5 Essential Terms of Strategic Management

Strategists collect information to identify competitive trends in the sector & set long-term objectives for an organization's success. Learn more about 5 essential terms of strategic management.

5 Essential Terms of Strategic Management

People in the organization who are responsible for the organization's success or failure are known as strategists. These strategists can be the CEO, president of the board, owner of 26%, businessman, or dean, among others. They collect, analyze, and organize information to identify competitive trends in the sector, establish scenario analysis, forecast models, evaluate corporate performance of divisions, and point out new marketing opportunities. They also highlight potential threats to the organization and prepare possible action plans.

In addition, they assist in support or staffing functions and make decisions at the top level of the organization's management. Different organizations have different types of strategies that change during the formulation, implementation, and evaluation phase. The personal philosophies of strategists also affect the selection of certain strategies. External opportunities and threats are also part of the key terms of strategic management. These include social, economic, environmental, cultural, demographic, political, legal, technological competition and technology trends and events that can harm or benefit an organization.

Examples of external opportunities include seizing opportunities and preventing threats. For this purpose, it is essential to identify, monitor, and evaluate external opportunities and threats for long-term success. Long-term objectives are also one of the important key terms of strategic management. These objectives are particular results that an organization wants to achieve by focusing on its mission. Strategies include those actions that are carried out to achieve long-term objectives.

There must be a coherent time frame for the objectives of the strategies which range from two to five years. Long-term objectives are necessary for an organization's success for several reasons. Without them, the organization moves towards an unknown end. Short-term goals that help achieve the organization's long-term objectives are called annual objectives. These must be quantitative, measurable, realistic, challenging, and consistent.

They must be developed at the corporate, functional and divisional levels in large organizations. Resource allocation is represented by annual objectives which are important for strategy implementation. The formulation phase contains long-term objectives while strategists are primarily responsible for an organization's success or failure. Today many organizations develop a vision statement that answers the question: What do we want to become? This is often considered the first step in strategic planning even before developing a mission statement. Many vision statements are a single sentence and companies must think strategically to survive and thrive in this highly competitive world. There are five essential tasks of strategic management which include developing a strategic vision and mission, setting objectives, developing tactics to achieve those objectives, implementing and executing tactics, and evaluating and measuring performance. A large amount of resources along with top management decisions is required to implement strategies in the form of actions.

In this step management decides how best to respond to changes in the environment, how to overcome competition and how to move towards corporate vision and strategic objectives. It is very essential for an organization to identify and evaluate its strengths and weaknesses in order to develop a successful strategic plan. Organizations strive to implement strategies that take advantage of internal strengths and improve internal weaknesses. The fourth step includes determining what company resources should be allocated to each activity; establishing policies; motivating employees; providing necessary resources; fostering a culture of continuous improvement; setting strategic objectives which seek to increase competitive position; gain market share; or develop a competitive advantage. Business strategies may include geographical expansion; diversification; acquisition; product development; market penetration; reduction; divestment; liquidation; or joint venture. The first step in strategic planning is developing a vision statement followed by a mission statement.

Lammy Heijden
Lammy Heijden

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