The need for strategic management stems from challenges presented by the external environment, which also includes the industry and competitors’ environment. According to Hanson, Hitt, Ireland, and Hoskisson (2016), “regardless of the industry in which they [companies] compete, the external environment influences firms as they seek strategic competitiveness and above-average returns” (p. 37). To be ready to use this influence to their benefit, companies should work on the skills that can help to identify such opportunities.
The centerpiece of strategic management is strategic planning because it accumulates all the analysis and research and creates a step-by-step guide for a company on its way to success. Planning and management are closely related, but, still, should be differentiated by their roles in a company’s development. According to Bolland (2017), strategic management is mainly a theoretical approach, while strategic planning is related to action planning and developing further steps.
For corporations, strategic management is crucial because due to the diverse character of their businesses, it is especially important for them to have a concept for development and to establish measures to achieve targeted goals. At the same time, they enjoy more freedoms related to the complex nature of their organization. Ike (2017) notes that “corporations can diversify broadly or narrowly, into related and unrelated industries via acquisition, joint venture, strategic alliances or internal start-ups” (p. 51).
Making decisions and determining the way of development of a company is one of the main responsibilities of a management team. No matter how small a company can be, it requires a plan to be prepared for foreseeable challenges and to keep up with the latest trends. Financial planning, predicting future growth, and understanding markets and competitors together make up the basis for strategic management.
References
Bolland, E. J. (2017). Comprehensive strategic management: A guide for students, insight for managers. Bingley, United Kingdom: Emerald Group Publishing.
Hanson, D., Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Competitiveness and globalization (6th ed.). Melbourne, Australia: Cengage Learning Australia.
Ike, L. (2017). Strategic management: Concepts & practices. Bloomington, IN: Xlibris Corporation.