There is no guaranteed formula for business success. However, companies that ignore the importance of strategic management are essentially giving their competitors an advantage.

Why Does Strategic Management Matter?

The key word in strategic management is “strategy.” Business strategy decisions include defining a company’s mission, vision, and other factors that set it apart from competitors.

Strategic management is an ongoing process where executives set business goals and take action to achieve them. It requires careful planning, and business leaders must constantly assess operations to ensure they align with long-term objectives.

If you’ve ever wondered, “Is strategic management important?” The simple answer is yes. But how a company approaches it can determine whether it succeeds or struggles.

Success in 2025 may look different from past years. Effective strategic management goes beyond following a specific theory—it’s about making smart, proactive decisions. Let’s explore how companies can approach it.

Competing in a Crowded Market Requires Strategy

Standing out in a competitive market requires a strong competitive advantage. Business leaders are responsible for identifying or creating these advantages.

This is especially challenging in highly regulated industries like airlines, banking, and mortgage lending, where products and services tend to be similar across companies.

While there are many ways to build a competitive edge, companies cannot be everything to everyone. Leaders must develop strategies that align with their company’s mission, vision, and day-to-day operations.

For example, if a company’s mission is to be the most affordable option, it cannot also compete on offering the highest level of customer service. On the other hand, if a business prioritizes an outstanding customer experience, it may not be able to offer the lowest prices.

Without a clear strategic management process, companies can struggle to keep up with constant market changes—and many may not survive.

10 Steps to Strong Strategic Management

1. Start with a SWOT Analysis
   Business leaders often use SWOT analysis to guide strategic decisions by assessing internal and external factors. SWOT stands for strengths, weaknesses, opportunities, and threats.
   • Strengths and Weaknesses: Internal factors such as leadership, structure, and processes. Strategies should focus on leveraging strengths and improving weaknesses.
   • Opportunities and Threats: External factors such as competitors, market trends, regulations, and technology. Strategies might include targeting new customer segments or adopting new technologies.
2. Enhance Customer Service
   Providing exceptional customer service can create a competitive advantage. Training employees and giving them the authority to resolve issues can improve customer satisfaction.
   • Companies like Amazon, Zappos, and Chewy allow representatives to solve problems without needing manager approval, making the process seamless for customers.
   • Other businesses make customer experiences easier with self-service solutions like online scheduling and mobile check deposits.
3. Be Transparent About Social Responsibility and Sustainability
   Corporate social responsibility (CSR) involves supporting charitable and environmental causes. Consumers and job seekers increasingly prefer businesses with strong CSR initiatives.
   • Companies that emphasize sustainability, such as using eco-friendly materials, often receive positive media coverage and attract more customers.
   • A lawn care business using organic treatments, for example, stands out compared to competitors using harmful chemicals.
4. Differentiate Your Product Through Marketing
   Product differentiation is crucial in competitive industries. Companies that highlight what makes their products unique can attract more customers.
   • Smartphone brands, for instance, compete by offering better cameras or unique features.
   • The fast-food “chicken sandwich wars” showed how brands differentiate through taste, size, and quality.
5. Compete on Price When Possible
   Offering the lowest price can be a strong advantage, but it’s challenging without large-scale purchasing power.
   • Large retailers like Walmart can offer low prices by ordering in bulk. Smaller companies can still compete by forming partnerships to lower costs.
   • A construction company that uses in-house labor instead of subcontractors can save money and pass the savings to customers.
6. Embrace Technology and Innovation
   Adopting new technology can set a company apart. Businesses that resist innovation risk falling behind competitors who improve efficiency and customer experience.
   • Amusement parks use mobile apps to show real-time wait times, improving the guest experience.
   • Ride engineers design unique roller coasters to stand out from competing theme parks.
7. Improve Internal Operations
   Optimizing logistics and internal processes increases efficiency and reduces costs.
   • Chick-fil-A speeds up drive-thru service by using employees with tablets to take orders outside, creating a smoother experience.
   • Streamlining workflows can save money and attract more customers by reducing wait times and improving service.
8. Align Marketing and Branding with Business Goals
   Marketing should support a company’s overall strategy. Businesses can track key performance indicators (KPIs) to measure effectiveness.
   • Wendy’s gained attention by playfully calling out competitors on social media.
   • Starbucks engages with customers by sharing user-generated content, creating a sense of community.
9. Use a Balanced Scorecard for Decision-Making
   A balanced scorecard measures success in four key areas:
   • Financial performance
   • Customer satisfaction
   • Internal business processes
   • Innovation and learning
10. Move Beyond a Profit-First Mentality
    Focusing only on profit (shareholder primacy) can hurt employees and long-term success. Some companies prioritize profits by cutting costs, often at employees’ expense.

• Layoffs, stagnant wages, and overburdened employees are common outcomes of shareholder-focused strategies.
• A balanced scorecard approach ensures profitability while also supporting employees and customers.

Are You Interested in Strategic Management?

Strategic management is complex but has a significant impact on businesses and society. If you enjoy thinking about big-picture business decisions, a career in organizational leadership could be a great fit.