Meaning of Strategy and Strategic Management
The term strategy is derived from the Greek word ‘Strategos‘ which means generalship the actual direction of military force, as distinct from the policy governing its deployment.
The strategy is a broad game plan to achieve objectives. It provides direction and scope to the organization over the long term. Literally, the word strategy means the art of the general. Strategy can be defined as the management action plan for achieving the chosen objectives.
It commits the organization to specific products, markets, résources, and technology. It specifies how the organization will be operated, run & what entrepreneur, competitive & functional area approach & action will be taken to put the organization into the desired position.
The strategy considers both means & ends. The goals & decisions making up an organization’s strategy may be planned ahead of time or may just evolve as a pattern in the stream of significant decisions. It determines the basic long-term goals & objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.
Modern organizations need a long term horizon to cope with environmental changes. Globalization is making the world one big market. It has brought competition everywhere. Strategic management is a three-tier process involving corporate, business & functional level planners, & more specific, narrow, short-term, & actions oriented, with lower risks but fewer opportunities for dynamic impact.
The purpose of strategic management is to exploit and create new and different opportunities for tomorrow, long-range planning, in contrast, tries to optimize for tomorrow the trends of today. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration, it is possible to mention “strategic consistency”.
Characteristics of Strategic Management
Strategic management involves formulation, implementation, and control of strategy to achieve long term objectives. It involves strategic decisions and actions of top management. It turns strategies into action. It controls strategic performance. It recognizes the complexity of the environment. It seeks to establish a competitive advantage at all levels. It is managing for the future. The key features of strategic management are:-
1. Uncertain: Strategic management deals with future-oriented non-routine situations. They create uncertainty. Managers are unaware of the consequences of their decisions.
2. Complex: Uncertainty brings complexity to strategic management. Managers face an environment that is difficult to comprehend.
3. Organization-Wide: Strategic management has organization-wide implications. It has a system-wide .application. It is a continuous process. It is an interactive process among various functional areas.
4. Fundamental: Strategic management is fundamental for improving the long term performance of the organization.
5. Long Term Implications: Strategic management is not concerned with day to day operations. It has long term implications.
6. Implementation: Strategic management ensures that strategy is put into action. Implementation is its essence. It also evaluates performance for future decision making.