Strategic management
Strategic management is the formulation and implementation
of the major goals and initiatives taken by a company's top management on
behalf of owners, based on consideration of resources and an assessment of the
internal and external environments in which the organization competes.[1]
Strategic management provides overall direction to the
enterprise and involves specifying the organization's objectives, developing
policies and plans designed to achieve these objectives, and then allocating
resources to implement the plans. Academics and practicing managers have
developed numerous models and frameworks to assist in strategic decision making
in the context of complex environments and competitive dynamics.[2] Strategicmanagement is not static in nature; the models often include a feedback loop to
monitor execution and inform the next round of planning.[3][4][5]
Michael Porter identifies three principles underlying
strategy: creating a "unique and valuable [market] position", making
trade-offs by choosing "what not to do", and creating "fit"
by aligning company activities with one another to support the chosen
strategy.[6]
Corporate strategy involves answering a key question from a
portfolio perspective: "What business should we be in?" Business
strategy involves answering the question: "How shall we compete in this
business?"[7] In management theory and practice, a further distinction is
often made between strategic management and operational management. Operationalmanagement is concerned primarily with improving efficiency and controlling
costs within the boundaries set by the organization's strategy.
Strategic management involves the formulation andimplementation of the major goals and initiatives taken by a company's top
management on behalf of owners, based on consideration of resources and an
assessment of the internal and external environments in which the organization
competes.[1] Strategy is defined as "the determination of the basic
long-term goals of an enterprise, and the adoption of courses of action and the
allocation of resources necessary for carrying out these goals."[8]
Strategies are established to set direction, focus effort, define or clarify
the organization, and provide consistency or guidance in response to the environment.[9]
Strategic management involves the related concepts of
strategic planning and strategic thinking. Strategic planning is analytical in
nature and refers to formalized procedures to produce the data and analyses
used as inputs for strategic thinking, which synthesizes the data resulting in
the strategy. Strategic planning may also refer to control mechanisms used to
implement the strategy once it is determined. In other words, strategic
planning happens around the strategic thinking or strategy making activity.[10]
Strategic management is often described as involving two
major processes: formulation and implementation of strategy. While described
sequentially below, in practice the two processes are iterative and each
provides input for the other.[
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