The Nature And Value of Strategic Management

The Strategic Management is a vital and imperative process which determines if an organization is going to excel or survive or die.

Every organization is engaged in strategic management process either formally or informally.  Strategic management is valid for all types of organization – public, private, not-for-profit and religious organizations.

Organizations generally employ one of the following three decision-making processes.

• The management/managers want to solve existing problems due to poor sales performance, low profits, or inefficient production. Managers identify the source of these problems and resolve as best as they can.
• Managers have to solve current as well as future problems.  Faced with rising productions cost, managers apply statistical techniques to create an optimal
• solution.
• Managers strive to design or create better relationships between the company and its operational and general environment.  This means the company has to undertake `strategic decision-making`.

J. Constable defines the area addressed by strategic management as “the management process and decisions which determine the long term structure and activities of the organization”.  This definition incorporates five key elements.

Management Process:  Means how strategies are created and changed.

Management decisions: Must relate to a solution for a perceived or specific problem (how to avert a threat or to take advantage of opportunities)

Time Scale: The structure time horizon is long.  But for a company in trouble this could be short.

Structure of the Organization: An organization works within a structure managed by people.  The decisions that result from the way managers work together within this structure result in strategic change.

Activities of the Organization:  This is limitless but strategy affects all activities that relate to the organization.

The above  five elements are fundamental to the study of the strategic management field.

There are two essential areas of management tasks:  Strategic management and operating management.  Operating management refers to the on-going day-to-day `operation` of the organization.  But what is discussed here is strategic management.

Questions:

• What are the three decision making processes in strategic management?
• What are the five key elements defined by J. Constable?