Strategic Management: Importance and Benefits for Businesses


Strategic management is a process that involves the analysis, formulation, and implementation of strategies to help organizations achieve their objectives. It is a critical function that guides the direction and success of an organization in the long run. This article will provide an overview of strategic management, including its importance, process, and key elements.

Importance of Strategic Management Strategic management is crucial for organizations because it helps them achieve their objectives, stay competitive, and adapt to changing environments. It enables organizations to identify and capitalize on opportunities, allocate resources effectively, and make informed decisions that align with their goals. Moreover, it provides a framework for evaluating performance and adjusting strategies based on results.

The Importance of Strategic Management

Strategic management is a critical function for organizations of all sizes and industries. It involves the analysis, formulation, and implementation of strategies that help organizations achieve their goals and objectives. The following are some of the key reasons why strategic management is important:

  • Proactive strategy: strategy that applies on the basis of what we want to do according to anticipation
  •  Reactive strategy: a strategy that must be implemented because the environment is changing. because there will always be differences, changes. This strategy is our way of adapting

Case studies for strategic management

The competition between Bluebird and online taxis led to the disruption. And BB also experienced a significant impact, for example: stock prices fell dramatically.

BB’s efforts to develop and survive are embracing online taxis, developing similar businesses

BB is not fixated on the initial business but expanding and diversifying, collaborating with innovative companies, adding to the fleet

Strategic management in business creation

Strategic management is critical for business creation, as it helps entrepreneurs develop a clear sense of direction and focus for their new venture. Here are some ways strategic management can be applied in business creation:


  • Value creation (having a product that is in demand by others)
  • Marketing, it will be easy to attract people to see the product
  • Sales ; manage sales
  • Delivery ; related to after sales. How to ensure customers can use the product optimally
  • Finance ; If the finances are good and sustainable then that’s a business

To make a business continue to grow, it must have a competitive advantage; i.e. when a company has an offer that is not owned by its competitors

Sustainable competitiveness in business ; is a condition or circumstance that puts the company in a profitable and superior business position on an ongoing basis.

2 The main parameters of the company to continue to review and evaluate:

  • Does the company have a comparative advantage
  • Does the company have valuable business capital in terms of value proposition and profit formula

Gaining and maintaining a competitive advantage is the main objective of a strategy Bisnis model canvas : Key partners, value proposition, cost structure, revenue stream

Generic strategy management and Blue ocean strategy

Joint Strategy Management and Blue Ocean Strategy are two different approaches to management strategy that organizations can use to achieve their goals.

General strategy management is a framework for choosing one of three general strategies – cost control, differentiation or concentration – to gain competitive advantage in a particular market. Cost restraint involves providing a product or service at a lower cost than competitors, differentiation involves offering a unique or superior product or service, and focus involves targeting a specific niche. By selecting any of these strategies, organizations can focus their resources and efforts on a specific area and gain a competitive advantage over their competitors.

  • Competitive advantage is the leverage that an organization or company has over its competitors
  •  A competitive strategy is a long-term plan from a business entity to gain a competitive advantage from market competitors

The cost leadership strategy has the definition of implementing efficiency in the production and or supply chain of a product or service so that we can offer products at the lowest/competitive prices on the market

Cost leadership strategy objectives

  • Consumers are interested in buying products/services at competitive prices
  • Competitors have difficulty / cannot match the prices we offe

The differentiation strategy has the definition of providing unique value or features to an item/service that will increase the value of the item/service in the eyes of consumers

Differentiation strategy objectives:

  • Make consumers interested in buying products / services at high price
  • Competitors will find it difficult because they cannot match the value that we offer

Blue Ocean strategy is a business strategy in which companies simultaneously pursue differentiation and low cost to open markets and create new demands.

Business Goals “Purpose” vision, mission and values

Business goals, purpose, vision, mission, and values are all important components of an organization’s strategy and can help guide the organization’s decision-making and actions. Here is an overview of each of these components:

Self question :

  • What is the reason for our existence
  • Is the most important thing
  • Where are we headed
  • Is there a common goal in the long term
  • Is doing the right thing in the right way is important to us
  • What is the legacy we want to leave behind?

External Analysis – Internal Company and SWOT

External analysis, internal analysis, and SWOT analysis are essential tools for understanding a company’s current position in the market, identifying potential opportunities and threats, and developing strategies for growth and success. This includes factors such as the industry, competition, customers, and suppliers. An external analysis helps a company to identify opportunities and threats in the market and develop strategies to take advantage of them.

Internal analysis, on the other hand, involves assessing a company’s internal strengths and weaknesses. This includes examining factors such as the company’s resources, capabilities, culture, and structure. An internal analysis helps a company to understand its competitive advantage and identify areas where it needs to improve.

Aspects to consider when doing business:

  • Current state
  • Issues and challenges (SWOT)
  • Trends around
  • Internal capabilities
  • Strategic goals
  • Aspirations

The function of SWOT is to use our internal to take advantage of opportunities that we see from the external analysis conducted; we must also mitigate identified internal weaknesses as well as external threats

The steps for preparing a SWOT analysis

  1. External analysis ; see what conditions are going on around us (factors: political, economic conditions, socio-cultural trends, technology, climate, legal and regulatory) and must be studied continuously
  2. Internal analysis ; how to build the company’s capabilities by ensuring that the capabilities possessed become advantages that can be used; take all the opportunities that exist and be better than competitors

Business Transformation

There are conditions of massive external change that make us have to do business in an unusual way. Transformation can only be done with the support of everyone in the company.

The stages of business transformation must occur from 2 sides:

  • Top down ; instructions that are passed down directly from the highest leadership to the lowest staff
  • Bottom up ; The technical staff below must convey aspirations. Whatever is facing the highest leadership must know

Some important points so that the transformation becomes a well-planned agenda:

  • Quick wins & hanging fruits : focus on things that produce quickly (large impact activities that require limited resources and funds and effort
  • Start addressing : the identified crucial issues and their challenges through strategic programs and initiatives that are determined based on the expected impact and time required

Every initiative needs to have a high level sponsor and a road map

Corporate Action: Vertical integration and diversification

Corporate Strategy is the steps and policies taken by the company to gain and maintain competitive advantage in the market and industry simultaneously

Various dimensions of corporate strategy:

  • Goods and services
  • Value chain in the industry
  • Geographical coverage of the market

Why companies need corporate action:

  • Can increase revenue / profit
  • Can reduce costs
  • Can increase market power
  • Can reduce risk
  • Can motivate management

Considerations for achieving vertical integration versus risks:

  • Decrease vs increase in costs
  • Increase vs decrease in product/service quality
  • Easier planning and scheduling vs loss of flexibility
  • Ensuring critical supplies and distribution network vs increasing potential legal issues

Strategic alliances and mergers and acquisitions

Strategic alliances, mergers, and acquisitions are common strategies that organizations use to achieve their strategic goals. While both involve partnerships between two or more organizations, they differ in their degree of integration and control.

Konsep Build – Borrow – Buy

  • Internal development (build)
  • Initiate contracts / Strategic cooperation (borrow)
  • Memporelah HR new capabilities and competencies (Buy)

Some of the main questions that management needs to ask regarding Build Borrow Buy:

  • Relevance ; how relevant the existing internal resources are to address the HR gap
  • Tradability ; Are the targeted external resources tradable?
  • Proximity (closeness); It needs how close the company is to external resource partners         
  • Integration ; How can the company integrate the targeted business if the company decides to make an acquisition

Strategic Alliance (alliance) is a collaboration between voluntary business entities that benefit from these activities

The Strategic Alliance has the following objectives:

  1. Sharing knowledge
  2. Resource
  3. Capability

Strategy Alliance helps companies to grow by:

  1. Support Part or all of the company’s value chain
  2. Enables companies to achieve targets/goals more quickly, at lower costs and also reduce risk

Why do companies need to do strategic alliances:

  1. Strengthen competitive advantage
  2. Entering new markets
  3. Facing uncertainty
  4. Assess critical supporting assets
  5. Acquire new capabilities

Merger is a combination of 2 different companies to form a new business entity, Acquisition is control of a company by another company. Acquisitions can be friendly or unfriendly

  • Reducing the intensity of competition (changing the industry structure in favor of surviving companies)
  • Lower costs (economies of scale)
  • Increased differentiation (answering gaps related to goods/services)

Corporate Culture

Organizational or corporate culture is a shared and systemic behavior that differentiates an organization from other organizations, Systemic behavior is a set of key characteristics that are highly valued by organizations

The main result of a successful strategy is good business performance; includes:

  • Strong business model
  • Organizational functions that run well and high productivity
  • Generate good financial compared to competitors
  • The company provides benefits to the community around it

In addition to the expected performance, the sustainability includes:

  • Obtain and maintain competitive advantage
  • Building company culture
  • Become part of a good corporate citizen

Insightful Business Ethics and leadership

Ethical leaders:

  • Able and talkative in making decisions
  • Able to influence employees to do good things and provide benefits to society
  • Everything is based on morals and ethics

If everything is owned then we will become ethical leaders (leaders who uphold ethics)

Company management should not only concentrate on increasing the company’s profit or income – Michael Porter A strategist needs to create a shared value concept that includes:

  • Creating economic value for shareholders
  • Creating social value by responding to the needs and challenges of society

ESG (Environmental Social & Governance) is a standard for assessing corporate behavior that investors use today to assess whether a company has the potential to receive their investment.