Strategic management is usually a process that applies a business’s strengths to current market opportunities in the hopes of creating success and furthering company growth. Business managers may create a strategic plan by clarifying the company’s mission and objective, and then assessing the company internal and external environment, searching for strengths and opportunities. Planners often formulate a strategy based on those findings, and choose strategic management tools to aid in the implementation process. There are different types of these tools, which include mission statements, SWOT analysis, cost leadership, differentiation, and integration.
Mission statements often inform the employees and the public of the company leader’s vision for the future of the business, along with a few general ideas of how it may fulfill those goals. Sometimes, these strategic management tools also include information on the company’s purpose and core values. The statement may be one or two sentences long and it usually doesn’t contain any new information, instead the mission may only offer company identity and perspective.
A strategic analysis tool, SWOT usually used in the planning and evaluation stages of the strategic management process. The acronym SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses refer to a company’s internal environment, while the opportunities and threats describe its external circumstances. By listing current conditions under each element of SWOT, business strategists may begin to formulate a strategy appropriate to the company.
Cost leadership is one of the strategic management tools that involves attempting to provide a product or service at the lowest price in the industry for the given quality level. Businesses often choose a cost leadership strategy as an attempt to quickly earn higher profits or gain more customers than competitors. Ways to improve product cost include purchasing cheaper materials, avoiding unnecessary costs, and creating more efficient work and manufacturing processes.
Differentiation means using product features and advertising to present the product as different and better than competitors' goods. Strategists may add unique value to products and services in a variety of ways, including scientific research and creative product development. To communicate the value, companies often use personal sales teams, media advertising, and public relations.
Integration encompasses one or more types of strategic management tools, including vertical or horizontal integration. Vertical integration means having one or more components of the manufacturing and supply chain involved in creating and delivering the business’s product. Horizontal integration refers to acquiring businesses that sell similar products and services and assimilating those previous competitors.
