Strategic management is the identification, selection and implementation of an organisation’s long- term goals and objectives.
There are many models for strategic management that generally have three components in common: strategic analysis, strategic choice and strategic implementation.
Strategic analysis starts with the definition of a mission for the organisation. This explains why the organisation exists and provides the context against which strategies will be formulated.
Mission statements usually contain high-level criteria that can be used to evaluate strategies as they are designed and implemented.
All strategic analysis must take account of the organisation’s changing external environment (often described using the acronym PESTLE) and its capacity and capability to implement the strategy. Tools commonly used for different aspects of this analysis include the Boston Grid and Ansoff’s Matrix.
Strategic choice involves the generation, evaluation and selection of strategic options. Inputs to this process include:
- stakeholders’ expectations and aspirations;
- the organisation’s strengths;
- the opportunities created by the external environment;
- demands imposed by external influences.
The third stage of strategic management is implementation through projects, programmes and portfolios. The relationship between strategic management and P3 management should be close and symbiotic.
In simple terms, strategic management will set out long-, medium- and short-term goals that are implemented by portfolios, programmes and projects respectively. Successful implementation of strategy depends upon successful P3 management. Together they lead to growth and development of the organisation and the creation of further opportunities and challenges that preface each strategic planning cycle.
In order to judge success, a strategy must have measurable consequences. Tools such as the balanced scorecard help translate strategy into four categories of performance measures: financial, customer, learning and growth, and internal business processes. These provide the basis for defining objectives for projects, programmes and portfolios.
P3 management is therefore of vital importance to strategic management. An organisation should ensure that it establishes governance structures that embed and continuously improve P3 management.