Strategic management is concerned with measures that organizations take to work around the opportunities, pressures, alterations, and challenges in varying economic trends.
Strategic management is a continuing process of putting together strategies that brings profit to the organization as well as creates a harmony between the organization and its environment. It lists the strengths that the organization already possess for the achievement of its objectives; weaknesses that hinder the achievement of goals; opportunities and markets that can be exploited in favor; and threats that are at hand in the external as well as internal environment: in short this is called a SWOT analysis. Strategic management is a level of managerial activity under setting goals and implementing the plans so as to achieve it.
Like mentioned before, strategic management can and will influence the organization’s performance during economic crisis. The following are the ways by which Strategic Management will be helpful in economic crisis:
1. Mission, goals and strategies:
Mission defines the organization’s purpose, their reason for being in business. It is also important to identify goals, because they are the foundation of planning and give managers a way to measure the performance their success. Finally, a manager needs to know the organizations strategies, to evaluate them and make the necessary changes.
2. External Analysis:
Strategic Management here is carried out as per the economic crisis. A study of all the aspects related to economic crisis must be done as it acts as a base for the managers to take the next step.
The manager must know all the environmental changes that are taking place so he can adapt to it accordingly.
3. Internal Analysis:
The manager has to go through SWOT analysis. It includes an analysis related to the organization’s resources, capabilities, and spot the strengths and weaknesses in order to improve his decisions.
4. Formulate Strategies:
The managers can now formulate various corporate, business and functional strategies.
5. Implement Strategies:
The next step after formulation of strategies is to implement them. The plan that is made must be executed.
6. Evaluate the output:
All the efforts that are taken to implement the strategies will go in vain if the results are not evaluated. The results must be constantly evaluated to improve and to sustain in economic crisis.
Strategic management comprises of various approaches that can be put into action to survive in a financial predicament. A manager may go for trimming down manpower, increasing the line of credit by means of banks, offer discounts for early receivables, and compete on quality, cutting costs, and a whole lot more. Thus the importance of strategic management has to do with the persistently changing situations that organizations face in these times, because it helps the management to scrutinize relevant factors before they actually decide which course of action to take, thus helping them to better cope with uncertain environments like an economic crisis.