The strategic management, also called general policy, is a set of decisions and guidelines taken within a company, with the aim of guaranteeing more than performances and long-term results.
To implement the actions, managers and general management have at their disposal several analysis tools. They allow them to implement the strategy, to implement it with the teams and to evaluate it to determine if it is effective or if it needs to be improved.
One of strengths of strategic management is that it promotes the development of the company in a sustainable manner, while taking into account several essential elements such as the context, the environment, the market or even developments.
Our guide is specially designed to help you understand strategic management, know the tools to use and thus improve the performance of your business in the long term.
The fundamentals of strategic management
Definition and objectives
Strategic management includes decisions aimed at achieving a company's goals. To use it, several parameters must be taken into account:
- the internal parameters of the company: resources, skills...
- the external parameters of the company: analysis of the environment, success factors, competitors, market...
Ce type of management concerns the parties who have an influence on the company's orientations: operational managers, researchers, consultants... It offers a global strategy of the company, and determines the position of the company in relation to the market.
What is the aim of strategic management? Thanks to strategic management, a company can obtain long term results, to ensure its growth and sustainability. By conducting a thorough analysis of the market, the company can obtain a accurate diagnosis to guide the various elements of the strategy.
The difference between strategic management and operational management
Strategic and operational management have very distinct but complementary modes of operation. Their common goal is to optimize the operation of the company by taking into account several factors such as the environment, room for maneuver, the objectives to be achieved, as well as the actions and means used to achieve them.
The strategic management offers lasting results. Decisions are taken by senior management, and concern all actors in the organization. For example, it may be forming a team on new software, or learning a foreign language.
The operational management concerns the day-to-day management of the company. It has two main functions: mobilizing the various resources set by strategic management to achieve objectives, and coordinating the actions of the members of the organization. To be effective, operational management uses three areas of action: organizational, technical and human. The decisions taken are frequent, not very complex and programmable. They act in the short term, and are generally taken by management personnel. For example, recruiting a new member is a useful decision over a defined and specific period of time.
Table of differences between strategic and operational management
The role of the strategic manager
The strategic manager The role is to define a business strategy in line with management methods, resources, and available resources. It must federate and empowering employees around the project, maintain and develop their skills with the common goal of achieving the defined objectives. Regularly, he must evaluate the results and carry out reports to monitor the evolution of the project, and put in place areas for improvement if necessary. In summary, the strategic manager must combine performance and profitability, to guarantee the sustainability of the company.
An effective strategic manager should:
- develop and lead an action plan while leading a team;
- empowering and mobilizing teams;
- motivate, involve and develop everyone's skills;
- listen to ideas, provide feedback and reports;
- encourage team cohesion, the Taking initiatives, the management of conflicts and the establishment of a climate of trust;
- manage deadlines and analyze performance.
The key tools of strategic management
Porter's 5 forces
THEPorter analysis is a model that makes it possible to conduct an analysis of competitive forces in a defined sector. Created by Michaël E.Porter (professor of strategy at Harvard), it aims to assess strengths and produce a structural analysis of sectors.
Porter's 5 strengths:
- Bargaining power of suppliers: analyze all aspects of the supplier to preserve the activity (number, reputation, size, quality, bargaining power...).
- Bargaining power of customers: study of customer behavior to influence prices, sales conditions and business profitability. Define a target customer base (based on number, demographic criteria, habits, preferences, needs...) to propose an adapted offer and retain customers.
- Arrival of new players on the market: implement strategies to limit the threat of new market entrants.
- Threat of substitute products: explore possible alternatives to products already offered to create added value to the existing offer.
- Intra-sensory competition: analyze how competitors manifest themselves in order to understand how they work and be able to differentiate themselves more easily.
Example ofUse of Porter's 5 forces (table to be filled in):
Other tools and templates
There are other tools and models used by companies that opt for strategic management:
- SWOT analysis (Strenght, Weakness, Opportunities, Threats): in French, it means Strengths, Weaknesses, Opportunities, Threats. This analysis tool is used to make important strategic decisions. It makes it possible to establish a complete diagnosis of the entire company ecosystem internally (strengths and weaknesses of the company) and externally (external opportunities and threats). In short, SWOT analysis defines the strengths and weaknesses of an organization with respect to its environment.
Example of a table to complete for a SWOT analysis
- PESTEL analysis : this tool helps to analyze each factor in the environment in which the company operates. It is an acronym for Political, Economic, Sociocultural, Technological, Ecological and Legal. PESTEL analysis makes it possible to measure the positive impact (opportunities) or negative (threats) of these external factors. The aim is to better understand the environment, the dangers and the opportunities to be seized. La decisionmaking is adapted to the context and the impacting factors.
PESTEL analysis example (table to be completed)
- BGC matrix : it is a decision-making tool represented by a graph based on two strategic values: the market growth rate and the relative market shares of a company. This matrix makes it possible to highlight the potential of each product in the company's portfolio, based on market attractiveness and competitive position. The result is obtained according to the place on the matrix: the products are classified into four categories: star products, cash cow products, dead weight products and dilemma products.
- GE matrix : it is a tool that provides advice on how a business should prioritize your investments by classifying them into different categories: investing, protecting, harvesting, disinvesting. The result determines whether the activities should be valued or not.
The 4-step strategic approachTo work, a strategic approach must be shared into several key steps.
First of all, the external analysis (environment) and the internal diagnosis of the company. Then, the formulation of the strategy the most effective and then its implementation (operational part). Finally, evaluation and control, reports and performance studies breaches.
Environmental analysis and internal diagnosis
It must be interested in the internal factors (strengths, weaknesses) and external factors (market opportunities and threats) of the company. Analyzing and diagnosing the environment is the first step in setting up a strategy, as it makes it possible to undertake a personalized approach and adapted to the expectations of the company. The SWOT matrix is ideal for this stage.
Formulation of the strategy
The strategy must be prepared in advance, because it is unique, complex and programmed. It is necessary to take into account all elements relating to the business and its internal and external analysis: resources, skills, development potential, limits of room for maneuver in relation to the market...
Implementing the strategy
Operational part, the strategy is put into action, in compliance with operational plans and thanks to the activation of the resources necessary for its development: human and financial resources...
Assessments and controls The objective of this stage is to take a step back, analyze, evaluate the relevance of the strategy depending on forecast results.
It is a question of taking stock and adapting or redirecting the strategy if necessary.
Strategic management levelsWhat are the three levels of strategic management? Corporate, business and functional management:
- Corporate management : it is set up and validated by the managing directors and shareholders. It is organized around three major components: activities, location and investments. It starts with the creation of the company, and throughout its development. The objective of corporate management is to define a portfolio of more or less profitable activities, to diversify the activity, or to refocus on a particular core business, for example. It is a global vision of the company, which gives impetus, with guidelines to follow for the implementation of all the strategic aspects of the company.
- Management business : it consists of governing the company by exercising the direction of maneuvers, coordinating actions and creating a perspective to be achieved. Business management is implemented through a market study (business plan) by the general management, then decision-making concerning the financial, human, technical, commercial resources used to deploy the activity.
- Functional management : it is an organization by functions within the corporate strategy. It makes it possible to avoid duplicates and to ensure effective communication and hierarchical (vertical and horizontal).
Conclusion
Strategic management will help your business on several essential points to remember:
- Important decisions that can be implemented over the long term
- Action plan that takes into account the internal and external factors of the company
- Several tools available
- Competitiveness and sustainability
- Performance and results
Strategic management has many benefits for your business, and for your teams. It makes it possible to refine the understanding of the environment external to society and to work on one and the same Guideline. It makes it easier to decision making by defining qualitative objectives, and improving overall performance. Finally, the internal diagnosis promotes team cohesion, communication and cooperation. In summary, strategic management is a management method that requires a great deal of expertise, but which offers very good results on several levels.
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