The concept of strategic management first arrived in the American workplace with Army officers returning to the management of businesses after commanding platoons during World War II. Over time, organizational leaders began to find this top-down method of managing workers to be as effective in the business world as it was on the battlefield. By the 1970s, the strategic management process had become a common method of organizational planning. Strategic management has several different functions within contemporary businesses as well as non-profit organizations.
The primary function of strategic management is to develop medium, or mid-term, strategies for the organization. Mid-term strategies are those which focus on the organizational leader's vision for the company with the mid-term range of 2 to 4 years, as opposed to short-term or long-term strategies. The strategic management process should be reviewed and adjusted periodically to ensure that these medium-term plans remain relevant to the organization's desired position within the industry.
Another essential function of strategic management is the alignment of day-to-day work activities with the overall mission of the organization. The strategic management process typically begins with the development of a mission statement, which articulates the organization's reasons for being in existence. The mission statement defines why and how the business does what it does and sets the tone for the organization.
Sustainable Competitive Advantage
The creation and maintenance of a sustainable competitive advantage is another essential function of strategic management. This is commonly accomplished through the use of a SWOT analysis, gap analysis or a combination of both. Through the use of the SWOT analysis, leaders may identify internal strengths and weaknesses as well as external opportunities and threats which may help or hinder the organization's ability to maintain a sustainable competitive advantage. Gap analysis, meanwhile, measures the gap between the organization's current position and its desired position.
No amount of strategic planning will be successful without effective implementation. The final function of strategic management is the implementation of strategies conceived throughout the process. These strategies -- which begin as abstract concepts at the uppermost echelons of the organization -- are finally disseminated downward through the ranks for implementation at the operational level. Strategy implementation typically occurs through the use of policies and procedures developed to align the day-to-day functional and operational activities of the organization with its mission statement.
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