In management, strategic management includes the formulation and implementation of the primary goals and initiatives made by top managers of an organization on behalf of owners, based on resources and assessing the internal and external environments. Strategic management presents overall direction to an enterprise. It includes specifying the organization's objectives, developing policies and plans to achieve those objectives, and allotting resources to implement the plans. Academics and practicing managers have created numerous models and frameworks to assist in strategic decision-making in complex environments and competitive dynamics.
According to Johnson and Scholes, A strategy is the organization's objective and scope over the long or short term: which achieves the organization's advantage through its configuration of resources within a challenging environment. A strategy is a master plan with clarity of objectives that need to be achieved in the short and long term. It shows a current or future plan of action.
A strategy exists at all levels in any organization, such as in Corporate, Business Unit, and Operational. First, the Corporate Strategy is concerned with the business's overall transaction, purpose, and scope to meet stakeholder expectations. This is a crucial level since investors heavily influence it in the business and guide decision-making strategically. A Business Unit Strategy focused more on how a business competes successfully in a particular market. It involves strategic decisions about choosing products, meeting customers' needs, gaining an edge over competitors, creating unique opportunities, etc. Lastly, Operational Strategy goes into how each part of the business addresses the corporate and business-unit level strategy. Hence it focuses on issues of resources, processes, people, etc.
Strategic management's primary purpose is to increase an organization's competitiveness in the marketplace to make short-term and long-term strategies that focus on gaining an advantage over competitors.
One way to increase competitiveness is having all of the information needed to precisely assess and evaluate competitors' positions in the marketplace and spot gaps and opportunities to gain advantages. Advancements and improvements in communications technology and global travel have changed the way business is done worldwide. A face-to-face conference or gathering that would have to take a three-month tour now only needs an eight-hour flight. In the 21st century, Business transactions occur just as speedily. Even cross-continental flights are being substituted by ready-to-use video chat thru the Internet.
Business transactions occur just as speedily. With that, globalization's pace takes the struggle for competitiveness to a new level, which has profound strategic management indications.
According to Investopedia, the globalization is the spread of products, technology, information, and jobs over countries. It represents an interdependence of nations around the globe fostered through free trade.
Globalization is the process of interplay and alliance among different nations. It is driven by international trade and investment, which is assisted by information technology. This process impacts the environment, culture, political systems, economic development and prosperity, and human physical well-being in societies worldwide.
In today, strategic plans must include global considerations or consider globalization while remaining focused on the local economy's competitive climate. For example, long-term financial plans must take foreign nations' economic conditions into account since economic problems on one side of the world can influence a company's local economy. Likewise, refiners of raw materials must consider the price and quality of goods imported from outside of their home country, even when trading solely with domestic customers.