There are number of benefits of strategic management and now strategic management has become the necessity of the organization to become successful in the competitive world. There are many potential benefits that are associated with the strategic management.
- The future of the organization is shaped proactively
- Action are initiated & influenced
- Better strategies are formulated
Benefits of Strategic Management
Below is the list of important benefits of Strategic Management that must be in your knowledge while developing a plan for your business. Believe that these benefits of strategic management are enough to encourage people to hire a special team of strategist for the planning of their business.
It is proved through research that those organizations that apply the concepts of strategic management are more successful & profitable than those that do not take into account strategic management. The Sales, productivity & profitability is much more in the organizations that apply strategic management concepts than the other ones. The organizations that are potential & high performers try to perform systematic planning for their future altering considerations in their internal & external environments. The long term financial performance is much more for the organizations that systematically apply the strategic management as compared to the entire industry.
Those organizations that are high performers anticipate the short term as well as long term consequences of their informed decisions that they take. On the other hand, those organizations which poorly operate actually do not consider the forecasting aspect in their planning & decision making activities. The strategists in the poorly performing organizations are involved in meeting paper work deadlines & solving internal problems. Furthermore the competitor’s strengths are underestimated by these strategists while overestimating their own strengths. They cannot cope with the effects of the uncontrollable factors such as technological change, poor performance or foreign competition. Following points clearly show the financial benefits the strategic management.
- The productivity is improved
- The sales of the organization is improved
- The profitability of the organization is improved.
There are many potential benefits that are availed by the application of strategic management other than the above mentioned financial ones. The awareness about the external threats is much enhanced through application of strategic management concepts in the organizations. The understanding about the strategies of the competitors is also enhanced. The productivity of the employees in greatly enhanced. The resistance towards change is reduced and there is clear comprehension of performance reward relationship in the organization using the concepts of strategic management. The interaction among all managers at the divisional & functional level is enhanced which will increase the problem prevention capabilities of the organization.
The managers & employees of the organizations are more nurtured by increased interaction. The organizational objectives are better shared with all the employees & they are more empowered to accomplish those objectives. Finally heir contributions are also recognized by the organization. The strategic management also keeps a proper system of order & discipline in the organization. The managerial system of the organization can become efficient & effective. There is confidence among the managers & employees about existing strategy or in case of any correction to the existing strategies. The demand for the change for all the managers & employees is better identified & rationalized with the application of strategic management in the organization. All the employees & managers consider change as an opportunity to them rather than as a threat. Following points show the non-financial benefits of strategic management.
- The productivity of the employee is enhanced
- The understanding about the competitor’s strategies is enhanced
- Awareness about the external threats is enhanced
- The relationship between performance & reward is better understood
- Problem avoidance is reduced greatly
- The resistance to change is reduced
Besides these benefits, there is a list of other benefits that are identified by the greenly. These benefits of Strategic Management are as follow.
- The opportunities are better identified, prioritize and exploit by the application of strategic management in the organization.
- There is an objective view about the problems of the management with the application of strategic management concepts.
- The coordination is improved in the organization along with the control of activities.
- The consequences of adverse conditions & change are minimized with the strategic management.
- The established objectives are better supported with the major decisions.
- The allocation of time & resources is effectively made for the specified opportunities.
- By the application of concepts of strategic management, lesser time & resources are applied for the ad-hoc & erroneous decisions.
- The internal communication among the employees is made better.
- The individual behavior of employee is integrated with the overall total effort of the organization.
- The individual responsibilities are clarified with the help of application of strategic management in the organization.
- The forward thinking is encouraged in the organization.
- The problems & opportunities are tackled with enthusiastic, integrated & cooperative approach.
- The favorable attitude towards change is encouraged in the organization.
- The management of the organization becomes more formal & disciplined.
Reasons of Avoiding Strategic Planning
There are some organizations that avoid Strategic Planning because of the following reasons.
- When there is no proper reward structure for good performance.
- When the management of organization is busy in crisis management & fire fighting.
- Some organization considered strategic planning as wastage of time.
- Some organizations give much importance to the fear of failure of the strategic planning.
- Strategic planning is more expensive & therefore sometime it is avoided.
- In certain cases there is bad experience associated with the planning which becomes the basis for the avoidance.
- In certain cases someone in the organization has acquired privilege, status or self esteem which conflict with the purpose of strategic planning.
- Different employees have different perception level & therefore a single plan seems to be different for a number of employees which makes them disagree for strategic planning.