1.

Difference Between Strategic Management and Strategic Planning

Strategic Management

Strategic management is a broader concept that encompasses the formulation,

implementation, and evaluation of strategies within an organization. It is an ongoing process
aimed at ensuring that the organization achieves its long-term goals and adapts to its internal
and external environments. Strategic management is a dynamic and continuous activity that
requires constant monitoring and adjustments based on organizational performance, changes
in the market, and emerging challenges or opportunities.

Strategic management involves three key phases:

1. Strategy Formulation: This includes analyzing the internal and external

environment, setting goals, and determining the best course of action to achieve those
goals.
2. Strategy Implementation: Translating formulated strategies into actions, allocating
resources, and ensuring the workforce is aligned with the organization's objectives.
3. Strategy Evaluation: Monitoring performance, comparing actual outcomes against
expected results, and making necessary adjustments to strategies.

Strategic Planning

Strategic planning, on the other hand, is a specific phase within the broader strategic
management process. It focuses on the initial stages of the strategic process—analyzing
where the organization is currently, deciding where it wants to be in the future, and
determining how to get there. Strategic planning is more structured and time-bound compared
to strategic management.

Key characteristics of strategic planning include:

 A focus on goal setting and defining the organization’s vision, mission, and
objectives.
 It is typically conducted over a defined period, such as annually or over several years.
 It involves creating a roadmap or blueprint that outlines specific actions, timelines,
and resources needed to achieve the organization's long-term objectives.

Key Differences

Aspect Strategic Management Strategic Planning

Scope Broader, includes formulation, Narrower, focuses on formulating
implementation, and evaluation goals and plans
Timeframe Ongoing and continuous Typically periodic (e.g., annual
or multi-year plans)
Focus Ensuring adaptability, alignment, and Developing a clear plan to
performance achieve goals
Approach Dynamic and flexible Structured and formalized
Examples Monitoring competition, adapting Setting a 5-year growth strategy
strategies to market shifts or market entry plan
2. Levels of Strategic Planning

Strategic planning operates at three main levels: Corporate Level, Business Level, and
Functional Level. Each level has a distinct focus, objectives, and scope.

a. Corporate Level

The corporate level is the highest level of strategic planning and deals with the overall
purpose and scope of the organization. This level addresses big-picture decisions that affect
the entire organization, such as diversification, acquisitions, mergers, and overall growth
strategies.

Key Characteristics of Corporate-Level Strategy:

1. Mission and Vision: This level defines the organization’s purpose, vision, and long-
term objectives. For example, a company like Apple may have a corporate-level
strategy focused on being the global leader in innovative technology.
2. Portfolio Management: Decisions are made regarding the mix of businesses or
markets the organization will operate in (e.g., entering new industries or exiting
unprofitable markets).
3. Resource Allocation: Determines how resources (capital, talent, etc.) will be
distributed among various business units or divisions.
4. Risk Management: Evaluates risks associated with corporate-level decisions, such as
entering foreign markets or acquiring a competitor.

Example of Corporate-Level Strategy:

 Amazon: Expanding its portfolio from e-commerce to cloud computing (AWS),

entertainment (Prime Video), and logistics.

b. Business Level

The business level focuses on strategies for individual business units or divisions within the
organization. It is concerned with how a business competes within its specific market or
industry.

Key Characteristics of Business-Level Strategy:

1. Competitive Advantage: This level focuses on how a business unit can achieve a
competitive edge in its market through differentiation, cost leadership, or niche
strategies.
2. Market Positioning: Decides how the business will position itself to appeal to its
target market (e.g., offering premium vs. budget products).
3. Customer Focus: Develops strategies to meet the needs of customers and respond to
competitors.

Types of Business-Level Strategies:

 1. Cost Leadership: Offering products or services at the lowest cost in the industry
(e.g., Walmart).
2. Differentiation: Providing unique products or services that justify higher prices (e.g.,
Apple’s innovative designs).
3. Focus/Niche Strategy: Targeting a specific segment of the market (e.g., Tesla
focusing on the electric vehicle market initially).

Example of Business-Level Strategy:

 Tesla: Competing in the automotive industry by focusing on electric vehicles, with an

emphasis on innovation and sustainability.

c. Functional Level

The functional level deals with specific departments or functions within a business, such as
marketing, operations, finance, and human resources. This level ensures that each department
contributes effectively to the business unit’s goals.

Key Characteristics of Functional-Level Strategy:

1. Alignment with Business Goals: Functional strategies are designed to support

business-level strategies.
2. Operational Efficiency: Focuses on optimizing processes and resources within a
specific function to achieve higher efficiency.
3. Tactical Implementation: Includes short-term, detailed plans and actions for specific
functions.

Examples of Functional-Level Strategies:

 Marketing: A marketing team may launch a social media campaign to increase brand
awareness.
 Operations: An operations team may implement lean manufacturing to reduce waste
and improve productivity.
 Finance: A finance team may focus on cost control and budget optimization.

Example of Functional-Level Strategy:

 Coca-Cola: The marketing department’s strategy focuses on global advertising

campaigns to build brand loyalty, while the operations team works on optimizing
bottling processes worldwide.

Summary of Strategic Planning Levels

Level Focus Scope Example Decision

Corporate Overall organization, vision, Broad Entering a new industry or
and portfolio acquiring a competitor
Business Individual business units or Moderate Differentiating products to beat
markets competitors
Functiona Specific departments or Narrow Launching a digital marketing
l functions campaign
Conclusion

Strategic management and strategic planning are interrelated but distinct processes. While
strategic management is an overarching and continuous activity, strategic planning focuses on
defining and setting goals for specific time periods. Strategic planning occurs at three levels
—corporate, business, and functional—each with unique responsibilities and objectives.
Understanding these levels ensures that every part of an organization contributes effectively
to its overall success, from big-picture corporate goals to tactical departmental actions.

References

Books
1. Hill, C. W. L., Jones, G. R., & Schilling, M. A. (2019). Strategic Management:
Theory: An Integrated Approach (13th ed.). Cengage Learning.
2. Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic
Management and Business Policy: Globalization, Innovation and Sustainability (15th
ed.). Pearson Education.
3. Mintzberg, H., Ahlstrand, B. W., & Lampel, J. (2005). Strategy Safari: A Guided
Tour Through the Wilds of Strategic Management. Free Press.
Journals
1. Kaplan, R. S., & Norton, D. P. (1996). "Using the Balanced Scorecard as a Strategic
Management System." Harvard Business Review, 74(1), 75-85.
2. Barney, J. (1991). "Firm Resources and Sustained Competitive Advantage." Journal
of Management, 17(1), 99-120.
3. Porter, M. E. (1996). "What is Strategy?" Harvard Business Review, 74(6), 61-78.
Web Resources
1. Investopedia. (n.d.). Strategic Management. Retrieved from
https://www.investopedia.com
2. MindTools. (n.d.). Strategic Planning: Delivering Your Company's Future. Retrieved
from https://www.mindtools.com
3. Corporate Finance Institute (CFI). (n.d.). Levels of Strategy: Corporate, Business, and
Functional. Retrieved from https://corporatefinanceinstitute.com
Case Studies and Examples
1. Case study of Apple Inc. in Hill, C. W. L., Jones, G. R., & Schilling, M. A. (2019).
Strategic Management: Theory: An Integrated Approach.
2. Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior
Performance. Free Press.