Benefits of strategic management
|Benefits of strategic management|
|Methods and techniques|
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
- Armstrong, J. S. (1982). The value of formal planning for strategic decisions: Review of empirical research. Strategic management journal, 3(3), 197-211.
- Hitt, M. A., Gimeno, J., & Hoskisson, R. E. (1998). Current and future research methods in strategic management. Organizational Research Methods, 1(1), 6-44.
- Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.
- Hoskisson, R. E., Wan, W. P., Yiu, D., & Hitt, M. A. (1999). Theory and research in strategic management: Swings of a pendulum. Journal of management, 25(3), 417-456.
- Schwenk, C. R., & Shrader, C. B. (1993). Effects of formal strategic planning on financial performance in small firms: A meta-analysis. Entrepreneurship Theory and Practice, 17(3), 53-64.