What are the Benefits of Strategic Management? Includes Strategic Planning; There are many benefits of strategic management and they include identification, prioritization, and exploration of opportunities. For instance, newer products, newer markets, and newer forays into business lines are only possible if firms indulge in strategic planning. Next, strategic management allows firms to take an objective view of the activities being done by it and do a cost-benefit analysis as to whether the firm is profitable.
Just to differentiate, by this, we do not mean the financial benefits alone (which would discuss below) but also the assessment of profitability that has to do with evaluating whether the business is strategically aligned to its goals and priorities.
The key point to note here is that strategic management allows a firm to orient itself to its market and consumers and ensure that it is actualizing the right strategy.
It is shown in many studies that firms that engage in strategic management are more profitable and successful than those that do not have the benefit of strategic planning and strategic management. When firms engage in forward-looking planning and careful evaluation of their priorities, they have control over the future, which is necessary for the fast-changing business landscape of the 21st century.
It is estimated that more than 100,000 businesses fail in the US every year and most of these failures are to do with a lack of strategic focus and strategic direction. Further, high performing firms tend to make more informed decisions because they have considered both the short-term and long-term consequences and hence, have oriented their strategies accordingly. In contrast, firms that do not engage themselves in meaningful strategic planning often bogged down by internal problems and lack of focus that leads to failure.
The section above discuss some of the tangible benefits of strategic management. Apart from these benefits, firms that engage in strategic management are more aware of the external threats, improve understanding of competitor strengths and weaknesses and increase employee productivity. They also have a lesser resistance to change and a clear understanding of the link between performance and rewards.
The key aspect of strategic management is that the problem solving and problem preventing capabilities of the firms enhance through strategic management. Strategic management is essential as it helps firms to rationalize change and actualize change and communicate the need to change better to their employees. Finally, strategic management helps in bringing order and discipline to the activities of the firm in both internal processes and external activities.
In recent years, virtually all firms have realized the importance of strategic management. However, the key difference between those who succeed and those who fail is how strategic management is done; and, strategic planning is carried out makes the difference between success and failure. Of course, there are still firms that do not engage in strategic planning or where the planners do not receive support from management. These firms ought to realize the benefits of strategic management and ensure their longer-term viability and success in the marketplace.
The following are the benefits of the strategic management process which allows the organizations to adopt it for long-term success.
(Note of Credits: This is article base on a lecture done by Mr. Marlon Gunasekara at APIIT-Sri Lanka on Strategic Management)
Strategic management includes strategic planning, implementation and review/control of the strategy of an organization. All most all the modern organizations engage in strategic management to ensure that they achieve the desired level of performance.
There are many benefits that an organization can obtain by engaging in strategic management and they can describe as follows :
The strategic management process clearly defines what is the desired level of performance (mission/goals/objectives); and, it sets the direction so that everyone in the organization knows where are they heading towards. Strategic management acts as a roadmap for everyone in the organization; and, it clearly defines the way to get to the final destination/desired level of performance.
Strategic management identifies the critical factors that are strategically important to the organization. When critical factors identify a company can analyze and take relevant measures to ensure satisfactory performance in those areas.
Strategic management predicts future changes that can take place. Predicting future changes that can take place will help the organization to be proactive and take the necessary steps to manage change with contingency planning and change management strategies.
This is the most important and the most critical benefit of strategic planning. By successful strategic management, the processing company should able to build a competitive advantage over other competitors which can sustain over time without imitating or outperform by its competitors. Strategic management identifies the competitive advantages that can generate strengths of the organization and take the necessary steps to effectively obtain it.
Successful strategic management should ensure that the company performs very well and generates profits for its owners. When the competitive advantage is built company can thrive on that to make profits and record good performance.
Strategic management identifies opportunities and threats that influence organizational performance. It makes use of opportunities and minimizes the threat to make sure that the company can survive in the market by outperforming its rivals. Reward Strategy with Developing System for Your Organization.
The current business world is too complex, volatile and dynamic. A firm without strategic management finds it hards to interprets the complexities faced by the organization. In contrast firm with strategic management makes the business complexities simple, predict future dynamics and take proactive steps to minimize threats and make use of opportunities.
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