Benefits of strategic management

From CEOpedia | Management online

Strategic management has several advantages for higher and middle level of management, which finally translate into positive economic results of company and more efficient operations. It also gives the possibility to attain long term success and follow the clear path of development.

Benefits of strategic management

Main advantages and benefits stemming from proper use of strategic management and its methods and techniques are:

  • delegation of responsibility for most important decision from top level of management to middle level on management and analytical staff, gives clear boundaries for decisions made in every functional area in organization
  • enables critical view and analysis of possible future scenarios of market and company and allows CxOs to break away from the problems of everyday activities, focus on priorities and development of whole organization
  • provides large picture view of whole system (company-market-competition) and a way to disseminate information from top to bottom levels of organizational structure
  • allows employees to understand how their daily activities and decisions contribute to the company's basic goals, thus allowing better discipline, commitment, participation and motivation to achieve this goals and support management in solving various challenges
  • strategic management gives vision for the future, and provides framework for culture and values for every employee, supplier and customer,
  • provides analysis framework for threats and opportunities identification and their external sources
  • gives set of methods and techniques for leveraging strengths and mitigating weaknesses
  • strategic information system provides specific measures (key performance indicators) for checking progress of implementation of strategic and tactical plans and determine level of success
  • simplifies analysis of whole organization and relations between internal systems and processes with external environment, thus giving possibility to integrate all parts of organization in whole interrelated system of systems
  • allows managers to be proactive and to prepare in advance solutions to probable challenges in the future and to prioritize goals and activities according to the influence on the results of organization as a whole
  • increases long-term financial viability and allows for greater investor confidence in company's success on the market
  • proper strategic management increases profitability and flexibility to possible negative influence from outside of the company, which is necessary to act in rapidly changing technological, social and political environments, allows managers to be proactive rather than reactive to changing environment
  • specific vision, mission and goals reduce employee's resistance to change and increases overall productivity due to higher motivation and clear relations between results and rewards
  • formalized strategic planning, analysis and implementation process allows to focus on most important aspects of management and gives tools for coordination and control of results of strategic activities
  • resources are properly allocated between operational and strategic levels increasing overall efficiency

Examples related to strategic management

  • Strategic management helps to create a clear vision of the company and its objectives. It enables to create a systematic plan of action and allocate resources accordingly. For example, Apple Inc. used a well-structured strategic management system to achieve success and become a leader in the smartphone industry.
  • Strategic management is also important in terms of decision-making. It allows managers to make informed decisions based on quantifiable data and analysis, rather than intuition and guesswork. For example, Amazon Inc. uses strategic management to identify the most profitable markets and determine the best strategies for expanding into those markets.
  • Strategic management also helps to create competitive advantages. It enables companies to gain a competitive edge by utilizing their resources more efficiently and effectively. For example, Walmart leverages its strategic management system to identify the most cost-effective methods of supply chain management and pricing strategies.
  • Finally, strategic management helps to create long-term success. It allows companies to anticipate changes in the market and adjust their strategies accordingly. For example, Microsoft used its strategic management system to stay ahead of the competition and develop innovative products and services.

Limitations of strategic management

The limitations of strategic management include:

  • It requires a large amount of time and resources to develop and implement an effective strategy. This can lead to a strain on resources, leading to a decrease in the organization’s efficiency and productivity.
  • Strategic management can be difficult to learn and understand. Many organizations lack the necessary knowledge and expertise to develop and implement a successful strategic plan.
  • Strategic management often requires changes in the organization’s structure and operations, which may be difficult and costly to implement.
  • Strategic management can be expensive to maintain, as it requires constant monitoring and evaluation.
  • A successful strategy also requires a strong commitment from the organization’s leaders and staff, who must be willing to make any necessary changes. This can be difficult to achieve in some organizations.
  • Strategic management can become outdated quickly, as the business environment is constantly changing. This can lead to a loss of competitiveness and a failure to meet the changing needs of customers.

Other approaches related to strategic management

Strategic management provides numerous benefits for higher and middle level of management. These include:

  • Increased Operational Efficiency - Strategic management helps to identify and analyze the core competencies of a business, and create strategies that allow the organization to maximize its resources and capitalize on its strengths. This helps to improve operational efficiencies, leading to higher profits.
  • Improved Decision Making - Strategic management helps to make decisions more quickly and accurately. This helps to reduce the risk associated with decision making, as well as reduce the cost of making decisions.
  • Improved Brand Awareness - Strategic management helps to create a brand identity and make the organization more recognizable in the marketplace. This helps to increase the customer base, leading to increased sales and profits.
  • Improved Employee Morale - Strategic management helps to create a positive work environment, which helps to improve employee morale, leading to increased productivity and better performance.

In summary, strategic management can be a valuable tool for organizations, providing numerous benefits that can help to improve operational efficiency, decision making, brand awareness, and employee morale.


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