There’s no way to guarantee business success. But any company that overlooks the value of strategic management is essentially helping its own competitors declare victory.
Why is that?
The key word in strategic management is strategic, or strategy. Business strategy decisions include a company’s mission, vision and other aspects that set it apart within the competitive landscape.
Basically, strategic management is the ongoing goal-setting process through which executives set business goals and take actions to meet them. Strategic management requires careful planning, and business leaders must constantly evaluate business operations to ensure they align with long-term objectives.
If you've been wondering, is strategic management important? The short answer is yes. But how you go about it can make all the difference in whether or not a business finds success.
And success in 2025 might look different than it has in years past.
Effective strategic management goes past any particular strategic management theory. It’s about responsive, active decisions. Let’s dive in.
It’s competitive out here—strategic management is a must
Standing out in a competitive environment requires a competitive advantage. Often, organizational leaders are responsible for identifying or creating these advantages.
This task is not without its challenges, especially in heavily regulated industries (e.g., airlines, banks and mortgage brokers) where products are similar across the board.
There are many ways to create a competitive advantage, but a company still can’t be everything to everybody. Leaders must develop corporate-level strategies that align with their organizations’ missions, visions, goals and day-to-day business management.
If a company’s mission is to be a low-cost leader, for example, then it can’t also distinguish itself through exceptional customer service. Conversely, a company that delivers an outstanding customer experience likely won’t be able to compete on price as well.
But without a strategic management process, businesses can easily get muddled trying to react to every factor of their environment. Many of them will go under.
Here are 9 things each organization should do for effective strategic management.
1. Use SWOT to begin your strategic management process
One of the ways business leaders make strategy decisions is by doing SWOT analyses to assess internal and external forces. SWOT is a strategic planning process that stands for strengths, weaknesses, opportunities and threats.
SWOT analyses can help you make business level strategies by highlighting your company’s position in the market.
Strengths and weaknesses
Strengths and weaknesses are internal to an organization and may include factors such as management, structure, processes and procedures.
Business strategies around this area might include how to navigate risks, prepare for situations ahead of time or lean a little more on what you already do best.
Opportunities and threats
Opportunities and threats are external factors like competitors, local consumer demographics, the economy, new laws/regulations, technological advancements and changing sociocultural attitudes and trends.
Business strategies around this might include launching new campaigns to target an overlooked demographic, planning to apply for new permits or incorporate a new machine, platform or other technology into your organization.
Senior leaders determine how an organization may use its strengths as a competitive strategy, to take advantage of opportunities and combat threats. Identifying weaknesses also enables leaders to create strategic plans to overcome them.
2. Optimize the customer service experience
One way an organization can create a unique advantage is to provide better customer service than its competitors offer. Investing in employee training and development ensures customer service representatives and other customer-facing employees are attuned to customer needs and can provide exceptional service.
Organizations may also authorize employees to resolve customer issues themselves, rather than requiring managers to handle all requests. This allows for a streamlined, customer-centric process that’s already proven successful for several major retailers.
For example, upon calling Amazon®, Zappos® or Chewy® for customer service, you will immediately speak to a person. That person will resolve all questions, issues and challenges without being required to obtain approval for any standard return, exchange, refund or replacement concerns.
This is a much different, and better, experience than most other companies provide to customers who have issues or challenges.
Alternatively, businesses can empower their customers to quickly and easily solve their own problems with solutions like free drink refills, mobile check deposits and online appointment-booking.
3. Be transparent about corporate social responsibility and sustainability initiatives
Corporate social responsibility (CSR) refers to the ways that corporations support charitable causes in the communities where they operate.
Yes, CSR is rooted in philanthropy, but it is also a good public relations (PR) and marketing tool for organizations. Companies tend to receive favorable media coverage when they demonstrate goodwill.
Environmental sustainability has become an especially popular CSR talking point. Among consumers and job-seekers, there is a growing sociocultural push for sustainable or environmentally friendly products and services. Corporations that deliver on these expectations may therefore obtain good press that further boosts their sales and expands brand awareness.
An organization that commits to “going green” can create a competitive advantage that sets it apart from organizations offering similar services.
For example, a lawn company using organic products to prevent harming local waterways has a clear competitive edge. The same can be said for a bug company using natural pesticides to avoid harm to humans, pets and the local environment.
CSR and sustainability efforts drive innovation while garnering positive attention that boosts sales—and aids companies’ reputations.
4. Emphasize product differentiation through marketing and advertising
Differentiation, beyond customer service, is not always easy to create. Some industries have extraordinarily high costs and other unique barriers to entry. Drug manufacturers, for instance, face the challenge of navigating patents.
Still, an organization that differentiates its products and services has an advantage. For example, a smartphone manufacturer that provides a better camera than the competition (i.e., one with a higher resolution or a more powerful zoom lens) will stand out for its unique product offering.
The fast-food chicken sandwich wars also provided real-world examples of the importance of product differentiation. There was a time when each restaurant chain attempted to “out-chicken-sandwich” the other by making the crispiest, juiciest or biggest chicken sandwich in the industry.
When organizations showcase the qualities that make their products unique, customers can more easily decide which brand is superior.
5. If possible, develop a cost-leadership strategy
Cost leadership involves competing on price. It’s a great way to create an advantage, but undercutting the competition can also prove difficult without having the luxury of being a mass retailer/purchaser.
Often, large organizations like Walmart® can provide products at low prices because they order their inventory in such large quantities. Not all organizations can place orders as large as Walmart, however. Still, there are other ways to reap the benefits of cost leadership.
A company may have partnerships that allow it to purchase goods at a reduced cost, for example. Decision-makers can choose to pass those savings on to customers.
Or let’s say you’re running a construction company that specializes in home improvement. You may be competing against other businesses that hire subcontractors. If your team performs the labor themselves, then your organization can save on expenses and allow your customers to do the same.
Of course, it’s important to keep in mind that cost leadership isn’t the only way to obtain and keep customers. For instance, despite Walmart’s low prices, many people still prefer to shop at other stores, like Target®.
These other retailers offer customer-centric environments, unique store experiences, and specialty offerings that customers value.
6. Embrace technology and innovation
Innovation is a key component of every corporate strategy. Corporations use technology to distinguish their products and services from those of competitors. Business units that resist new technologies also run the risk of losing out to competitors who can create better customer experiences or deliver faster, more efficient services.
For example, an amusement park may implement technology that allows its guests to see wait times for rides. This example of innovation can help make the customer experience significantly more enjoyable. And as a result, guests may visit the amusement park more often.
Technology and innovation are also key elements of product differentiation strategies. For instance, amusement parks can innovate news type of rides by engineering tracks with unique angles, drops and speeds to set themselves apart from competitors.
7. Review logistics and internal operations to increase efficiency
The benefits of optimizing logistics and operations can be two-fold.
First, this step can help employees make better use of their time, effectively cutting costs. Reducing inefficiencies this way makes it possible for organizations to pass additional savings on to their customers.
Second, logistics and operations improvements can make processes simpler and faster, which can help to attract more customers and increase sales.
The new drive-thru process at Chick-Fil-A® is a perfect example of efficient logistics and operations. At peak times, Chick-Fil-A has extra employees use tablets to take orders in the drive-thru lane. This operational improvement helps to speed up—or appear to speed up—the drive-thru process.
(Customer perception is often just as important as reality.)
8. Ensure marketing and branding help support the company’s goals
Marketing and branding efforts should always support strategic goals. Organizations can monitor performance metrics to determine whether their marketing and branding strategies are effective. These metrics can include key performance indicators like sales, email newsletter signups or active followers on social media.
Speaking of social media, brands can now easily garner attention by interacting publicly with their competitors. Take the time Wendy’s® infamously called out McDonald’s® for using frozen burger patties in its restaurants.
Starbucks® also engages its customers through social media, though the coffee giant opts for a less combative approach. In fact, Starbucks has become known for reposting customers’ images of its coffee in unique locations.
For example, a customer once posted a photo of themselves holding a cup of coffee at the Bellagio in Las Vegas, well-known for having umbrellas on its ceiling. Starbucks reposted the image.
Interacting with customers through social platforms not only engages them in conversations—it also yields valuable marketing data.
Organizations are often able to use social media analytics to help personalize the ads they serve to specific target markets.
9. Use a balanced scorecard to guide strategic management initiatives
Balanced scorecards are becoming somewhat of a trend within the strategic management world. According to Harvard Business Review, having a balanced scorecard means that a corporation considers four key areas when measuring the success of its strategic management efforts:
- Finance
- Customers
- Internal business operations
- Innovation and learning1
10. Phase out your profit-above-all-else mentality
The opposite of a balanced score is called shareholder supremacy or shareholder primacy.
Shareholder supremacy is a form of corporate governance that prioritizes shareholder interests—namely, profitability. It was popularized during the 1970s by Milton Friedman and perpetuated by consulting companies such as McKinsey & Company®.
In recent times, experts have argued that shareholder primacy has proven terrible for employees. It has also expanded the divide between the rich and the poor by shrinking the middle class.
If CEOs can’t achieve shareholders’ profitability goals (which are typically tied to most of their compensation/bonuses) through revenue, they can artificially create profitability by reducing expenses. But the biggest expense in most companies is employees’ salaries.
As a result, shareholder primacy has fueled the ongoing reduction in employee wages, even among profitable companies. It’s also led to arbitrary layoffs and “reductions in forces,” with increased work responsibilities falling on shoulders of remaining employees, thus overburdening them.
All in the name of shareholder supremacy and CEO wages.
Recently, in the face of record-high inflation, employees have begun to push back against shareholder primacy and pursue unionization. (For more on this, check out Companies Struggle With Business Ethics, and It’s Going to Cost Them.)
Using a balanced scorecard is the key to avoiding the fallout of solely focusing on profitability. Organizational leaders can create environments where all stakeholders can reap the benefits of organizational success.
Using a balanced scorecard also creates a positive societal impact by keeping wages aligned with corporate profits, thereby benefiting local communities.
Do you find corporate level strategy interesting?
If you’ve read this far, you understand that strategic management is not only complex, it’s also a powerful way to impact the business landscape (and society as well). Many people don’t care for this macro-level kind of thinking. But if you like it, you might find organizational leadership a very fulfilling career path.
Rasmussen offers an online Organizational Leadership Bachelor's degree program that focuses on these exact ideas and how to implement strategic management.
If you are ready to start making changes in how organizations do business, check out 4 Organizational Leadership Careers for Ambitious Career Advancers to see some career options you could pursue.
Amazon® is a registered trademark of Amazon.com, Inc.
Zappos® is a registered trademark of Zappos IP LLC.
Chewy® is a registered trademark of CHEWY, INC.
Walmart® is a registered trademark of Wal-Mart Stores, Inc.
Target® is a registered trademark of Target Brands, Inc.
Chick-Fil-A® is a registered trademark of CFA PROPERTIES, INC.
Wendy’s® is a registered trademark of Quality Is Our Recipe, LLC.
McDonald’s® is a registered trademark of McDonald’s Corporation.
Starbucks® is a registered trademark of STARBUCKS CORPORATION.
McKinsey & Company® is a registered trademark of McKinsey Holdings, Inc.
1 Robert S. Kaplan and David P. Norton, The Balanced Scorecard—Measures that Drive Performance, (January-February 1992), [accessed November 2024], https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2
2 Completion time is dependent on transfer credits accepted and the number of courses completed each term.
