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What is strategic management?
Strategic management is the art and science of formulating, implementing and evaluating
cross-functional decisions that will enable an organization to achieve its objectives. It
involves the systematic idendification of specifying the firms objectives, nurturing policies
and strategies to achieve these objectives, and acquiring and making available these
resources to implement the policies and strategies to achieve the firms objectives. Strategic
management, therefore, integrates the activities of the various functional sectors of a
business, such as marketing, sales, production etc. , to achieve organizational goals. It is
generally the highest level of managerial activity, usually iniated by the board of directors
and executed by the firms Chief Executive Officer (CEO) and executive team. Strategic
management hopes to provide overall direction to the company has ties to the field of
organization studies.
"Strategic management is an ongoing process that assesses 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." (Lamb, 1984)
Generally, there are two main ideologies which dictate the approach taken, these are
opposite but complement each other in some ways, to strategic management:
The Industrial Organizational Approach
o centred on economic theory tackles issues like competitive rivalry, resource allocation
and economies of scale
o assumptions rationality, self discipline behaviour, profit maximization
The Sociological Approach
o deals mainly with human interactions
o assumptions bounded rationality, satisfying behaviour, profit sub-optimality. An example
of a company that currently operates this way is Google.com, the internet search engine.
Strategic management techniques can be viewed as bottom-up, top-down, or collaborative
processes. In the bottom-up idealogy, employees submit proposals to their respective
supervisors who, in turn, channel the best suggestions further up the company food chain.
This is usually processed through a capital budgeting system. New ideas are scrutinesed
using financial criteria such as return on investment or cost-benefit analysis. The proposals
that pass these initail feasiblity tests form the substance of a new strategy, all of which is
processed without an overall strategic design or a strategic architect. The top-down
approach is the most common by far. In it, the CEO (such as Don Sheelen {Regina
vacuum cleaners}, Jeff Bezos {Amazon.com} and Samuel J. Palmisano {IBM}) with more
