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Advantages of Strategic Management

Advantages of Strategic Management

A couple of definitions on STRATEGIC MANAGEMENT

  1. Strategic management involves formulation and implementation of the major goals and plans taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes.
  2. The methodical analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices is another well known definition.  The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities.

The benefits of strategic management

Advantages:

1. Discharges Responsibility

The process of strategy formulation satisfies the expectation from shareholders, stakeholders and the general public at large, that a strategically managed organization will discharge its duties successfully.

2. Allows an Objective Assessment

Strategic management provides a CONTROL that allows the senior management team to take a step back from the day-to-day business and CONTEMPLATE  about the future of the organization.

3. Faciliatates to Make Wise Business Decisions

Strategy provides the framework within which EXECUTIVES at lower and middle levels can make day-to-day operational decisions that are aligned with the accomplishment of the organization’s goals.

4. Enables Understanding and Improves co-ordination between different departments

Allowing participation in the strategic management process enables better understanding of the direction, why that direction was chosen, and the associated benefits. Good strategy formulation and communication process are vital steps in enabling effective and efficient strategy deployment.

5. Simplifies Measurement of Progress

Strategy sets the direction and empowers an organization to bring into line its objectives and performance measures. These objectives and performance measures allow meaningful information to be provided to decision-makers regarding the organization’s progress through such tools as scorecards and dashboards.

6. Enhances Strategic Agility (Innovation)

When a firm can successfully capitalize upon opportunities resulting from unanticipated and significant change, it is said to be innovative as it has a competitive edge over other firms.

7. Ensures Allocation of Resources:

The limited resource is properly allocated to different functional levels so as to create value for all stakeholders. A targeted approach to markets and opportunities obviously strengthens your bottom line.

A simple representation will make your understanding better:

Enhanced Communication

DIALOGUE

PARTICIPATION

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Deeper/Improved Understanding

OF OTHER’S VIEW

OF WHAT THE FIRM IS DOING 

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Greater Commitment

TO ACHIEVE OBJECTIVES

TO IMPLEMENT STRATEGIES

TO WORK HARD

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The Result

ALL MANAGERS AND EMPLOYEES ON A SINGLE MISSION TO HELP FIRM SUCCEED

 

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