“They made the products which never failed and yet cost-effective. They were the unbeatable beasts of that time”

Those were the words by a former employee of Dutch multinational technological company, PHILIPS, about their toughest competitor British Physical Laboratories (known as BPL Ltd.). That sort of compliment is rare to get from a competitor.
BPL, one of India’s high-profile company who ruled the market in the 1990s and would regularly feature among the top 10 brands in the country during its prime time was brought down to its knees by 2004. The crash down of this undisputed leader was due to a combination of circumstances – simultaneous expansion into several unrelated businesses, little financial discipline, entry of new competitors from South Korea (LG, Samsung) and family issues – while a few circumstances were unavoidable, most of them were definitely avoidable with a proper set of strategies.  

What is Strategic Management?

Designing a strategy or in simple words, “Planning” is something we have imbibed in almost every step of our life, consciously or habitually. At a corporate level, strategic management is the management of the organization’s resources to achieve its goals and objectives and incorporate the preparation strategy to be ready for future opportunities, risks, and market trends.  It involves setting the objectives, analyzing the competitive environment, internal environment, and organization, evaluating the plan strategies and ensuring it is implemented across the organization. At its core, strategic management is a practical way to implement the decisions, vision, and goals of a company. Ideally, the method that is followed to have a proper strategic management is SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. It helps the organization’s leaders to have a thorough understanding and work towards optimizing the company’s strengths and minimizing the operational weaknesses. Strategic Management helps the company in developing the roadmap of growth and could be critical in staying competitive. 

Importance of Strategic Management:

  1. Increase in alertness and efficiency in Employees:

    Strategy management helps the business to realize the capability and weakness of the employees and resources of the organization and takes steps to improve the same. This increases the alertness and efficiency of employees and focuses their strength to succeed in achieving the objectives and targets.

  2. Increases productivity and profitability:

    The company that leverages the limited resources and achieves the highest possible productivity is the company with the proper strategic management. Through the implementation of strategic management, the financial resources can be used efficiently along with increasing the overall productivity and profitability of the unit.

  3. Reduction in Fixed and Flexible Expense:

    Fixed capital is the capital invested in the fixed assets. Through thorough strategy planning, you can reduce the fixed expenses. For example, instead of investing in fixed assets, the managers may buy the assets on rent. This decreases the fixed capital investment. Flexible expenses might be reduced through collection arrangement.

  4. Acceptance of Organization Change:

    Changes are not easy to accept, especially during the time when the employees have been accustomed to one particular internal environment of the organization. Strategy management plays role in preparing the employees for the possible change. It anticipates the future change in the organization and keeps the method of approach and method of acceptance update. Not only for the development of the organization, but the company also throbs for the development of the skills in employees.

  5. Increase in return on investment (ROI):

    The internal and external environment of the organization can have a huge impact on the return on investment. Strategic management provides a noble increase in the ROI. It is possible based on the information that has been received by a thorough analysis of the conditions of the firm.

  6. Prevention in the organizational gap:

    In an organization, if an employee is allotted with any activities, it is called an organizational gap. This could be the waste of human resource as well as financial resources. Through strategic management, this wastage of resources could be reduced by having a proper interacting process between the higher management and employees so that all the employees are given equal workload.

“Without a strategy, the execution becomes aimless & without execution, the strategy is useless”. As much as the strategy holds its high importance in any organization, it needs a genuine roll out too throughout the organization for it to succeed and have you a leg up in the competitive world of today. So, plan the strategy, implement it and manage it to bridge the gap between “where we are now” to “where we want to be”.

Strategic Management