Strategic Management Concepts, Competitiveness & Globalization
By: Charles Udofia
Tags: Strategy, Concept, Globalization, Strategic Planning, Management

The term “strategic management” refers to a systematic approach of planning and executing a company’s path to success. Large numbers of businesses struggle to gain market share in finite marketplaces, where there is only so much money to go around. This requires competitiveness. Globalization refers to the quickening pace of international trade and the steadily increasing reliance of individual economies on each other. Competitiveness and globalization are linked with strategic management, and understanding how these concepts tie in to each other is required to form a successful long-term strategy for your business.

Strategic Management Basics

Business strategy can cover multiple time frames and objectives. A strategy may focus on short-term, medium-term or long-term goals, for example, and may include objectives for growth, brand development, market leadership, product differentiation or infrastructure development. Developing goals is only the beginning of strategic management, which also includes building systems and processes to accomplish objectives, monitoring operations and comparing outcomes against benchmarks. Revising strategic goals as needed and continuously setting new goals also are integral parts of the process.

Competitiveness

The fundamental goal of strategic management is to increase an organization’s competitiveness in the marketplace. Medium-term and long-term strategies should always be focused on gaining an advantage over competitors, and there are countless ways to gain such advantages. Short-term goals are often more internally focused (quarterly revenue goals, for example), and can be less “strategic” in the true sense of the word. A key to increasing competitiveness is having all of the information needed to accurately assess competitors’ positions in the marketplace, and using that information to spot gaps and opportunities to gain advantages.

Globalization

Advances in communications technology and global travel have changed the way business is done all over the globe. A face-to-face meeting that would have once required a three-month voyage now only requires an eight-hour flight. In the 21st century, even cross-continental flights are being replaced by instantaneous video chat over the Internet. News travels instantly from one side of the globe to the other, and business transactions occur just as quickly. Competitors on opposite sides of the globe can find themselves with distinct advantages or weaknesses stemming from their local geography, legal climate, national labor pool and a host of other factors, adding layers of complexity to competitive strategies.

Tying It all Together

The pace of globalization takes the struggle for competitiveness to a new level, and that has deep implications for strategic management. Strategic plans must include global considerations while remaining focused on the competitive climate of the local economy. For example, long-term financial plans must take the economic conditions of foreign nations into account, since economic troubles on one side of the world can affect a company’s local economy. Similarly, refiners of raw materials must consider the price and quality of goods imported from outside of their home country, even when dealing solely with domestic customers.