Strategic management is the development and implementation of all the goals and objectives of an organization. It involves the details of the method that a company will employ to achieve its goals. It represents the initiatives that a company plans to take on behalf of its board of directors, its employees, its owners and other relevant stakeholders. A strategic manager is involved in the team that accomplishes the goals set out in the strategic plan. A strategic manager is professionally trained in strategy formulation by getting certified from a strategic management course commonly available in business schools or online educational portals.
Strategic management provides direction to the company and its employees. It helps layout the strategic objectives of the organization in an easy to understand way. The strategic goals of an organization are long term in nature and may take years. However, a company keeps itself on track by ensuring that all their plans are in accordance with its strategic plan.
According to marketing guru Michael Porter, there are three principles of the strategy. The organization’s strategy should help in creating a valuable and unique positioning of the company in the market. It should help the company in choosing what it should not do and; it should help the company in aligning its various activities with each other.
Because of the obvious benefits that strategic management possesses, it is gaining relevance among Indian corporates. These benefits are as follows –
- Strategic management is helping Indian corporates in giving their businesses a direction
India’s booming economy is home to a variety of start-ups. These start-ups are new and need to stay focused. A good strategy allows them to keep their eyes on the goal. It helps them set clear goals on what business they want to be in and what kind of customers they want to serve. With the plethora of market segments available in a vibrant economy, it is easy to get confused. A clear-cut strategy helps organizations stay out of the confused state.
- Strategic management allows situational analysis through management tools
One of the management styles in strategic management is called situational analysis. It helps a business evaluate itself in its current market. By doing this they can define where they want to be, their future course of action and the time frame that they want to define for reaching their goals. They can clearly fine-tune their working to achieve their goals by knowing how far they need to go from where they currently are. It helps them know how much resources they need to direct to achieve the desired result in the stipulated time frame.
- Strategic management helps look around for strategic alliances
Once a company has a set of goals and a time frame to achieve those goals, they can find out means that can help them speed up their process of achievement of the decided goals. One of those means is a strategic alliance. A strategic alliance can happen between two organizations which have similar or complementing strategic objectives. They can have a partnership, or a bigger firm can acquire a smaller one. This provides both the sides access to each other’s resources and customer base. They can place each other’s products in their stores. In this manner, by tying the growth of the organization with the strategic alliances, one can fasten the goal completion.
- Strategic management encourages innovation
Innovation is one of the key criteria for keeping a business relevant in the eyes of the customers. It keeps the company on its toes and encourages employees to create new products and processes which are better than the previous ones.
However, a recent study by the IBM Institute for Business Value and Oxford Economics claims that 90% of Indian start-ups fail due to lack of innovation. 77% of the venture capitalists who were interviewed for this study said that Indian start-ups lacked new technologies and fresh business models. In 2016, Asian Paints was the only Indian company in Forbes magazine’s list of 25 most innovative companies. Most Indian start-ups in fact are known to emulate western business models. Lack of innovation is evident in the way they fail to sustain themselves. Since 2015, more than 1500 Indian start-ups have closed down in India.
This shows that a very critical aspect that Indian companies need to look at is innovation. Strategic management allows a company to innovate and sustain itself in the long run.
While India is home to the third-largest number of start-ups globally, it does not have meta-level start-ups like Amazon, Alibaba or Google. Strategic management is highly relevant in this case as a well-thought strategic plan will help these company find out loopholes and fix them ahead of time.