Strategic management and decision making
Strategic management is a disciplined effort or control to make necessary decisions that have an effect on a business or an organization; the aim of strategic management is mainly to develop new, innovative or diverse ideas and opportunities for potential or development, and facilitates or assists an organization to achieve its goals (SM, 2010). In reality, strategic management not only can be used or applied to determine mission, vision and values or objectives, but it also establishes roles and responsibilities or timelines in a business (David, 2009). In the following sections, this study will focus on and examine the nature of strategy formulation, implementation, and evaluation activities, and analyze the potential pitfalls or risks in using a strategic-management approach to decision making.
Strategy formulation is the process of establishing the firm's mission, goals, and choosing among alternative strategies or plans; it involves and implies that preparing the best approach to respond to the circumstances of a firm's environment, whether or not its conditions are known in advance; being strategic and tactical, then, means being clear about the management's aims; being aware of the company's resources, and incorporating both into being consciously responsive to a dynamic environment (SM, 2010). As nearly all businesses have limited resources, top leaders and management must determine which alternative plans or strategies will do well to the organization most; strategic management requires attention to the big picture and the motivation to adapt to circumstances, and consists of the following aspects:
Formulation of the organization's future mission in light of changing external factors such as regulation, competition, technology, and customers development of a competitive strategy to achieve the mission creation of an organizational structure which will deploy resources to successfully carry out its competitive strategy. Strategic management is adaptive and keeps an organization relevant (S.M, 2010, p.1).
There are three main processes of strategic formation, Kim and Mauborgne (2005) suggests:
1) Carrying out situation and competitor analyses with self-evaluation (both internal and external, and in cooperation with micro-environmental and macro-environmental);
2) Simultaneous with this assessment, business goals are set; all objectives (short-term or long-term) should be parallel to a time-line--this includes creating vision statements (long term view), mission statements (the role that the firm gives itself in society), company and business unit strategic and tactical objectives; and
3) Together with the situation analysis, these objectives should put forward a strategic plan which presents the aspects and details of how to accomplish these goals or targets.
Overall, strategic management not only can help management focusing its energy, and ensure...