What Is Strategic Management? Benefits, Process, and Careers (2024)

Strategic management is the process of defining and implementing procedures and objectives that set a company apart from its competition. Strategic management is also a skill that can be developed as someone gains experience and adopts a strategic mindset. It is considered part of business acumen and can also apply to fields like non-profit, government, and the public sector.

In this article, you will learn all about strategic management, including its benefits, process, and career paths. We'll also go over the steps to becoming a strategy manager, including taking courses, like the Strategic Management and Innovation specialization, to build in-demand skills.

What is strategic management?

Strategic management involves developing and implementing plans to help an organization achieve its goals and objectives. This process can include formulating strategy, planning organizational structure and resource allocation, leading change initiatives, and controlling processes and resources.

Strategic planning involves identifying business challenges, choosing the best strategy, monitoring progress, and then making adjustments to the executed strategy to improve performance. Tools like SWOT (strengths, weaknesses, opportunities, and threats) analysis are used to assess where opportunities and threats lie between the organization, its competition, and the overall market.

Strategic management happens at broader levels like organization-wide leadership, but it can also be implemented at a department or team level.

Approaches to strategic management

There are two main approaches to strategic management: prescriptive and descriptive. A prescriptive approach to strategic management focuses on how strategies should be developed, while a descriptive approach focuses on how strategies should be put into practice. The prescriptive model is more top-down, based on SWOT analysis. The descriptive model is more guided by experimenting with different methods to find solutions and learning from experience. It applies Agile methodology to strategic management.

Read more: What Is Agile? And When to Use It

Benefits of strategic management

The strategic management process helps an organization's leadership plan for its future goals. Setting a roadmap and actionable plan ensures that employees and leaders know where they're going and how to get there in the most efficient, cost-effective manner. It is a work in progress, so strategic plans should continuously be evaluated and adjusted as the market outlook changes.

Financial benefits:

• Increase market share and profitability.

• Prevent legal risk.

• Improve revenue and cash flow.

Non-financial benefits:

• Relieves the board of directors of responsibilities.

• Allows for an objective review and assessment.

• Enables an organization to measure progress throughout time.

• Provides a big-picture perspective of the organization's future.

5 steps of the strategic management process

It's common to view the strategic management process as a five-step process. The steps are identification, analysis, formation, execution, and evaluation.

1. Define the direction.

Identifying the direction and specific goals is the initial stage of the strategic management process. This step involves identifying goals and determining what needs to happen to achieve them.

2. Analyze the current situation.

The second step is analysis and research. Using tools like SWOT analysis and examining the organization's resources, including budget, time, people (staff), and more, you'll gain a better understanding of how to leverage what's working and get rid of what's not.

3. Outline the strategy and plan of action.

Next is formulating a strategy and plan of action based on situational analysis. This step involves crafting a specific and realistic plan to help the organization achieve its goals.

4. Execute the plan.

Executing the plan is the fourth step in the strategic management process. This step involves putting the plan into action and monitoring its progress. You may have to adjust the plan as circ*mstances change, especially if you take a more descriptive approach to strategy.

5. Evaluate the plan.

Evaluation is the fifth and final step in the strategic management process. Here, you'll assess whether the organization has achieved its goals. If not, you can adjust your plan and implement it in innovative ways. Feedback and analysis are essential to evaluation and preparing for an optimal business future.

Here's a video on OKR (objectives and key results), an important process in strategic management:

Examples of strategic management in practice

Implementing and overhauling information systems and technology

Let's say Company A is a startup that has been scaling rapidly. They hired a strategy consultant to come in and conduct an audit. The consultant finds that the company is paying for apps and tools that it doesn't use. They conduct survey research to understand employee needs and compile a list of 20 apps (out of 100) that can be discontinued with little negative impact. After implementation, the company surveys employees again in two months to gauge their needs. Overall it turned out to be an efficient, cost-cutting strategy.

Shifting resources (budget) toward more successful revenue streams

Company B's Chief Marketing Officer asked its department to assess its brand marketing strategy. The head of marketing found that their email marketing efforts were generating more conversions than any other channel, so they diverted some of their print budget toward investing in expanding the email marketing team. The email marketing team developed a strategy and plan to reach new audience segments. After six months, more budget was shifted toward email to support the program's success.

Careers that apply strategic management

To some extent, strategy is necessary for plenty of management and leadership roles in nearly any industry. But strategic management is slightly different since it involves managing the evolution of strategies that are important to an organization's bottom line. These are a few careers that apply strategic management as a core part of the role:

• Management consultant

• Corporate strategy advisor

• Business analyst

• Strategy manager

• Business development manager

• Entrepreneur

Pursue strategic management with Coursera

A career in strategic management can be challenging and rewarding, offering a unique perspective on how businesses operate.

If you're ready to take the next step toward a career in strategic management, consider the Strategic Management and Innovation Specialization offered by the Copenhagen Business School on Coursera. This program covers how to formulate and execute a business strategy and analyze strategies in a case study.

If you're an entrepreneur and want to incorporate strategic management into your business practices, consider the free Entrepreneurial Strategic Management course from the University of New Mexico.