Strategic management
Strategic management sets the stage for virtually all managerial activity. Managers at all levels need to think strategically and be familiar with the strategic management process for three reasons: farsightedness is encouraged, the rationale behind top-level decisions becomes more apparent, and strategy formulation and implementation are more decentralized today. Strategic management is defined as the ongoing process of ensuring a competitively superior fit between the organization and its ever-changing environment. Strategic management effectively merges strategic planning, implementation, and control.
Strategic thinking, the ability to look ahead and spot key organization/ environment interdependencies, is necessary for successful strategic management and planning. Three tools that can help managers think strategically are synergy (the 2 +2 =5 effect), product life cycles that trace the life of a product through its introduction, growth, maturity, and decline stages and Porter's three generic strategies. Porter's three strategies are overall cost leadership, differentiation, and focus.
The strategic management process consists of four major steps: (1) formulation of grand strategy, (2) formulation of strategic plans, (3) implementation of strategic plans, and (4) strategic control. Ongoing evaluation after each of these steps and corrective action based on feedback help keep the strategic management process on track. Strategists formulate the organizations grand strategy by conducting a situational analysis and identifying the driving forces. Results-oriented strategic plans that specify what, when, and how are then formulated and translated downward into more specific and shorter-term intermediate and operational plans. Problems encountered along the way should be detected by the strategic control or by ongoing evaluation and subjected to corrective action.
Event outcome, event timing, and time series forecasts help strategic planners anticipate and prepare for future environmental circumstances. Event outcome forecasts are used when strategists want to predict the outcome of a highly probable future event. Event timing forecasts predict when, if ever, a given event will occur. Time series forecasts seek to determine future values in a sequence of values recorded at fixed intervals. Popular forecasting techniques among todays managers are informed judgment, surveys, and trend analysis.