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Home » Benefits of Strategic Management

Benefits of Strategic Management

By Richard Daniels Reading Time: 4 mins
Updated April 26, 2021

Strategic Management

There are a number of benefits of strategic management. 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 and 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 strategists for the planning of their business.

Financial Benefits

It is proved through research that those organizations that apply the concepts of strategic management. Actually are more successful and profitable than those that do not take into account strategic management. The Sales, productivity and profitability is much more in the organizations that apply strategic management concepts. The organizations that are potential and high performers try to perform systematic planning for their future altering considerations in their internal and external environments. So the long term financial performance is much more for the organizations. Those that systematically apply the strategic management as compared to the entire industry.

Steps to Strategic Management Process

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 and decision making activities. The strategists in the poorly performing organizations are involved in meeting paperwork deadlines and 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 of strategic management.

  • The productivity is improved
  • The sales of the organization is improved
  • The profitability of the organization is improved.

Non-Financial Benefits

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. Moreover the understanding about the strategies of the competitors is also enhanced. Also the productivity of the employees is greatly enhanced. Although the resistance towards change is reduced and there is clear comprehension of performance reward relationships in the organization using the concepts of strategic management. The interaction among all managers at the divisional and functional level is enhanced which will increase the problem prevention capabilities of the organization.

The managers and employees of the organizations are more nurtured by increased interaction. The organizational objectives are better shared with all the employees and they are more empowered to accomplish those objectives. Finally their contributions are also recognized by the organization. The strategic management also keeps a proper system of order and discipline in the organization. The managerial system of the organization can become efficient and effective. There is confidence among the managers and employees about existing strategies or in case of any correction to the existing strategies.

The demand for the change for all the managers and employees is better identified and rationalized with the application of strategic management in the organization. All the employees and 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 and reward is better understood
  • Problem avoidance is reduced greatly
  • The resistance to change is reduced
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Besides these benefits, there is a list of other benefits that are identified by the greenly. These benefits of Strategic Management are as follows.

  1. The opportunities are better identified, prioritized and exploited by the application of strategic management in the organization.
  2. There is an objective view about the problems of the management with the application of strategic management concepts.
  3. The coordination is improved in the organization along with the control of activities.
  4. The consequences of adverse conditions and change are minimized with the strategic management.
  5. The established objectives are better supported with the major decisions.
  6. The allocation of time and resources is effectively made for the specified opportunities.
  7. By the application of concepts of strategic management, lesser time and resources are applied for the ad-hoc and erroneous decisions.
  8. The internal communication among the employees is made better.
  9. The individual behavior of an employee is integrated with the overall total effort of the organization.
  10. The individual responsibilities are clarified with the help of application of strategic management in the organization.
  11. Forward thinking is encouraged in the organization.
  12. The problems and opportunities are tackled with an enthusiastic, integrated and cooperative approach.
  13. The favorable attitude towards change is encouraged in the organization.
  14. The management of the organization becomes more formal and disciplined.

Reasons of Avoiding Strategic Planning

There are some organizations that avoid Strategic Planning because of the following reasons.

  1. When there is no proper reward structure for good performance.
  2. When the management of an organization is busy in crisis management and fire fighting.
  3. Some organizations considered strategic planning as wastage of time.
  4. Some organizations give much importance to the fear of failure of strategic planning.
  5. Strategic planning is more expensive and therefore sometimes it is avoided.
  6. In certain cases there is bad experience associated with the planning which becomes the basis for the avoidance.
  7. In certain cases someone in the organization has acquired privilege, status or self esteem which conflict with the purpose of strategic planning.
  8. Different employees have different perception levels and therefore a single plan seems to be different for a number of employees which makes them disagree for strategic planning.
Author at Business Study Notes
Richard DanielsAuthor at Business Study Notes

Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
Love my efforts? Don't forget to share this blog.

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Filed Under: Finance, Strategic Management Tagged With: benefits of strategic management ppt, financial benefits of strategic management, Reasons of Avoiding Strategic Planning

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