Strategic management is the practice of long-term planning and structuring objectives that allows businesses to leverage their capabilities, increasing opportunities, and to achieve competitive advantages. With all the advantages that come with strategic management, like reducing resistance to change and moving towards more collaborations, there are a couple of drawbacks. Processes in strategic management are complex, time consuming , and often difficult to implement; much skillful planning is required to avoid pitfalls.
So, what is the strategic management process?
Strategic Management according to the Business Dictionary is a systematic analysis of external and internal environments in order to maintain optimum management practices at its basis.
Effective strategic management is a tool to allow companies to follow pre-defined directions in relation to long-term planning. In cases of deviation, timely corrective action is needed to get organisations back on track to achieve its strategic goal.
There are several variations in outlining and defining the stages of strategic management processes from different sources, however, the general stages include:
The first place to start is to define your strategy and ensure it is in line with your organisational values and mission. These are what sets the direction and predetermines an organisation’s strategic objectives.
Next, you need to understand that strategic aims to gain a particular market share, to increase your company’s competitive position, and to develop a competitive advantage. This will lead to the internal and external environments to adjust and shape your set objectives in relation with the current market situation. The great thing about understanding your organisation’s footing is that it can help you move forward with the strategic planning steps you have in place. It suggests that you need to make optimal decisions and work out a plan based on the decisions made from the previous stages. Remember, strategic planning is the draft and representation of hitting strategic targets. Therefore, it is essential to use a dedicated strategy building app that will help you visualise your strategies and give you an aerial perspective of your plans.
Finally, execution and monitoring are the final steps of strategic management, and here is where the pitfalls hide. Below, we’re going to look at those disadvantages.
There are a lot of continuous assessments of critical components that are a key component of strategic management. These components include external and internal environments, short and long-term objectives, organisational structures, and strategic control – these are all integrated so any change made in one component may affect the others.
Here’s an example. It is often the case that companies will need to reduce their workforce during an economic downturn, due to external factors such as the poor economy, and changes in the internal environment, which is the employed staff. In such cases, a company may have to review their objective and make necessary adjustments, and whatever adjustment is made will influence areas such as the company’s management, leadership as well as structural systems which all can affect the decision-making.
It takes a great deal of time to prepare, research, and communicate strategic management processes, and this the job for managers. The time it takes to do all this can hinder the day-to-day operations and also have a negative impact on the business. The pitfall lies when managers overlook daily issues that require resolving, which can lead to a decrease in employee productivity and achieving short-term sales. As you may know, issues left unattended in a timely manner will cause higher employee turnover as a result. In such cases, companies may be forced to redirect critical resources and this can sidetrack strategic management initiatives.
With successful implementation processes, a clear communication plan is needed that involves being fully attentive, having active participation, and accountability from every level of an organisation. Managers are required to continuously develop and improve collaborations among the staff to promote a buy-in and to garner support from the company’s objectives and its mission. However, this too can be challenging. For instance, if a manager was involved in formulating the strategic process without being as involved with the implementation process, the manager will not feel accountable for any decisions made.
The goal of strategic plans is to reduce uncertainty in meeting long-term objectives, however, the planning process itself provides opportunities for pitfalls. It is essential that companies anticipate the future, which often involves varying degrees of change and risks. To avoid missteps, managers need to have the ideal skills to plan strategies and to mitigate risk factors. Monitoring and developing business contingency plans to address potential changes in external environments like market fluctuations, competitive forces as well as economic factors that may affect the business negatively is an important role for managers.
Applying the right KPIs to track the performance and validating your company’s achievements towards strategic goals is vital. When you’re not meeting targets, or aren’t seeing the results the company has determined, you’ll need to revise your business processes and alter, or completely change your current tactics.
On the other hand, changing market conditions can have a huge impact on stagnant companies. Dynamic approaches are needed in today’s modern high-velocity environments, especially in strategic management – whenever needed, you need to adapt and course correct.
It’s possible that you miss the changes happening in the market, what then? Remember we mentioned that strategic goals involve long-term planning and need a bird’s eye view, make sure that you monitor the bigger picture to stay on course with your strategic objectives instead of being lulled by minor day-to-day achievements into a false sense of success.
Poor communication is one of the top reasons for strategy implementation failures. Making employees as well as the management team aware of your business’ direction is paramount! This is because your plans will need people to execute them, and people who’ll fuel your company’s strategic will.
To avoid issues with achieving your desired strategic goals, make sure you make time to communicate all strategies to your staff. USing a professional strategic planning software such as Roadmap Planner will help you see and understand your strategic plans. What’s more, this makes it easier to make your strategies more tangible for your employees as much as it is for you.
Real Business understands how these strategic management pitfalls can affect a business. Remember, the bottom line is that factors defining successful strategic management will vary, and this diversity is essential. Make sure you look at strategic management as an organisational plan that involves everyone in the company. Communication, execution and constant monitoring are just as important, so never overlook them. We at Real Business hope that you’ll make sure that your business competitive environment stays effective!