Strategic management of small firms and importance of strategic management skills

Strategic Management, can be looked as, the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objective.

Analysis:

The on-going process of formulating, implementing and controlling broad plans guide the organizational in achieving the strategic goods given its internal and external environment.

Interpretation: 

1. On-going process:

Strategic management is a on-going process which is in existence through out the life of organization. 

2. Shaping broad plans:

First, it is an on-going process in which broad plans are firstly formulated than implementing and finally controlled. 

3. Strategic goals:

Strategic goals are those which are set by top management. The broad plans are made in achieving the goals.

4. Internal and external environment:

Internal and external environment generally set the goals. Simply external environment forced internal environment to set the goals and guide them that how to achieve the goals?

Importance of strategic Management

Strategic management becomes important due to the following reasons:

Globalization: 

First, global considerations impact virtually all strategic decisions! The boundaries of countries no longer can define the limits of our imaginations. To see and appreciate the world from the perspective of others has become a matter of survival for businesses. The underpinnings of strategic management hinge upon managers' gaining an understanding of competitors, markets, prices, suppliers, distributors, governments, creditors, shareholders, and customers worldwide. The price and quality of a firm's products and services must be competitive on a worldwide basis, not just a local basis.

The distance between the business sectors are becoming less due to the provisions of certain facilities. Although political boundaries are there but in order to become successful in business it is essential to laid stress on globalization.

E-Commerce: A business tool

A second theme is that electric commerce (e-commerce) has become a vital strategic-management tool. An increasing number of companies are gaining competitive advantage by using the Internet for direct selling and for communication with suppliers, customers, creditors, partners, shareholders, clients, and competitors who may be dispersed globally. E-commerce allows firms to sell products, advertise, purchase supplies, bypass intermediaries, track inventory, eliminate paperwork, and share information. In total, electronic commerce is minimizing the expense and cumbersomeness of time, distance and space in doing business, which yields better customer service, greater efficiency, improved products and higher profitability.

The Internet and personal computers are changing the way we organize our lives; inhabit our homes; and relate to and interact with family, friends, neighbors, and even ourselves. The Internet promotes endless comparison shopping which enables consumers worldwide to band together to demand discounts. The Internet has transferred power from businesses to individuals so swiftly that in another decade there may be "regulations" imposed on groups of consumers. Politicians may one day debate the need for "regulation on consumers" rather than "regulation on big business" because of the Internet's empowerment of individuals. Buyers used to face big obstacles to getting the best price and service, such as limited time and data to compare, but now consumers can quickly scan hundreds of vendors’ offerings. Or they can go to Web sites such as Compare Net.com that offers detailed information on more than 100,000 consumer products.

The Internet has changed the very nature and core of buying and selling in nearly all industries.

It has fundamentally changed the economics of business in every single industry worldwide

Earth environment has become a major strategic issue

A third theme is that the natural environment has become an important strategic issue. With the demise of communism and the end of the Cold War, perhaps there is now no greater threat to business and society than the continuous exploitation and decimation of our natural environment. The resources are scarce but the wants are unlimited. In order to meet the wants of the world, the resources
should be efficiently utilized. For example, the use of oil resources or energy resources will make the people to use these resources for a long time.

Strategic management – A route to success:

The study of strategic management integrates different topics. Different courses are integrated due to the study of this course so that businesses become successful in every sector. It integrates the following:

Marketing
Management
Finance
Research and development

The management and marketing are essential part of a business sectors. They should be integrated. Just like other sections of the business are integrated under this study. This term is mostly used by academia but this is also used in media.
The fundamental question in the field of strategic management is how firms achieve and sustain competitive advantage. This can be confronted by developing the dynamic capabilities approach, which endeavors to analyze the sources of wealth creation and capture by firms. The development of this framework flows from a recognition by the authors that strategic theory is replete with analyzes of firm-level strategies for sustaining and safeguarding extant competitive advantage, but has performed less well  
 

Conclusion

 

Strategy-evaluation framework that can facilitate accomplishment of annual and long-term objectives. Effective strategy evaluation allows an organization to capitalize on internal strengths as they develop, to exploit external opportunities as they emerge, to recognize and defend against threats, and to mitigate internal weaknesses before they become detrimental.

Strategists in successful organizations take the time to formulate, implement, and then evaluate strategies deliberately and systematically. Good strategists move their organization forward with purpose and direction, continually evaluating and improving the firm's external and internal strategic position. Strategy evaluation allows an organization to shape its own future rather than allowing it to be constantly shaped by remote forces that have little or no vested interest in the well-being of the enterprise. 

Although not a guarantee for success, strategic management allows organizations to make effective long- term decisions, to execute those decisions efficiently, and to take corrective actions as needed to ensure success. Computer networks and the Internet help to coordinate strategic-management activities and to ensure that decisions are based on good information. A key to effective strategy evaluation and to successful strategic management is an integration of intuition and analysis.

A potentially fatal problem is the tendency for analytical and intuitive issues to polarize. This polarization leads to strategy evaluation that is dominated by either analysis or intuition, or to strategy evaluation that is discontinuous, with a lack of coordination among analytical and intuitive issues.

Strategists in successful organizations realize that strategic management is first and foremost a people process. It is an excellent vehicle for fostering organizational communication. People are what make the difference in organizations. 

The real key to effective strategic management is to accept the premise that the planning process is more important than the written plan, that the manager is continuously planning and does not stop planning when the written plan is finished. The written plan is only a snapshot as of the moment it is approved. If the manager is not planning on a continuous basis—planning, measuring, and revising—the written plan can become obsolete the day it is finished. This obsolescence becomes more of a certainty as the increasingly rapid rate of change makes the business environment more uncertain.

Sources:

Virtual University of Pakistan 

Fred R. David,Strategic Management: Concepts and Cases (12th Edition)

Thomas L. Wheelen,Strategic Management & Business Policy: Achieving Sustainability (12th Edition)