Fundamentals Of Global Strategic Management

By M. Isi Eromosele

Today’s business world is global, Internet driven and obsessed with speed. The challenges it creates for strategic managers are often complex, ambiguous, and unstructured. As such, the need for effective strategic management has never been more pronounced than it is today.

Strategy refers to top management’s plans to develop and sustain competitive advantage, a state whereby a firm’s successful strategies cannot be easily duplicated by its competitors so that the organization’s mission is fulfilled.

Many strategic problems can be traced to fundamental misunderstandings associated with defining an organization’s strategy. Debates over the nature of the organization’s competitive advantage, its mission and whether a strategic plan is really needed should be wide-spread internally in order to build a consensus.

Strategic management is the thorough analysis of the environment in which the organization operates prior to formulating a strategy, as well as the plan for implementation and control of the strategy.

The difference between a strategy and the strategic management process is that the latter includes considering what must be done before a strategy is formulated through assessing the success of an implemented strategy. The strategic management process can be summarized in five steps:

• External analysis: Analyze the opportunities and threats or constraints that exist in the organization’s external environment, including industry and macro-environmental forces.
• Internal analysis: Analyze the organization’s strengths and weaknesses in its internal environment. Consider the appropriateness of its mission.
• Strategy formulation: Formulate strategies that build and sustain competitive advantage by matching the organization’s strengths and weaknesses with the marketplace’s opportunities and threats.
• Strategy execution: Implement the strategies that have been developed.
• Strategic control: Measure success and make corrections when the strategies are not producing the desired outcomes.

It is necessary to address these steps sequentially, applying a systematic approach that progresses through these steps in order. Doing so results in a holistic understanding of the firm, its industry and its strategic challenges.

An effective strategy is built on the foundation of the organization’s business model, the mechanism whereby the organization seeks to earn a profit by selling its goods. In a general sense, all firms seek to produce a product or service and sell it at a price higher than its production and overhead costs, thereby generating a profit.

Developing a successful strategy for a firm is not an easy task. Ideally, a number of factors are typically associated with successful strategies, including the following:

• Strategic managers thoroughly understand the competitive environment in which the organization competes.
• Strategic managers understand the organization’s resources and how they translate into strengths and weaknesses.
• The strategy is consistent with the mission and goals of the organization.
• Plans for putting the strategy into action are designed with specificity before it is implemented.
• Possible future changes in the proposed strategy (i.e., strategic control) are evaluated before the strategy is adopted

Careful consideration of these critical success factors reinforces the inter-relatedness of the steps in the strategic management process. Each factor is most closely associated with

one of the five steps, yet they fit together like pieces of a puzzle.

Intended and Realized Strategies

A critical challenge facing organizations is the reality that strategies are not always implemented as originally planned. An intended strategy, that which management originally planned, may be realized just as it was planned, in a modified form or even in an entirely different form.

Occasionally, the strategy that management intends is actually realized, but the intended strategy and the realized strategy, which is what management actually implements, usually differ.

Hence, the original strategy may be realized with desirable or undesirable results, or it may be modified as changes in the firm or the environment become manifested.

The gap between the intended and realized strategies usually results from unforeseen environmental or organizational events, better information that was not available when the strategy was formulated or an improvement in top management’s ability to assess its marketplace.

Although it is important for managers to formulate responsible strategies based on a realistic and thorough assessment of the firm and its environment, things invariably change along the way.

Hence, it is common for such a gap to exist, creating the need for constant strategic action if a firm is to stay on course. Instead of resisting modest strategic changes when new information is discovered, the company should search for new information and be willing to make such changes when necessary. This activity is part of strategic control, the final step in the strategic management process.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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