Strategic Management System. The SWOT Matrix

Strategic management is an essential part of an effective management structure in general. Developing long-term strategic plans enables top-managers to evaluate perspectives of markets, recourses, and technologies, to choose the priorities of further company development emphasizing key goals. In today’s highly competitive business environment, budget-oriented planning or forecast-based planning methods are insufficient for a large corporation to survive and prosper. The firm must engage in strategic planning that clearly defines objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay on track.

Information and analytical tools of the System:

• Current monitoring of company’s activities
• Goals achievement controlling
• Current trends diagnostics of a company’s development and its environment
• Analysis of development trends correspondence to strategic goals of a company
• Forecasting and forming scenarios of strategic goal achievement
• Estimation and analysis of corporate risks appeared in achieving strategic goals and in risk management scenarios
• Corrective scenarios System of current, medium-term and long-term company
  development programs.

Strategic management is a process of definition of interaction of an organization with its environment expressed through use of the elected purposes and achievement of desirable result by distribution of resources of an organization according to an effective plan of action. In strategic management, main principles are formulating strategy and implementing strategy. Strategic management is administrative processes and the decisions determining long-term structure and a character of activity of an organization.

Strategic management begins with a careful analysis of internal merits and disadvantages of a company, and also external opportunities and threats – the SWOT-analysis. The information received as a result of the SWOT-analysis, is used for construction of the strategy directed on realization of mission of the company.

The second stage, formulating strategy, is connected with formulating mission of the enterprise, statement of long-term and short-term objectives and arrangement of priorities in realization of a strategy. A strategy should be developed in the way to proportion the opportunities revealed in an environment of activity, with internal advantages of the company. This balance of internal advantages and external opportunities for each company will be unique. Formulating an effective strategy is based on revealing, comprehension and using unique competence and advantages of the company thus, what other companies are not capable to make. In some models development of strategy is considered to be the first step on a way of formation of the process of strategic management.

The third element of this process is realization (implementing) of strategy. It includes a statement of objectives of the company, attracting the workers capable efficiently to carry out ordered duties, and their compensation. Realization of strategy is achieved due to development and introduction of the organizational culture, supporting the chosen strategy.

Finally, the fourth stage, an estimation (evaluating) and perfection (correcting) of strategy, creates not only systems and parameters for the control of efficiency of activity, but also expands duties of administration.

The doctrine of strategic management contains the following basic elements:

• Looking ahead. It is necessary to know, in what markets you are operating at the moment and on which ones you want to find yourselves in the future.
• Paying indefatigable attention to external factors – technological, economic, political and social.
• It is necessary to establish and support a balance between these external factors and internal parameters (indicators) of the organization.
• It is always important to remember, that strategic management is an interactive process. It can never be made right at the beginning of work, and then deserted; strategic management assumes feedback and constant accumulation of knowledge.

Strategic management allows the organization to operate not being limited only with reciprocal steps, and also increases its confident readiness to face both controllable and uncontrollable situations. Strategic management provides precise strategic vision and gives sense of mission of the company. Presence of clear vision creates a synergy and unites all energy of the organization in one stream. It helps to inform effectively all workers about plans of the organization, thus providing their readiness to solve organizational objectives. Strategic management allows to estimate strength and weaknesses of the organization and to concentrate on strategically important directions.

Now it’s time to introduce a person, who bears the responsibility for formulating and implementing strategic decisions in an organization. A goal-oriented, determined strategic manager always tries to strengthen advantages of the organization, to capitalize favorably developed circumstances and at the same time to minimize its weaknesses and to try to overcome potentially adverse coincidence of circumstances which can represent a threat of the organization. The term «the strategic manager » concerns to a chairman of a board of directors, an executive director, top managers, i.e. to those who actually bears the responsibility for acceptance of strategic decisions and changes in a company. The strategic head can be a one person or a team of executive directors. In large corporations, the board of directors and the top echelon of management are major strategic managers. In the small and medium enterprises, the main strategists are an executive director (president) or the owner – head.

The SWOT Matrix

To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:

	Strengths	Weaknesses
Opportunities	S-O strategies	W-O strategies
Threats	S-T strategies	W-T strategies

S-O strategies pursue opportunities that are a good fit for the company’s strengths.

W-O strategies overcome weaknesses to pursue opportunities.

S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.

W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats.

Vision – the knowledge and imagination that are needed in planning for the future with a clear purpose.

Mission – an aim that is very important to an organization.

Mission statement — a clear statement about the aims of a company or organization.

Objective – smth that you plan to achieve in business.