Whether formalised or not, most businesses have a mission statement that captures their passions, plans, objectives and unique selling points. What businesses may not have, however, is an appropriate, considered and strategic approach in order to achieve these high-level visions.
Management strategy refers to the planned handling of a company’s resources in order to meet its set objectives and goals. It encompasses strategising, monitoring, analysis and assessment on a continuous basis, taking into account shifts in business environments, marketplaces and a variety of other internal and external factors. Business strategy of this type is universal – it can be adopted by businesses of all sizes and types who need to take stock of their progress and performance and develop strategies to increase these.
The benefits of a strategic management plan
The key to strategic planning of this nature is that it is never finished. It isn’t an exercise that chief executives and top and mid-level managers complete once before producing a roadmap that will take a business from strength to strength.
Formalising the direction for an organisation’s short-term and long-term future can bring with it a number of key benefits, both financial and non-financial. These include the following.
Attainment of goals and targets
Organisations need to establish, implement, monitor and adapt a roadmap in order to achieve growth and performance objectives. Management strategies align realistic, measurable goals with agreed visions and overall ambitions, providing a course of action for an organisation to follow to achieve their end goals. Strategy formulation allows organisations to thrive in specific areas of interest.
Cohesive corporate culture and drive
Strategic management calls for organisation-wide commitment from team members to senior management to other stakeholders. When the whole business is united under a shared aim and shared action plan, team members can then understand their common goals and are better placed to communicate and collaborate. It also serves to increase the engagement and awareness of team leads and managers; they must consistently re-evaluate their position and performance in line with the objectives.
Structured and sustainable growth
Strategic management serves to streamline performance – and, in turn, increases efficiency. This efficiency is the driver for sustainable, long-term growth, enabling organisations to cement their position in the industry marketplace and build upon its success.
Increased competitive advantage
Organisations focused on their goals and management strategies are, by necessity, forward-thinking. This involves possessing an outlook on the market, including changing customer demands, constraints and unpredictable or unfavourable scenarios that may occur. This perspective is not only critical in strategy, but helps organisations to remain ahead of competitors through limiting damage and seizing opportunities. Additionally, competitive businesses – who move through iterations to be better and perform better – may be more likely to observe other benefits, such as increased staff retention and recruitment of the best talent.
As the business world changes, strategies must adapt – making this planning process an integral part of running a business effectively.
The stages of strategic management
A useful framework for the strategic management process includes the following four steps:
- assessment and analysis of the organisation’s current strategic goals and direction
- identification and analysis of organisational strengths and weaknesses, both internal and external
- formation of action plans
- implementation and execution of action plans
- evaluation and control of action plans, including how successful they have been and whether further adjustments are required
In the analysis stage, leaders must clarify business intentions. Using the mission statement as a starting point, evaluate the overall objectives and assess whether progress and performance is in alignment. Stakeholders are a useful source of information during this initial stage, along with risk management and SWOT analyses (Strengths, Weaknesses, Opportunities, Threats). Once primary focuses have been identified, the business has a basis to build on and aims to work towards.
The formation stage is where leaders establish an action plan in order to meet its primary objectives. Ensure each point of the action plan is aligned with SMART guidelines (Specific, Measurable, Achievable, Realistic, Timely) to build a solid framework into the process. It may be prudent to formulate a ‘Plan B’ for some of the strategic steps as this will encourage flexibility and resilience in unpredictable periods.
When an action plan is in motion, businesses have entered the execution stage. At this point, any elements necessary for smooth implementation – for example, establishment of new operational initiatives in certain business units, allocation of human resource or acquisition of funding – should be in place. To maximise efficiency, all stakeholders should be briefed on the action plan and confident of their role and responsibilities in relation to it.
The final stage is evaluation and control. Refer back to the goals set during the analysis stage and assess the process and its results against these measures for benchmarking purposes. Corrective actions and further adaptations may be required and are both part of the overall strategic management process. This knowledge management exercise enables leaders to use the insights to develop and hone operations, plans and processes, ensuring that with each correction the business moves closer to its core objectives. Internal and external issues must be evaluated, together with data and other useful observations.
The balanced scorecard
Robert S. Kaplan and David P. Norton state that traditional, financial-based performance measures do not provide a detailed-enough indication of how well modern organisations are faring. In today’s competitive business environment, metrics such as return-on-investment can be misleading grounds on which to develop innovative, continuous improvement-based activities.
Enter the balanced scorecard: a set of measures that offer business leaders a quick, comprehensive view of organisational performance. Alongside financial measures, the scorecard provides insights into customer perspective and satisfaction, innovation and improvement activities, and internal processes and perspectives. In doing so, it asks: how do we perform in the eyes of shareholders, customers and ourselves? The scorecard aims to provide a valuable, holistic look at organisational health, reducing information overload to allow leaders to speedily assess the most-critical areas for development and improvement. Strategy and vision, rather than control, become the focus.
Scorecard findings can then be used in decision-making, problem-solving and forecasting efforts, translating overarching strategy into specific and measurable steps. It’s important that managers ensure the goals are Kaplan and Norton advise that the scorecard “keeps companies looking – and moving – forward instead of backward.”
Implement management strategies to structure and align your business goals
If you want to gain the skills to help organisations make strategic decisions to achieve their objectives, choose the University of York’s online MBA programme.
Successful growth and expansion requires leaders with the tools and abilities to evaluate, analyse and act decisively at the highest levels, navigating ever-evolving environments and taking advantage of business opportunities. The key operational fundamentals you’ll acquire – including international business strategy and trade, marketing, financial management, leadership, and project management – will help to underpin long-term business objectives, increasing your employability and preparing you to succeed in senior strategic roles.