Strategic Management: Principles, Processes, and Types

Strategic Management

Strategy is the set of decisions a company can take on actions to be undertaken, and the resources that can be used in these actions. However, to achieve a series of business objectives at various levels, success must be sought. All management is given a rating based on economic, technological, or social factors, and considering the possible reactions that may occur against the competitive strategies of the company.

Items

Strategic Analysis

Before defining a strategy, a set of underlying elements must be considered as the basis for good strategic management:

1. Economic, Social, Political, and Technological Environment: Influence of external factors.
2. Strategic Capacity: Weaknesses that must be avoided and strengths that must be strengthened.
3. Promoters' Expectations: The role of clearly defined objectives and prior goals that are to be achieved.

Strategic Choice

To determine what kind of strategy is to be implemented, each responds to characteristics according to the company and its environment. The three types of strategies are:

• Corporate
• Business
• Operations

Implementing the Strategy

This is to define and plan how the company's strategy will be applied in terms of resources, and defining an organization of the temporary plan of action for the strategies that must be developed.

Process of Strategic Management

1. Definition of objectives
2. Evaluation of internal resources
3. Evaluation of external resources
4. Analysis of the competitive environment
5. Elaboration of future scenarios
6. Formulation of the strategy
7. Evaluation of strategic alternatives
8. Strategic tools
9. Strategic control

Competitive Strategy

How to stay objective in securing a competitive advantage.

The Basis of Competitive Strategy

• Reduced-Pricing Strategy
• Differentiation Strategy: Offering a product different from the competition.
• Hybrid Strategy: Reduced-price differentiation.
• Strategy of Low Production Costs: Through an advantage in production scale.
• Segmented Differentiation Strategy: Companies are offering a significant value difference with respect to competition, allowing them to justify higher prices.

Value Creation

An engine is most important to achieve the success of a competitive strategy, since in markets where there is much competition, trade margins are reduced, and reduced-price strategies have no effect, it becomes a great way.

Types

Corporate

Decisions are made related to the objective of the company with the intention of satisfying the expectations of owners and adding value to parts of the company. Features:

• Set the framework for making decisions.
• They are global, as they are at the highest level of strategic direction, implying that they are usually applied by large companies with a wide range of products.
• Long-term temporal dimension.

Business

More specific aspects, such as the definition of the elements that can make the company's products competitive within its market. Features:

• Usually applied by SMEs that tend to operate with a single product.
• Medium-term temporal dimension.

Operative

Heed to efficiently manage the resources that are in the company, both at a departmental and a more general level. Characteristics:

• Related to day-to-day specifics.
• Short-term temporal dimension.

Strategic Principles

1. Strengths and weaknesses of the environment
2. Market opportunity
3. Strength of innovation
4. Potential synergy
5. Means
6. Value of simplicity
7. Business constancy