1.1.

Concept of Strategic Management

Strategic management is a comprehensive area that covers almost all the

functional areas of the organization. It is an umbrella concept of management
that comprises all such functional areas as marketing, finance & account,
human resource, and production & operation into a top level management
discipline. Therefore, strategic management has an importance in the
organizational success and failure than any specific functional areas.

Strategic management is different than the routine and operation

management. Strategic management deals with organizational level and top
level issues whereas functional or operational level management deals with
the specific areas of the business. Strategic management has relatively long-
term focus in comparison to the operational management. Top-level managers
such as Chairman, Managing Director, and corporate level planners involve
more in strategic management process whereas functional managers and
other employees involve more in operational management areas. Strategic
management area is broader than any specific functional management area.
Strategic management relates to setting vision, mission, objectives, and
strategies that can be the guideline to design functional strategies in other
functional areas. Therefore, it is top-level management that paves the way for
other functional or operational management in an organization.

Strategic management is very important area. It determines whether an

organization excels, survives, or dies. Strategic management is very important
because it guides all the functional areas of the business. It is generally
believed that businesses, which develop formal strategic management
systems, have a higher probability of success than those, which do not1.
Strategic management helps firms anticipate future problems and
opportunities. It provides clear vision, mission, objectives, and strategies that
lead organization into the secured future.

"Strategic management is defined as the art and science of formulating,

implementing, and evaluating cross-functional decisions that enable the
organization to achieve its objectives."2. Generally, strategic management is
not only related to a single specialization but covers cross-functional or overall
organization.
Strategic management is a stream of decisions and actions3. It is a process by
which top-level management decides and does for the success of the
organization. It helps to determine the best possible strategy so that
organization could win the game in competitive business environment. Thus,
strategic management is a way where a strategist finds where organization is
and where it wants to reach. The gap between desired and possible is known
as performance gap. In this context, strategic management process not only
identifies the performance gap but also attempts to reduce the gap.

1
Lawrence R. Jauch & Willam F. Glueck, Business Policy and Strategic Management, McGraw-Hill Pub, 1989,
pp. 35.
2
Fred R. David, Strategic Management: Concept and Cases, 2003, Pearson Education, Delhi, 2003, p. 5.
3
Lawrence R. Jauch & Willam F Op. Cit.
Sometimes, the performance gap can be positive, too. In such case a
strategist uplifts his or her goal and minimizes the gap. Strategist tries to repair
the system and strategy to reach at the targeted goal to fulfill the performance
gap in case of negative gap.