Knowing how to set yourself apart from your competitors is no easy feat. With so many other companies doing similar things, knowing exactly how to identify what makes you different can be tricky. But this information is vital to attract customers and gain a competitive advantage.
This is where the strategic management process can help.
In this article, we'll outline what strategic management is and its benefits, and we'll walk you through the steps of the strategic management process.
What is strategic management?
Strategic management is the course you set after you systematically analyze your internal and external environment. This analysis helps you set effective strategic goals, figure out the best way to achieve them, and identify areas for improvement across the business.
Building a strategic management plan includes:
- Analyzing the competitive environment.
- Keeping up to date with the changing business landscape.
- Identifying opportunities and risks (also known as a SWOT analysis, which we’ll cover in more detail later).
- Setting goals and objectives.
- Allocating resources effectively.
- Tracking progress to ensure alignment with your vision and mission statements.
Ultimately, strategic management aims to look at the bigger picture and achieve your long-term goals.
What is the strategic management process?
The strategic management process (also known as the strategic planning process) outlines the steps you take to figure out where you want to be, how to get there, and whether you're succeeding.
Here are the common stages most businesses use:
Let’s look at these steps in a bit more detail.
- Setting goals. The first step involves clearly defining your organization's long-term goals and strategic objectives. These goals provide a clear direction and purpose for your strategic planning, which helps you define your vision for the future to help your business grow.
- Reviewing your business environment. Next, you'll thoroughly analyze your internal and external business environment. This means looking at the strengths, weaknesses, opportunities, and threats that may impact your business.
- Creating your business strategy. Based on the analysis of your business environment, you’ll develop a strategic plan. This plan outlines the actions and initiatives you’ll take to achieve your goals.
- Launching your strategy. Once your business strategy is complete, you’ll communicate it to your stakeholders and implement it across your organization. Part of this process involves assigning responsibilities, allocating resources, and establishing clear project timelines.
- Tracking performance. Regularly monitor and track the performance of your strategic initiatives to assess progress and identify areas that require adjustments. You’ll then use this feedback to refine your strategy and make informed decisions.
Keep reading to find out more about these stages and how to use them in your own business.
Why is strategic management important?
Let’s take a look at some of the benefits of strategic management.
To align goals across the business
Strategic management makes sure that your actions and initiatives are aligned with the long-term goals and objectives of the business. This means that you can be sure all your activities, resources, and time are helping you achieve your goals.
It also provides a clear direction and purpose for the business, which improves collaboration.
Think about a team that has a clear understanding of organizational goals. With this knowledge, they can all work together to make sure they’re contributing toward the success of the business. Without knowing what the business goals are, it’ll be much harder for them to collaborate effectively and reach the goals successfully.
To gain a competitive advantage
By analyzing the external environment and identifying opportunities and threats, you can figure out how to capitalize on your strengths and mitigate your weaknesses. As a result, you can differentiate yourself from competitors and provide customers with a unique product or service.
Let’s use an example to demonstrate this.
Imagine that your analysis of competitors shows that you don’t have much market share, but you do offer a unique and desirable product feature that none of your competitors have. To use this strength and increase your market share, you can focus on promoting this feature to gain a competitive advantage.
To improve resource allocation
Strategic management helps you optimize your resources, whether it's financial capital, human resources, technology, or other assets.
Let’s say that you’re struggling to allocate your budget to each department. With strategic management, you’ll have a better understanding of the company’s long-term goals. As a result, you can allocate your budget to help you achieve those goals.
For example, if one of your company goals is to reach a new market, you might allocate a higher budget to your sales and marketing teams to perform market research, outreach, and more.
To manage risk
With strategic management, you can proactively identify and manage risks. This means you can spot potential threats and put plans in place to prevent them from impacting your business.
For example, let’s say that a new business begins operating in your industry. This takes some of your market share, and you lose some customers in the process.
But because you’re using strategic management, you have contingency plans in place to deal with this situation. You have reserve funds to keep the business afloat and a new action plan to regain your competitive advantage and hopefully get those customers back.
How to use the strategic management process
Now that we know what the strategic management process involves and the benefits of using it, let’s outline the steps you can follow to use it in your own business.
1. Set your goals
Start by identifying what you want to achieve and setting long-term goals for your business. This will guide all your business activity, so it’s important that you set realistic, relevant, and impactful goals that’ll help your business grow.
To do this, we’d recommend using the SMART goals framework.
SMART is an acronym for specific, measurable, achievable, relevant, and time-bound. It’s a useful model for setting goals that’ll help you set clear goals for your business.
To use the SMART framework, start by defining your goal in a specific and clear manner. Then, ask yourself the following questions:
- How can I measure or track progress toward this goal?
- Is this goal achievable, given my available resources and constraints?
- How does this goal align with my broader objectives or the objectives of my organization?
- What is the deadline or timeframe for achieving this goal?
By answering these questions, you can refine your goal to make it SMART.
You might also create milestones to hit along the way, which are a great way to track progress and motivate everyone to keep working toward the business goal.
For example, let's say you have a key milestone halfway through your strategy. Hitting this milestone shows that you're on track to reach your goal and gives everyone a chance to celebrate their hard work.
Find out more about setting goals here: The Ultimate Guide to Setting Professional Goals in 2023.
2. Perform a business environment analysis
Next, you’ll analyze your different areas of the business environment to review your internal strengths and weaknesses, as well as the external opportunities and threats in your industry or market.
There are a few different ways to review your business environment, one of which is to perform a SWOT analysis.
Here’s how it works:
- Identify your strengths. Start by identifying the strengths of your business. These are the factors that give you a competitive advantage or unique capabilities. For example, your expertise, resources, technologies, brand reputation, or customer loyalty.
- Pinpoint weaknesses. Identify any areas where you may be at a disadvantage to your competitors. This could be limited resources, outdated technology, skill gaps, or any other internal limitations.
- Find opportunities. Evaluate any opportunities that could be good for your business. This might be new trends, market developments, emerging technologies, or changes in customer behavior.
- Locate any threats. Assess the threats that could pose challenges to your organization. For example, your competition, economic factors, changing consumer preferences, or any other external market forces that may hinder your success.
With all this information, you’ll be able to develop a strategy that focuses on your strengths, finds new opportunities, addresses weaknesses, and mitigates potential threats.
3. Create and implement your strategy
The next step involves creating your strategy and getting it off the ground. This typically involves the following steps:
- Decide which strategies to pursue. The first step of creating your strategy is to choose which type of strategy to use. Common strategies include differentiation (how to differentiate yourself from the competition), cost leadership (cutting costs to offer a better price for your customers), diversification (launching a new product line), and market segmentation (targeting specific customers with a specific product or service). The right strategy depends on the goals you’re trying to achieve. For example, if you want to penetrate a new market, you might consider a cost leadership strategy so you can offer a lower price to attract new customers.
- Outline your strategic activities. Strategic activities are events that must be completed to achieve the strategic goal. They could be a set of tasks or milestones that show progress toward the overall objective. To outline these activities, make a list of everything that needs to happen to reach the end of your strategy. Make sure you identify any dependencies or top-priority items as you go, as these will be important to the success of your strategy. If you use a platform like Motion to note all the activities, you can easily track top-priority items.
- Define roles and responsibilities. To run a successful strategy, everyone involved needs to know what their role is and what their responsibilities are. This means you need to assign specific tasks and accountabilities to individuals. To do this, break down your strategic activities into smaller, manageable tasks. Then, determine who’s best suited to fulfill each item. You can liaise with teams directly to make sure they’re on board with the activities and that they understand what they need to do. A task management tool is particularly helpful here as it allows you to share task information and update your team in a central location.
- Allocate resources. Assess your available resources to determine how to allocate them effectively to support your strategy. For example, if your strategy involves a new product, you might allocate more resources to your product development team.
Creating and launching your strategy may also require you to address changes in the company's culture, policies, or technology. For example, you might want to adopt an automated work-planning tool that helps you manage your tasks and track progress in real-time.
With this technology, you’ll be able to run a more efficient workflow and keep on top of how your strategy is progressing.
4. Monitor performance
The strategic management process is iterative. This means that you need to continually track progress, measure performance, and evaluate the effectiveness of the strategy.
To do this, you can review performance against the milestones you set. If things aren’t on track, you can make adjustments and get things back on schedule.
This is where a task management platform like Motion is helpful. For example, let’s say that you haven’t hit one of your milestones. With Motion, you can easily take a look at what’s going on to find the cause of the problem.
So you have a look at your workflow, and there’s a bottleneck that’s causing delays. You can immediately see the problem, so you take corrective action. Our AI-powered calendar can then automatically rebuild your tasks to get your strategy back on the right path.
Track your strategic management efforts with Motion
Strategic management is useful for any business that wants to align its goals and focus on the bigger picture. If you're thinking about using the strategic management process in your business, use Motion to make things easier.
With Motion, you can manage tasks, workflows, and resources in a central location. Plus, our calendar is automated, making it easy to reshuffle your schedule but keep high-priority items at the top of the agenda.
Try Motion for free to see what you think.