Strategic management is all about setting and reaching your long term goals
When looking at long-term goals, what should you be focusing on?
The core activity of a company is not, as is commonly believed, the product or service that the company provides. Instead it’s all about winning and keeping customers. Many will not shed a tear when they lose a customer, but in essence what it means is that you need to find a new customer to take its place in order to maintain the same turnover as before. This results in additional time spent and additional costs incurred, while the growth of the company stagnates and the costs of doing business increases.
How do you reach your long-term goals?
To have a successful business means reaching your long-term goals. In order to do so you will need to make sure your business is well organized. It’s vital that your business processes are focussed on delivering value to your customer. Overlooking this important step has a direct, negative impact on your customer base. When your company is not able to retain customers it means loss of sales and margin. You will need to compensate for these losses by attracting new customers. Costs to attract new clients are far higher than costs to retain existing customers, even if that means additional investments to meet the expectations of your client. In addition, winning new customers is difficult, especially when the customers you lose give you a bad reputation in the market by sharing their disappointment with their peers. In short it’s vital that the strategic management receives the necessary attention in your organization and you must ensure that everybody in your company understands and supports the long-term goals.
Strategic management is the entire process from setting your long-term goals to determining actions and assignment of resources, which are necessary to reach these goals.
Do you have enough focus on the long-term goals?
Strategy is the responsibility of the entrepreneur and/or management of a company, but in practice this task is often not fulfilled. The strategic planning is not integrated in the management process and as a result the long-term goals are not known in the organization. The logical consequence of not having long-term goals is that no actions are planned and no resources are allocated to adjust the business processes to the expectations of the customer. At the same time the road to gaining competitive advantage, and thus becoming a successful entrepreneur or manager, has been cut off. There are a number of reasons that can be considered as to why strategic management doesn’t get the attention it deserves.
Strategic management doesn’t get enough attention, because:
- the responsibility for strategy doesn’t get enough attention from senior management
- business planning is not based on relevant management information
- the workload of the entrepreneur/manager is too big
- there is an abundance of information, but not enough relevant information to make the right decisions
- the organisation is too focused on a single aspect of the business, typically the product or service
- there is no integrated approach within the organisation
- the competition doesn’t get enough attention (information about the competition is inadequate or missing entirely
During my career I had several management/executive positions in both the Netherlands and abroad. I have provided leadership in a broad range of disciplines and gained a wealth of experience.