Running a successful business means establishing an overall strategy and set of policies to move the organization forward and ensure its long-term success. Management is made up of 3 hierarchical levels of management: strategic management, tactical management and operational management. Together, they represent a considerable force for the management of any company.
It is essential to understand these different levels of management so that any company can adapt effectively to its internal and external environment. These 3 management methods are therefore necessary to maintain a competitive advantage.
The different levels of management
Management is a process of planning, organizing, directing and controlling the activities of an organization in order to achieve the objectives set. Each level of management has its own responsibility and specific functions.
Also read our article on the complete definition of management .
Strategic management is the highest level. It aims to define the direction of the company and the strategies to be implemented to achieve the objectives set.
The responsibilities and objectives of strategic management include:
- Determining the vision, mission and goals.
- Developing a strategy to achieve these goals.
- The allocation of resources for the implementation of the strategy.
- Market and competition analysis to adjust the strategy as needed
- Assessing business performance and identifying opportunities for improvement
- Strategic decision making
- Strategic management focuses on a long-term vision and performance
More concretely, operational management consists of implementing the strategies defined by strategic management . The tasks to be accomplished are prioritized and distributed.
The objectives of operational management include:
- Increased productivity and profitability
- Reduction of costs and production times
- Optimization of the use of human, financial and material resources
- Meeting the needs and expectations of employees
- Anticipation and management of potential risks
Tactical management is the intermediate level and implements the strategies set by strategic and operational management. It involves the coordination of operational activities to achieve the company’s short-term goals.
The responsibilities and objectives of tactical management include:
- Resource planning and allocation.
- Supervision and coordination of day-to-day activities to ensure short-term goals are met.
- Communication of instructions and objectives to the teams
- Assessing operational performance and identifying opportunities for improvement
The tools used for each level of management
Strategic level tools include:
- Environmental analysis: PESTEL method (assessment of political, economic, societal, technological, ecological and legal forces)
- Competitive analysis: assessment of competitive forces to determine opportunities and threats.
- Analysis of company resources and capabilities to determine strengths and weaknesses.
- Analysis of the business portfolio: BCG matrix or GE matrix
- Strategic planning to achieve the objectives set: management of schedules, distribution of tasks, etc.
Operational level tools include:
- Definition and improvement of organizational processes and methods
- Identification of needs
- supply chain management
- Performance indicators
- Stock management
- Tools for monitoring and evaluating individual performance
Tactical level tools include:
- Short- or medium-term operational planning: SMART objectives methodology
- Budgeting and tracking costs
- Performance evaluation
- Process analysis: identification and improvement to increase efficiency and quality
- The establishment of systems to guarantee the quality of products/services.
- Human resources management: recruitment, training and personnel management
What are the limits of strategic, operational and tactical management?
Although each level of management is essential to the growth and sustainability of a company, it is important to understand that each has its own limits.
Strategic and operational management can be a challenge when relying on incomplete or inaccurate forecasts and information. It can also be difficult for a company to anticipate market fluctuations which can have a significant impact on its plans. Moreover, the risk of losing sight of short-term opportunities can become significant.
Tactical management involves risks, such as focusing on short-term goals without considering long-term consequences. Without reliable information and strategic guidance, decision-making can be misguided. In addition, tactical management can become too operational and lead to the neglect of important strategic objectives .
To mitigate the risks associated with strategic, operational and tactical management, it is important to maintain a balance between short and long-term objectives and to ensure that all decisions are in line with business objectives.
Conclusion
Each of these levels of management has different responsibilities and objectives, but all work together to achieve overall business goals. The strategic manager defines the overall strategy and important decisions, the tactical manager implements it and the operational manager manages day-to-day activities.
In summary, knowing the different levels of management can help to understand the organizational structure of the company, improve communication between different departments and better understand strategic decisions, allowing to seize opportunities and anticipate future challenges.
Do not hesitate to consult our previous articles to learn more about:
What is strategic management?
How to set up an effective flat hierarchy: complete guide
The key differences between an entrepreneur and a manager
