To undertand the process of developing strategic management, there is a need to understand the concept of strategic management which is defined as a set of managerial decisions and actions aimed at the generation of sustainable competitive advantage. It is also a reality that strategic management operates on several time scales. Thus, there are short term strategies which involve planning and managing for the present. There are also long term strategies which involve preparing for and pre-empting the future.
This concept of time scales was actually suggested by marketing strategist Derek Abell (1993), who said that understanding this dual nature of strategic management is the least understood part of the process. Abell thus claimed that balancing aspects of strategic planning requires the use of dual strategies simultaneously. (Wikipedia, 2007) (Paraphrasing made). Strategic Management is a framework within which all the functioning managerial operations are bundled together and which is also considered at the highest level corporate activity that sets the terms and goals for a company that it should follow for prosperity.
Strategic management techniques may be viewed as bottom-up, top-down or collaborative processes. When employees submit proposals to their managers who, in turn, funnel the best ideas further up the organization, there is bottom-up approach. Capital budgeting process normally helps in attaining this approach where proposals are assessed using financial criteria such as return on investment or cost-benefit analysis. Approved proposals form the substance of a new strategy and all of which is accomplished without a grand strategic design or a strategic architect.
Most common of the approaches is the top-down approach where the CEO, possibly with the assistance of a strategic planning team, charts the overall direction the company is taking. Emergent nature of strategic decision have caused some organizations in experimenting with collaborative strategic planning techniques that recognize may take the combination of top-down and bottom-up approaches (Wikipedia, 2007) (Paraphrasing made).
Part of the process in developing strategy requires the steps until the strategy will get implemented. Hence there is need to understand strategy hierarchy. Corporations have different departments which may be divided functionally. Hence we have the so called functional strategies include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, and information technology management strategies.
To design these strategies, the emphasis is on short and medium term plans and is restricted to the area of each department’s functional responsibility. It is thus expected that each functional responsibility attempts to do its part in meeting overall corporate objectives, and hence there is basis to infer that to some extent their strategies are derived from broader corporate strategies (Wikipedia, 2007) (Paraphrasing made).