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Why You Should Use Strategic Management In Your Business

Strategic management becomes an important tool in business management and its success. This implies the implementation of strategic management models, the evaluation of the goals, vision and objectives of the organization, as well as its future plans. Deeply internalizing this strategy that is built by reviewing internal and external concepts is crucial to its success.


The importance of strategic management

Of course, it is your desire to make your business grow and succeed, and that requires a long-term vision. That is, the definition of goals and objectives to be achieved over time. But if you don't plan how to get there, it will be much harder to achieve the expected results. This is where strategic management comes into play, since it is the one that directs the company's actions towards success, helps to promote the necessary changes and overcome obstacles, as well as reducing risks and fully understanding the mission and vision of the company.

 

It is through strategic management that you make professionals working in the company aware of their responsibilities. This reflects the increase in productivity and, consequently, in the competitiveness of the business, and also helps in the proper use of resources, the reduction of waste and the maximization of the profitability of each action triggered by the company. Therefore, it is in strategic management that you should be guided to promote the continuous improvement of your business, in addition to ensuring the survival of the company over time.

 

Stages of strategic management

Generating strategic management alternatives: in this step, a series of alternatives are sought in the light of business, industry and competition of the company. These strategies can be acquisition or expansion, focus on core competencies, increasing market share, etc.

 

Evaluating the alternatives: at this stage, several strategies are observed based on the benefits they deliver. Similarly, questions such as:

  • Will it improve the position or market share of the company?
  • Will it increase existing strengths?
  • Will it bring new opportunities?
  • Will it maximize shareholders' equity?

 

Strategy selection: the optimal strategy is selected at this stage. This is where the company's internal and external analysis tools come into play.

 

When to use SWOT analysis and PEST analysis

SWOT analysis and PEST analysis are two of the most commonly used planning methods in the strategic management process. Here is a brief introduction to both methods.

 

SWOT analysis

When its structure is reviewed, it simply means analyzing 4 basic points:

  • Strengths: the advantages it has over the competition in relation to the project.
  • Weaknesses: the disadvantages that it has internally compared to the competition.
  • Opportunities: current external trends that are waiting to be seized.
  • Threats: external movements that can cause a problem and have a negative impact on your business.

This is one of the most used methods within the types of strategic management models. However, it is not enough to be aware of the weaknesses and strengths of organizations. The strategic management must bridge the gap between capacity gaps and strengths of a company. Apart from the internal resources that a company must have and the factors of the industry, there are other macroeconomic factors that can have a profound impact on the performance of a company. One method to discover and quantify these factors is the PEST analysis.

 

PEST analysis

PEST is an acronym for political, economic, social and technological. It is a way of understanding how external forces affect your business:

  • Political: The main issues discussed in this section include political stability, fiscal guidelines, trade regulations, safety regulations and labor laws.
  • Economic: this would include factors such as inflation, interest rates, economic growth, the unemployment rate and tariff policies of your country, and the economic cycle followed in the country.
  • Social: with the social factor, a company can analyze the socio-economic conditions of its market through factors such as customer demographics, cultural limitations, lifestyle and education.
  • Technological: these factors include technological advances, the life cycle of technologies and the role of the Internet, among others.

 

Have your team participate in strategic management meetings

A good organizational strategic management meeting is just that: a meeting based on your strategy. This meeting should not involve any discussion about operations. Getting the right equipment is extremely important for the success of your meetings. You need people who understand the organization and can speak with authority and help you maneuver. Continuity in attendance is also critical.

  • Vision: Build a clear vision of what success will be like in the future.
  • Priorities: identify short and medium-term priorities.
  • Alignment: obtain alignment and acceptance around the direction of the strategy.
  • Identify the challenges: talk about key issues facing the business.
  • Address: plan on a clear roadmap for the rest of the organization.
  • Open communication: open the lines of communication and improve teamwork.
  • Empowerment: delegate to others the tasks that will advance the organization.
  • Values ​​and culture: you will create the culture, values ​​and behaviors that you want to foster within your organization.