Corporate strategy and portfolio theory

Strategic management is a continuous process of strategic analysis, strategy creation, implementation and monitoring, used by organizations with the purpose to achieve and maintain a competitive advantage.

The general purpose of doing it is to combine the energy of organization’s functional areas into one focused effort to achieve superior performance. It is usually done through the many steps of the process.

In essence, it answers the following 3 questions:

• Where the organization is at the moment?
• Where does it want to go?
• How it will get there?

Strategic management is not about predicting the future, but about preparing for it and knowing what exact steps the company will have to take to implement its strategic plan and achieve a competitive advantage.^[5]

The difference between strategic management and strategic planning

Both strategic management and strategic planning terms mean the same! The difference is that the latter one is more used in the business world while the former is used in the academic environment.

According to David,^[1] strategic planning is sometimes confused with strategy formulation, because strategic plan is constructed in this stage.

Importance of strategic planning

Requirement for sustained competitive advantage. Competitive advantage is what keeps great organizations ahead of their competitors. Rothaermel^[2] pointed out that the company, which has a competitive advantage, performs financially much better than other companies in the industry or better than the industry average. Some companies may achieve it without thorough strategic plan but for the most players out there it is vital to plan strategically, i.e. analyze, create, implement and monitor, and do this continuously. It is not guaranteed that companies will ever achieve competitive advantage conducting strategic planning but it is an essential process if the company wants sustain it.V