Strategic management (SM) is now prominent on the agenda of public administration (PA) scholars and practitioners e.g. in Swedish Central Agencies, and is said to become increasingly relevant in public organizations due to new public management (NPM) changes. Some scholars even suggests that the models of SM takes us beoynd NPM towards something new where SM becomes the core of the organization. SM has so far mainly been studied in a context of the private sector, and the main concern in public sector research on SM has been on how to translate the concepts of competitive advantage, growth and profitability into a public sector context. We however argue the importance to further elaborate on the nature of strategy by addressing a greater range of SM theories, and its usefulness for PA. There is also a lack of studies investigating how public organizations actually apply SM in practice. We have studied how SM has been applied in the Swedish Transport Administration (STA), a central government agency. The empirical material is based on document studies and interviews with 85 top- , middle- and lower-level managers, strategists and other employees. SM is supposed to lead to e.g. decentralization, a long term holistic perspective and strategic thinking. However, our results indicate when public sector do their interpretation of SM they tend to become quite centralized, fixated on shortterm measurements and focused on operative matters. One explanation for this seems to be that SM is translated into a NPM discourse, altering the initial intentions with SM. This suggests that NPM becomes an important contextual aspect to consider when SM-are implemented in the public sector. Key words: strategic management (SM), public administration (PA) public sector, strategy, new public management (NPM).