Strategic Management - Meaning and Important Concepts
                     Strategic Management 
- Meaning and 
Important Concepts
What is strategic 
management?
Strategic management is the process of setting 
goals, procedures, and objectives in order to 
make a company or organization more 
competitive. Typically, strategic management 
looks at effectively deploying staff and 
resources to achieve these goals.
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Why is strategic 
management 
important?
In business, strategic management is 
important because it allows a company to 
analyze areas for operational improvement. In 
many cases, they can follow either an 
analytical process, which identifies potential 
threats and opportunities, or simply follow 
general guidelines. 
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Source: www.investopedia.com
Components 
of Strategic 
Management
Formulation
Formulation includes an assessment of the 
environment in which the organization 
operates and then creating a strategy on how 
the organization will operate and compete. This 
is similar to the first step of the budgeting 
process.
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Implementation
Implementation includes the deployment of an 
organization’s resources to meet the desired 
objectives.
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Frameworks 
for Strategic 
Management
Competitive 
Advantage
An organization may achieve either lower cost 
of production or product differentiation as an 
advantage against its rivals. It is important to 
look at the market positioning of the brand and 
company and also to pinpoint all the 
competitive advantages the company has over 
its competitors.
 
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Corporate 
Strategy and 
Portfolio Theory
The Modern Portfolio Theory provides a 
framework for allocating assets so that, for a 
given level of risk, the expected return is 
maximized. Portfolio Theory allows 
corporations to perform a cost-benefit analysis 
on the deployment of resources and view the 
merit of individual resource placement to the 
company in its totality.
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Core Competence
Businesses should seek to develop expertise in 
areas of relative excellence and eliminate or 
outsource the remainder of its business 
activities. By being able to do this, an 
organization can provide a unique and 
unparalleled product, service, or perspective to 
the market and consumers.
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Experience Curve
The experience curve expresses the 
proposition that whenever the output produced 
doubles, the value-added costs decline by a 
consistent percentage.
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Sustainable 
growth
Strategic management has been shown to lead 
to more efficient organizational performance, 
which leads to manageable growth.
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Increased 
managerial 
awareness
Strategic management means looking toward 
the company's future. If managers do this 
consistently, they will be more aware of 
industry trends and challenges.
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