What Are the Functions of Strategic Management?
Strategic management is both visionary and practical and, at its best, finds an effective balance between these two poles.The functions of strategic management primarily revolve around setting a direction for your company, guiding the company as it moves in the direction that has been outlined, and evaluating and adjusting the articulated direction as the business and its environment evolve. Strategic management is based on leadership that encourages all managers and employees to continually learn, individually and as a group.
Successful companies understand who they are and what they want to achieve. The first function of strategic management is to define your company's identity in terms of the unique capabilities it brings to the marketplace and also in terms of the specific role it will play in a competitive landscape. This process usually takes the form of formulating a mission statement or a concise articulation of your company's big picture reason for existing, such as a healthcare company's objective to make patients healthier and more comfortable.
The mission statement sets the stage for practical actions and policies. Strategic management's subsequent function is to develop a big picture understanding of the practical actions necessary to translate your company's vision into reality. A business may choose to develop a series of products or services based on its unique capabilities, the existing competition and opportunities presented by customer needs and wants. Strategic managers conduct and review thorough research to learn about opportunities and constraints before translating this information into a comprehensive strategy.
Once a big picture strategy is in place, strategic management's function is to create a series of quantifiable, actionable goals and communicate these goals to employees. "To grow substantially during the coming year" is not a quantifiable, actionable goal, but "To grow 20 percent during the coming year by bringing two new products to market" communicates to employees exactly what needs to be achieved and how your business intends to achieve it. If your company does not achieve the strategic objectives it has outlined, strategic management's function is to evaluate the outcome and determine whether the goals should be revised or whether your business needs to approach them in a different way.
Strategic management also is responsible for understanding the market for your company's products or services and developing a plan for reaching different groups of potential customers. Most companies have a general idea of who wants to buy their product. For example, a business that manufactures an innovative baby bottle will have new mothers as its primary target market. But customers choose products for a variety of reasons. Strategic segmentation is the process of understanding the nuances of different target markets and applying them to marketing and product development.