Because the firm’s internal and external environment change over time, the Strategy also changes consequently, the idea that strategy is dynamic is inherent in our conception of strategic management. Strategy has four components. Firstly, strategy should include a clear set of long term goals. Second components are that it should define the scope of the firm i.e. the types of products the firm will serve etc. Thirdly, a strategy should have a clear statement of what competitive advantage it will achieve and sustain. Finally, the strategy must represent the firms’ internal contest that will allow it to achieve a competitive advantage in the environment in which it has chosen to compete. Thus, you may say, ‘Goals’ are ‘What’ of the strategy ‘Competitive Advantage; is how of the strategy and the; logic is the ‘Way’ of the strategy.
The strategic management or strategic planning encompasses long-range plans, new venture management, planning, programming, budgeting, business policy, etc. with greater emphasis on environmental scanning and forecasting and taking into account external and internal factors in formulating and implementing the plans.
Today, strategic management is understood as a process of formulating objectives of an organization and developing methods to achieve them. It is a process of designing a path and selecting one path, after due evaluation of various alternatives for reaching a goal. The objective can be in the form of a mission statement or may be clearly defined in the form of postulates.
Strategic management is a science of choosing the alternatives from the designed and available courses. The managers have to decide on a process that will be most suitable to their conditions and that would enable them to achieve a desired position for their organization.
Alfred D.Chandler (1962) made a detailed analysis of various interrelationships among environment, strategy, and organization structure in 70 manufacturing firms in the US and defined strategy as, ‘The determination of the basic long term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals’.
It is pertinent to note here what Alfred D. Chandler has made reference to three basic aspects of strategic process;
- Determination of basic long-term goals,
- Adoption of course of actions to achieve these goals, and
- Allocation of necessary resources for carrying out these goals
Kenneth Andrews (1965) outlines business strategy definition as a method of describing the future position of a company, its objectives, purposes, goals, policies, and plans that may be required for guiding the company from its existing position to where it desires to be.
Andrews defines strategy as, ‘The pattern of objectives for achieving these goals and the major policies and plans for achieving these goals stated in such a way so as to define what business the company is in or is to be and the kind of company it is or is to be.” Thus, you find that Strategic Management is a set of rules aimed at taking decisions for sustenance and growth of an organization in a given environment.
