by V. Kumar

Created on: May 14, 2008   Last Updated: June 20, 2008

STRATEGIC MANAGEMENT lies at the top of the hierarchy of management decisions.

It differs from routine and day to day management in that it involves decisions that will shape the future of the organization. Unlike 'operational management' which takes care of operations within the organization by maintaining and improving the equipment and the processes, and the 'tactical management' which takes care of the problems and challenges faced by the organization on a day to day basis, strategic management reflects decisions that decide the future course of the enterprise and its long term fate.

DEFINING STRATEGIC MANAGEMENT

One can define strategic management as consists of the decision making process pertaining to the direction in which the organization is intended to grow, that can drastically change the focus of the activities within it, its character, the product range, the marketing tactics and its market image and standing.

In simpler words, strategic management can be described as consisting of three steps. First is determining 'where you are now', second is determining 'where you want to go' and third is determining 'how to reach there'. All actions falling within the range of strategic management can be said to be included within these broad objectives.

(i) DETERMINING WHERE YOU ARE NOW

The first step in strategic management requires 'self evaluation', 'situational analysis' and 'competitor analysis'. It is actually one of the most challenging tasks and requires great objectivity. These processes allow the management to take stock of how they are placed viz a viz their competitors and how are the circumstances and changes therein likely to impact their status. The need for such evaluation was first describes by Philip Selznick in 1957. The processes for doing so gradually evolved and were later developed into SWOT analysis at the Harvard Business School. SWOT analysis consists of identifying strengths and weaknesses of the organization and their relevance to the capabilities and vulnerabilities of the organization in responding to the opportunities and threats provided by external environment.

(ii) DETERMINING WHERE YOU WANT TO GO

This is perhaps the easiest to implement but the most critical step. It consists of evolving a vision for the organization in terms of its size, scope, nature and products. Peter Drucker described this step as 'Management by objectives' in as early as 1954. In many ways this is a step that often depends to a large extent upon the intuition

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