position of the company. It answers the question “What do we want to become?” It is aspirational and should inspire employees. Example vision statement: We aspire to become the most popular fashion retail store chain in the country by 2025.
  • Mission Statement: The mission statement defines the company's purpose and primary objectives. It answers the question “Why does our company exist?” Example mission statement: “To provide affordable and stylish clothing to teenagers and young adults all over the country.”
  • Core Values: The values statement lists 3-5 core values that guide the company's internal conduct and relationships with external stakeholders. Example values: Integrity, customer-focus, innovation.

Analyzing the External Environment

Strategic analysis of the external environment examines opportunities and threats that could impact the organization. It commonly involves:

  • Industry Analysis: Evaluating the competitive landscape, market size, growth trends, regulation, technological change, etc.
  • Competitor Analysis: Identifying rivals, assessing their strategies, and evaluating strengths & weaknesses.
  • PEST Analysis: Scanning the political, economic, socio-cultural, and technological landscape.
  • Resources: Reviewing physical, human, technological, reputational and financial resources.
  • Capabilities: Determining capabilities around operations, distribution, marketing, innovation, customer service etc.
  • Core Competencies: Identifying abilities that serve as a competitive differentiator.
  • Value Chain: Mapping out primary and support activities in operations to find efficiencies.
  • Growth Strategy: Increasing market share, revenues, expansion into new markets etc.
  • Competitive Strategy: How to build strategic advantage by competing differently vs rivals.
  • Cooperative Strategy: Partnerships, strategic alliances, joint ventures.
  • Divestment Strategy: Spinning off or selling parts of the organization.
  • Setting Objectives: Translate strategic aims into specific, measurable, actionable, realistic and timely management objectives.
  • Crafting Policy: Form policies to provide guidelines for decision making during implementation.
  • Allocating Resources: Deploy capital and talent necessary to undertake planned actions.
  • Redesigning Structure: Modify organization design, job roles and governance processes to fit the strategy.
  • Monitoring Progress: Track progress using metrics and take corrective actions when required.

For example, a footwear company may conduct industry analysis to determine market saturation, growth of online sales, supply chain innovations, etc. Competitor analysis would map out direct and indirect rivals and assess their market share, product strategy, pricing, capabilities, etc. PEST analysis may highlight regulatory issues, technology disruptions, changes in consumer lifestyle trends, etc. that could affect strategy.

Assessing the Internal Environment

While the external analysis scans the industry landscape, internal analysis evaluates organizational strengths and weaknesses. This commonly involves:

For example, an airline company would take stock of its fleet size, route networks, ticketing technologies, brand recognition, maintenance capabilities, in-flight services, reliance on oil suppliers, etc. It would pinpoint superior capabilities like its online booking system, frequent flyer program, or average fleet age as competencies.

Formulating Strategy

Based on external opportunities/threats and internal strengths/weaknesses - organizations need to form strategies to meet objectives. Common types of strategies include:

Within these, there are strategy variations. Growth can be organic by investing in operations or inorganic via mergers & acquisitions. Competitive strategy may focus on cost leadership or differentiation. Companies could form alliances to share resources or jointly develop new products or technologies.

For example, a grocery chain planning aggressive regional expansion would pursue an intensive growth strategy. An upstart consumer tech company attempting to disrupt larger rivals may adopt innovation differentiation.

Implementing Strategic Plans

There could be a great strategy on paper, but the company’s ability to execute it efficiently makes all the difference. This requires detailed action planning and organizing resources accordingly.

Steps in strategy implementation include:

For example, a retailer expanding into e-commerce would set targets for online sales contribution, develop fulfillment and digital marketing capabilities, train the teams to use new technologies, create loan funding pools for technology infrastructure, and continually monitor web metrics.

Continuously Evaluating and Evolving

Finally, as internal and external conditions evolve, the effectiveness of existing strategies needs to be continually evaluated, and strategy formulation needs to adapt accordingly.

This may involve routine checks like quarterly performance reviews. It could also require event-triggered reassessments, like when new technologies emerge or when major new regulations disrupt operations.

For instance, the advent of 5G networks may compel changes in products, services and business models across various industries due to associated improvements in data speeds, connectivity, automation potential and real-time responsiveness. Incumbent companies may need to revisit innovation strategies and external partnership approaches to remain competitive.

The strategic planning process thus needs to be flexible and recurring rather than rigidly linear. Only an openness to reexamining assumptions and strategic alternatives will keep strategy relevant.

Conclusion

Effective strategic management requires making deliberate, calculated choices about how to respond to external dynamics, leverage organizational strengths, and bridge resource gaps – all to achieve sustainable competitive advantage. It involves articulating future ambitions, setting supporting objectives, crafting plans to get there, aligning resources based on said plans, and continuous adaptation guided by results.

Done right, it provides the guiding beacon that keeps companies matching customer demands and industry trends – critical for prosperity and survival. The examples and frameworks provided here aim to equip managers with a starting toolkit to embark on the strategic planning journey suited to their specific context.

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