Strategic management

A set of managerial decisions and actions that determine the long run performance of a
corporation. The study of strategic management therefore, Emphasizes the monitoring
and evaluating of external opportunities and threats in light of a corporation’s strength
and weakness.

Strategic or institutional management is the conduct of drafting, implementing

and evaluating cross-functional decisions that will enable an organization to achieve its
long-term objectives.[1] It is the process of specifying the organization's mission, vision
and objectives, developing policies and plans, often in terms of projects and programs,
which are designed to achieve these objectives, and then allocating resources to
implement the policies and plans, projects and programs. A balanced scorecard is often
used to evaluate the overall performance of the business and its progress towards
objectives.

Strategic management is a level of managerial activity under setting goals and over
Tactics. Strategic management provides overall direction to the enterprise and is closely
related to the field of Organization Studies. In the field of business administration it is
useful to talk about "strategic alignment" between the organization and its environment
or "strategic consistency". According to Arieu (2007), "there is strategic consistency
when the actions of an organization are consistent with the expectations of
management, and these in turn are with the market and the context."

“Strategic management is an ongoing process that evaluates and controls the business
and the industries in which the company is involved; assesses its competitors and sets
goals and strategies to meet all existing and potential competitors; and then reassesses
each strategy annually or quarterly [i.e. regularly] to determine how it has been
implemented and whether it has succeeded or needs replacement by a new strategy to
meet changed circumstances, new technology, new competitors, a new economic
environment., or a new social, financial, or political environment.”

Strategic formulation is a combination of three main processes which are as follows:

 Performing a situation analysis, self-evaluation and competitor analysis: both

internal and external; both micro-environmental and macro-environmental.
 Concurrent with this assessment, objectives are set. These objectives should be
parallel to a time-line; some are in the short-term and others on the long-term.
This involves crafting vision statements (long term view of a possible future),
mission statements (the role that the organization gives itself in society), overall
corporate objectives (both financial and strategic), strategic business unit
objectives (both financial and strategic), and tactical objectives.
 These objectives should, in the light of the situation analysis, suggest a strategic
plan. The plan provides the details of how to achieve these objectives.

Benefits of strategic management

A survey of 50 corporations in a variety of countries and industries found the three

most highly related benefits of strategic management to be:
-clearer sense of strategic vision for the firm

-sharper focus on what is strategically important

-improved understanding of a rapidly changing environment

To be effective, however strategic management

Need not always be a formal process. It can begin with a few simple questions.

-where is the organization now?

-if no changes are made, where will the organization be in 1 year? 2year? 5years? Are
the answers acceptable?

-if the answer are not acceptable, what specific actions should management under
take? What are the risk and payoffs involved?

Tactical management

The difference between strategy and tactics is that strategy defines "what" is to be
done but tactics defines the "how". Tactical management is the use of tactics to
implement strategy. This is different from traditional management in that in traditional
management there is usually one procedure (standard operating procedure) for getting
any action done whereas tactical management allows the manager to select appropriate
tactics for best achieving the objective.

SWOT analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business venture.
It involves specifying the objective of the business venture or project and identifying
the internal and external factors that are favorable and unfavorable to achieve that
objective. The technique is credited to Albert Humphrey, who led a convention at
Stanford University in the 1960s and 1970s using data from Fortune 500 companies.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning, has
been the subject of much researchCitation Needed.

 Strengths: attributes of the person or company that are helpful to

achieving the objective(s).
 Weaknesses: attributes of the person or company that are harmful to
achieving the objective(s).
 Opportunities: external conditions that are helpful to achieving the
objective(s).
 Threats: external conditions which could do damage to the objective(s).
Identification of SWOTs are essential because subsequent steps in the process of
planning for achievement of the selected objective may be derived from the SWOTs.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning, has
been the subject of much researchCitation Needed.

 Strengths: attributes of the person or company that are helpful to

achieving the objective(s).
 Weaknesses: attributes of the person or company that are harmful to
achieving the objective(s).
 Opportunities: external conditions that are helpful to achieving the
objective(s).
 Threats: external conditions which could do damage to the objective(s).

Identification of SWOTs are essential because subsequent steps in the process of

planning for achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given
the SWOTs. If the objective is NOT attainable a different objective must be selected
and the process repeated.

The SWOT analysis is often used in academia to highlight and identify strengths,
weaknesses, opportunities and threats [citation needed]. It is particularly helpful in identifying
areas for development

Decision Making

Decision making can be regarded as the mental processes (cognitive process)

resulting in the selection of a course of action among several alternatives. Every
decision making process produces a final choice.[1] The output can be an action or an
opinion of choice.

Human performance in decision making terms has been the subject of active research
from several perspectives. From a psychological perspective, it is necessary to examine
individual decisions in the context of a set of needs, preferences an individual has and
values they seek. From a cognitive perspective, the decision making process must be
regarded as a continuous process integrated in the interaction with the environment.
From a normative perspective, the analysis of individual decisions is concerned with the
logic of decision making and rationality and the invariant choice it leads to. [2]

Yet, at another level, it might be regarded as a problem solving activity which is

terminated when a satisfactory solution is found. Therefore, decision making is a
reasoning or emotional process which can be rational or irrational, can be based on
explicit assumptions or tacit assumptions.

Logical decision making is an important part of all science-based professions, where

specialists apply their knowledge in a given area to making informed decisions. For
example, medical decision making often involves making a diagnosis and selecting an
appropriate treatment. Some research using naturalistic methods shows, however, that
in situations with higher time pressure, higher stakes, or increased ambiguities, experts
use intuitive decision making rather than structured approaches, following a recognition
primed decision approach to fit a set of indicators into the expert's experience and
immediately arrive at a satisfactory course of action without weighing alternatives.
Recent robust decision efforts have formally integrated uncertainty into the decision
making process. However, Decision Analysis, recognized and included uncertainties with
a structured and rationally justifiable method of decision making since its conception in
1964.

A major part of decision making involves the analysis of a finite set of alternatives
described in terms of some evaluative criteria. These criteria may be benefit or cost in
nature. Then the problem might be to rank these alternatives in terms of how attractive
they are to the decision maker(s) when all the criteria are considered simultaneously.
Another goal might be to just find the best alternative or to determine the relative total
priority of each alternative (for instance, if alternatives represent projects competing for
funds) when all the criteria are considered simultaneously. Solving such problems is the
focus of multi-criteria decision analysis (MCDA) also known as multi-criteria decision
making (MCDM). This area of decision making, although it is very old and has attracted
the interest of many researchers and practitioners, is still highly debated as there are
many MCDA / MCDM methods which may yield very different results when they are
applied on exactly the same data. [3]

Decision Making
• Objectives must first be established
• Objectives must be classified and placed in order of importance
• Alternative actions must be developed
• The alternative must be evaluated against all the objectives
• The alternative that is able to achieve all the objectives is the tentative decision
• The tentative decision is evaluated for more possible consequences
• The decisive actions are taken, and additional actions are taken to prevent any
adverse consequences from becoming problems and starting both systems (problem
analysis and decision making) all over again