BY DR. TANAI CHARINSARN

OCTOBER 26, 2016

“Without strategy, execution is aimless. Without execution, strategy is useless.”—Morris Chang

The term "Strategic Management" refers to looking into the future and determining the direction in which a business should proceed. It often involves making high-level decisions to bring about significant organizational changes, ultimately aimed at gaining a competitive advantage in the long run. Therefore, strategic management is not just about annual budget planning, goal setting, creating new marketing plans, or introducing new products. Every plan and activity should align with the organization's direction and strategy.

The three essential components necessary for developing a strategy including context, tools, and processes.

1. Context 

Strategic management relies on context-specific decision-making. There is no one-size-fits-all formula that can be easily studied and replicated. It depends on various contextual factors, both internal and external to the organization, such as its history, culture, and environmental factors. These contextual factors shape an organization's unique characteristics. What works for one business in a particular industry may not work the same way for another business in the same industry.

For instance, the success story of Starbucks, a coffee shop business, has been widely publicized and even taught in universities. However, if a new entrepreneur wants to open their coffee shop and aims for success similar to Starbucks, duplicating Starbucks' strategies may not guarantee the same results.

2. Tools

Tools, frameworks, and theories remain essential in strategic management. They help in structuring thoughts and formulating new ideas. While the younger generation might sometimes overlook these theories in favor of practical experience, in reality, theories are equally vital. Success in business cannot rely on luck alone, but it requires knowledge and understanding.

There is a wide array of management tools available, such as SWOT analysis, Five Forces, PESTEL analysis, Value Chain Analysis, Benchmarking, VRIO analysis, among others. These tools help organize thoughts and determine the desired outcomes. It is essential to use these tools correctly and choose the right ones to address the specific problem at hand.

3. Processes

Once the context and tools are well understood and results have been achieved, the next step is developing and implementing the processes. It's vital to ensure that everyone in the organization understands the same goals, sees the same picture, and knows where the company is heading.

Creating a shared understanding is essential. Commitment from all team members is crucial as well. Often, things might not go as planned, and it is at this point that commitment becomes vital. Ensuring that people are responsible for their actions and outcomes is a significant part of the process.

Furthermore, managing the changes in direction is part of the process, and often, it requires meticulous planning, clear delegation, and follow-up on whether the agreed processes are being followed. Detailed plans, however, might fall by the wayside due to various challenges, but it is essential to adapt and evolve to ensure long-term success.

In summary, strategic management is a dynamic process that requires a deep understanding of context, the right tools, and an efficient process to achieve desired outcomes and success.