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Definition of Strategic Management
The term strategic management is used to denote a branch of management that is concerned with the development of strategic vision, setting out objectives, formulating and implementing strategies and introducing corrective measures for the deviations (if any) to reach the organization’s strategic intent. It is the process of determining the goals and objectives of the enterprise, analyzing the relations between the enterprise and its environment, planning the necessary activities to achieve the goals and distribution of the necessary resources. It is to harmonize the internal resources and capabilities of the business with the opportunities and threats of the external environment.
These are decisions and activities for strategy development, implementation and evaluation and control of results. It is the use of business resources to regulate the relations between the business and its environment and to outperform competitors.
Strategic management, which has become a concept that everyone knows, is actually a very new management practice and the development process of strategic management can be monitored from a recent date. In the 1950s, while the businesses continued their activities only by planning, long-term plans were started to be understood that this was not enough and to see more distant points. The insufficiency of the plans for the business departments in 1965 was noticed and corporate plans covering the whole organization were created. By the 1970s, it was seen that all of these actions did not eliminate the difficulties of the companies to succeed and entered the strategic planning period including the direction to be followed.
In the following years, the first strategic management practices were started to be implemented based on the need of organizations to reform themselves by evaluating the results of the strategic plans and feedback. This period can also be divided into two: the "competitive strategy" period, which was the dominant understanding between 1980-2000, and the "basic competencies strategy" period that emerged after 2000.
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Strategic Management Sub-areas
Strategic management, which has developed in this way in the historical process, is now divided into sub-areas. According to the Strategic Management Society, which is the most important of the competent organizations in this field, strategic management is divided into 12 subgroups. Some of them are behavioral strategy, corporate strategy, competition strategy and stakeholder strategy.
People who think and research about strategic management in businesses have presented various examples of strategic management processes over the years. The strategic management process created by Hayri Ülgen and Kadri Mirze very useful process for strategic management. According to them, the stages of the strategic management process are as follows:
- Strategic consciousness phase
- Strategy selection and assignment phase
- Strategic analysis phase
- Strategic orientation phase
- Strategy building phase
- Strategic implementation phase
- Strategic control phase
The strategic management process begins when managers become strategic conscious. Managers with this awareness think that other organizations are creating strategies, how they can produce more effective strategies and how they can benefit from environmental opportunities and threats.
The next step is to identify and assign strategists who will undertake and carry out the strategy business in the organization. At this stage, either executive strategists from within the organization or professional strategists from outside are selected.
In the next stage, strategic analyzes are made. For this, priorities are collected and evaluated. After the information is collected, remote external environment, industry environment, and internal environment analyzes are performed. Finally, due diligence matrices are prepared.
Porter's 5 Power Models
At this stage, there are two concepts which is very important. The first one is the strategic management 5 power analysis, also known as Porter's 5 power models. This analysis is frequently used when examining the industry environment and focuses on 5 factors that can affect the company's competitive position, strategic decisions and behavior:
The second important concept is SWOT analysis, which can be used while preparing the determination matrix. After analyzing the sector and the business, the opportunities that can benefit the organization and the threats that may cause harm are combined with the strengths and weaknesses compared to the competitors to prepare the strategies.
After the strategic analysis is made, the definition, mission, vision and objectives of the firm's work are determined and the strategic orientation phase is started. The mission is important because it is the reason for the organization's existence. In this way, it illuminates and guides strategists. Vision is also important because it reveals where companies want to be in the future and their potential future.
Strategy building comes as the fifth stage. Now the organization has obtained sufficient and necessary information. It is time to determine the strategy to be followed. At this point, strategic management has basic strategies and management level strategies. The basic strategies are related to the business and activities that the business must do or stay away in order to survive and gain a competitive advantage. It can be classified as growth, downsizing, stationary and mixed strategies.
Management level strategies, as the name suggests, are corporate strategies which are diversification and withdrawal that top management focuses on, competitive strategies like cost leadership, differentiation, focus that middle managers are interested in, and functional strategies including production, marketing, human resources implemented by lower level managers. classified as. As will be noted, categories are created from various angles for the question of what is strategy in the business.
Once the strategies are put forward and determined, the implementation phase of the strategy comes. At this stage, the strategy and organizational structure, the systems in which the company is located and owned, the current management and leadership styles, the shared values accepted in the organization, also called corporate culture, the human resources and talents owned by the company are harmonized. Strategies are implemented harmoniously and by providing feedback.
Strategic Management Process
Benefits of Strategic Management
This approach, which has been applied and applied for years, has many benefits for both the private sector and public and non-profit organizations. Generally, the benefits of strategic management can be summarized as follows:
- It brings long-term thinking and vision to institutions and people.
- It gives organizations the opportunity to understand and focus on what is of strategic importance.
- It gives them the ability to adapt to the rapidly changing environment, to make changes on time and to be flexible.
- It provides coordination within the hierarchical structure.
- It provides integrity and coordination within the business.
- It prevents different units and stages from setting independent goals.
- It analyzes the external environment, such as competitors, customers and suppliers, that threaten itself for the business to survive.
The general benefits given above can also be seen as the goals of strategic management, and when we look at these goals, the importance of strategic management clearly stands before us. Some strategic management concepts have an important place in this process as a management approach that has been thought and implemented over the years.