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Abstract
The following paper is devoted to strategy, strategic management, and strategic planning. The paper outlines the abovementioned notions, which constitute the baseline for strategic management as a whole, and discusses the importance of strategic management in business. The traits of effective strategies are outlined and some relevant examples are given as well. Graphic evidence is used to support some of the notions as applied to practice by a renowned global-scale corporation.
Strategy, strategic management, and strategic planning
An all-encompassing perspective of a business lies within the domain of strategy, strategic management, and strategic planning. A strategy is an overarching plan setting the business course of action in terms of finance, management, human resources, etc. A strategy cannot remain static; the business world is turbulent, and the strategies should undergo regular revision.
Strategic management is a process involving managers from all layers of organizational structure to set objectives, analyze the competitive environment, assess the strategy, and make sure it functions. The goals are not dictated; rather, they are for the middle-tier management to formulate and later put to practice. Strategic planning is the process of determining the strategy and the means and tools of implementing it (Kinicki & Willams, 2012).
The importance of strategic management and planning
The importance of strategic management and planning is stipulated by the fact that they provide direction, develop a sustainable advantage in competition, and encourage fresh ideas. Setting direction helps establish the goals and methods of achieving them. Communicating the direction can occur on the board of executives part in the meetings.
Collective involvement in the establishment of direction which is constructed by the organizational mission, vision, and values ensures that the organization is thoroughly focused on the problem-resolution on all tiers. A sustainable competitive advantage is the uniqueness of a company as opposed to others. There is a multitude of ways to gain the advantage. For example, a company can make innovation (which is why new ideas should be encouraged) and patents a valuable strategic asset, like IBM with its magnetic stripe technology or General Electric with the X-ray machine (Laya, 2011).
Principles of an effective strategy
Competitive advantage is the main aspect an effective strategy should be focused upon. To consider a strategy effective, it is worth assuring it facilitates the unicity of the companys position, meets the competition tradeoff requirements, and creates a fit among the activities. A good example of an effective strategy creating a competitive advantage in these respects can be IKEAs. It sets it as a value proposition to provide unique furniture designs at lower costs and makes strategic trade-offs accordingly: IKEA deliberately accepts that not all of the customers needs shall be met (Carlsson, 2015). Accordingly, it leverages its activities to create a fit as presented in the following mind map:
(Fit Across the Value Chain, n.d.).
Strategic management and planning certainly benefits business giants with their millions of customers, legions of shareholders, and considerable funds. However, the methods and tools of strategic management and planning can be as well implemented in smaller and emerging firms. The firms survival is dependent on whether they are capable of making a difference for their customers, and for that matter, an effective strategy should be considered. On the other hand, such firms should be prepared that the revenues might not be significant on a smaller scale.
References
Carlsson, M. (2015). Strategic Sourcing and Category Management: Lessons Learned at IKEA. London, UK: Kogan Page Publishers.
Fit Across the Value Chain. (n.d.)
Kinicki, A., & Williams, B. (2012). Management: A Practical Introduction (6th ed.). New York, NY: McGraw-Hill Education.
Laya, P. (2011). The 15 Most Innovative Companies Of All Time. Business Insider.
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