Strategic management as the basis for creating business plans

Service Business

Creating both a professional and effective business plan is related to understanding what strategic management is, which is the key to the company's success. Increasing the company's value results in guaranteeing its stable development. The main goal of strategic management is to reduce the uncertainty surrounding the organization. The decisions made by the top management are most often based on the methods and techniques supporting management used in conscious planning.

Strategic management - key aspects

Among the many different definitions of strategic management, there are certain aspects that most often define what it actually is. In particular, it is:

  • planning horizon - it is a definition of long-term directions of continuous development of the company, reaching even from a few to several years. It depends on the industry and market dynamics;
  • goal thread - a set of values, mission, vision of the company in the future, as well as strategic goals are the elements by which appropriate tactical actions are taken;
  • subject of management - the enterprise is treated as a coherent whole, where strategic management integrates organizational functions and processes into one strategy, coordinating its operation;
  • management entity - a group or organizational unit dealing with strategic management, the so-called strategic top - supervisory board or management board.

Strategic management is a specific set of processes that allow you to react quickly to changes in the environment, while creating and maintaining appropriate relationships between the company's strategic goals and the resources it has. In practice, it is a set of guidelines that managers use when making decisions or specific actions in specific areas of the organization. Among the distinguished areas, there are three levels of strategy development:

  • corporate level - key decision makers of the company are looking for methods to increase the value of the organization through, inter alia, diversification, acquisitions (mergers) or investments;
  • business (company) level - formulation of a strategy in this area consists mainly in selecting an attractive market offer and such a management method to achieve a competitive advantage in a specific industry;
  • functional level - a strategy implemented by managers of individual departments in order to achieve positive results in the optimization of the company's operations.

Every manager dealing with defining the company's or department's strategy should answer three basic questions: where is the company at the moment, where would it be (what it wants to achieve) and how does it want to be there.

The process of formulating a strategy

Strategic management is in a sense an organizational cycle, and as you know, each cycle consists of several successive stages. When formulating the strategy, the following can be distinguished:

  • the stage of strategy planning in which strategic goals are set, supported by an earlier analysis of the present and future state of the enterprise. Then, an action plan is executed, on the basis of which managers aim to achieve the target state. It is part of the management for which a number of formal techniques and methodologies have been developed to help.
  • the implementation phase of the strategy is the process of implementing the strategy. It is necessary to adjust the resources and operating conditions of the organization to the guidelines set out in the action plan. You should not stick to rigidly defined and planned implementation steps, because it is necessary to refer to the real conditions of the company, which can change relatively quickly. Often, higher-order goals may turn out to be less important than assumed. During this stage, the organizational structure, management system and budget planning are selected.
  • the strategy supervision and control phase is an integral part of strategic management. Monitoring of current changes allows to ensure their compliance with the adopted assumptions as to the target state. Any deviation can be successfully corrected. Due to advance supervision, it is possible to detect situations that may constitute opportunities or threats to the further achievement of the assumed goals.

Optimal shaping of the strategy depends mainly on the attitude of the company (managers 'commitment, risk acceptance, reactions to competitors' actions), as well as on the market situation, which may affect the implementation of the various stages of strategy implementation.

Key Success Factors

To achieve a competitive advantage in a given industry, companies decide to compete. Sources of the above-mentioned advantages may be varied, and they depend, among others, on from the sector in which the organization operates, reputation or owned innovative solutions. The so-called key success factors, representing the resources and skills that can lead to the desired success. In general, among the types of competitive position held, the following can be mentioned:

  • competing with a product - that is, a market offer addressed to a group of recipients, i.e. determining the physical characteristics of a product, the scope of its applications, orientation towards satisfying consumer needs, packaging, brand, product differentiation (multi-assortment production);
  • competing with price - in terms of unit costs, distribution, terms of sale, but also competing with the quality level and marketing activities;
  • competing with resources - that is, with everything that is the company's strengths. They should be valuable and rare, hard to come by competitors now and in the future.

Company business identification

An entrepreneur who already has an idea for a business must thoroughly understand the rules prevailing in a given industry, as well as define a detailed picture of his own business. Such action is the identification of the company's business, without which a business plan practically cannot exist. A properly created business plan must not fail to include important issues related to:

  • company's products and their profitability - a concise description of the products offered by the company, production plans and selected distribution channels;
  • the company's customers and their profitability - defining the target group of customers to whom the company's offer will be addressed. The success of any promotional and advertising campaigns will depend on the correctness of this position;
  • meeting customer needs - in this case, you should conduct a customer survey and find out about their needs. It is then easier to adjust the offer so that it becomes attractive to recipients;
  • company structure - a properly selected organization structure will certainly optimize the functioning of a given company. Appropriate relationships at the rank of supervisor-subordinate and structured channels of information transfer between departments favor not only a good working atmosphere, but also quick response to changes in the environment;
  • employment structures - divided into blue-collar and non-blue-collar positions;
  • organizational culture and management style - social norms and value systems that create the right atmosphere in the organization, constitute a certain management system that defines the requirements of behavior.

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Company mission and vision

The formulation of the company's mission allows for the definition of the company's identity, as well as its identification in the environment. It is a formalization of values ​​important for the organization and a vision for the future. Thanks to a properly defined mission, it is easier to assess the correctness of implemented strategies, but it has no direct impact on decisions and actions taken.

The mission determines the sense of the company's existence, the main assumptions and the most important tasks and values ​​offered to customers. Its task is to distinguish the company from other companies of the same industry and characterize the scope of its operation. The vision, on the other hand, is a concept of the model and image of the organization in the future, assuming favorable conditions. A vision is a bundle of future desired states or results of the company's activity, possible to be achieved in the long term. It manifests itself as a source of employee motivation and allows them to be involved in the achievement of the company's goals. Integration around a common goal has a positive effect on the atmosphere in the company.