Strategic Management is the process by which an organization analyses their environment, develops plans and implements the plans to achieve its goals and objectives. Strategy provides the context, goals and direction for product development and on-going product management. The core of strategic management is the concept of competitive advantage – what do we do better than others in the industry?
Strategic Management is important because it is the blueprint for your organization. Without knowing where you want to go, how can you get there?
Most organizations will have a hierarchy of strategies.
An organization is directed by an overarching corporate strategy that provides goals, priorities and focus for the whole organization over the long term. A corporate strategy:
- is the principal strategy of a diversified organization.
- answers the questions “in which businesses should we compete?” “how do these individual businesses create synergy and /or add to the competitive advantage of the organization as a whole?” “how do we deploy resources?”
If a company has multiple businesses, it will have a business strategy for each business. Business strategy is about choosing a set of plans and activities to deliver a unique mix of values centered on the product and/or services the business offers to specific markets. Answers the question “how do we win in our target markets?”
Most companies rely on innovation, to some degree. An innovation strategy, founded on the corporate and/or business strategy, provides the direction and framework for innovation.
Most companies will have a range of functions (e.g., finance, human resources, marketing, product development). Each function develops its own functional strategy -- how it will support and contribute to the overall corporate strategy and support the innovation strategy.
Strategy helps define and support the organization’s identity. Fundamental to the long-term success of an organization is a clear definition and understanding of what the organization stands for and why it exist, “Who are we as an organization?”This is often contained in the mission statement. The mission statement is defined as part of the corporate strategy. A mission statement is an organization's creed, philosophy, purpose, business principles, and corporate beliefs. The purpose of the mission is to focus the energy and resources of the organization.
Strategy lies at the very heart of an organization’s health and growth. It provides the foundation and framework for all of the organization’s functions and activities.
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