Importance of strategic management

Importance of strategic management
See also
Nature of strategic management Capability mapping Strategic decision Strategic planning functions Strategic management Strategic management principles Definition of controlling Benefits of strategic management Strategic control

The importance of strategic management results from its role in ensuring optimal use of resources, achieving competitive advantage and long-term growth of the enterprise. Strategic management is an integral part of business management, and therefore must take into account constraints such as conflicting interests of groups affecting the functioning of the enterprise, financial barriers, resource constraints, lack of information, strategic potential, skills gaps, anticipated changes in the environment, activities competition.

Strategic management is a field of knowledge and specific practical activities. It is different compared to traditional approaches and methods of management. Strategic management includes a comprehensive range of business organization. It relates to the competitors, resources, functions and objectives.

Strategic Managers

Managers play a key role in the strategy-making process. They must take responsibility for formulating strategies to attain a competitive advantage and to putting those strategies into effect.

They must lead the process of creating strategies. There are two mains types of managers:

• general managers - they are bear responsihility for the overall performance of the company
• functional managers - they are responsible for supervising a particular function, for example: a task, activity, or operation, such as accounting, marketing, research and development.

General managers have profit and loss responsibility for a product, a business, or the company as a whole. They are responsible for deciding how to create a competitive advantage and achieve high profitability thanks the resources and capital they have at their disposal.

Strategic Management Model

The main elements of strategic management:

• Performing an environmental analysis.
• Establishing organizational direction.
• Formulating organizational strategy.
• Implementing organizational strategy.
• Evaluating and controlling strategy.

Strategic management is a dynamic and continuous process. The major models differ primarily in the degree of detail, explicitness and complexity. These differences derive from the differences in backgrounds and experiences. Strategic management involves the strategic thinking and related concepts of strategic planning. Strategic planning is analytical in nature, it refers to formalized procedures to produce the data and analyses used as inputs for strategic thinking. Strategic planning happens around the strategic thinking or strategy making activity.It planning may also refer to control mechanisms used to implement the strategy once it is determined.

Examples of Importance of strategic management

• Strategic management enables organizations to identify opportunities, define missions and objectives, develop strategies and plans, and ensure the allocation of resources in order to achieve its goals. Through this process, it helps organizations to make better decisions, allocate resources more efficiently, and respond quickly to changes in the external environment.
• Strategic management provides a framework for businesses to analyze their current situation, identify potential risks and opportunities, and develop strategies to capitalize on those opportunities and mitigate risks. Strategic management can help businesses reduce costs, increase profits, and achieve competitive advantage.
• Strategic management encourages businesses to think about the future and plan for long-term growth. By developing strategies that take into account the current external environment, businesses can anticipate future market developments and adjust their operations accordingly. This helps businesses to remain competitive in the long run and maintain their profitability.
• Strategic management helps organizations to make decisions that are based on data and evidence, rather than on instinct or intuition. By using data and evidence to develop strategies, businesses can make more informed decisions and increase the likelihood of achieving their goals.

Advantages of Importance of strategic management

An introduction to the advantages of strategic management: Strategic management is an important tool for enabling organizations to effectively achieve their goals and objectives. Below are some of the advantages that strategic management can bring to an organization.

1. Improved Decision Making: Strategic management provides an effective framework for making decisions that are based on the long-term objectives of the organization. It allows for a more complete understanding of the implications of decisions and the impact they will have on the organization.
2. Improved Accountability: Strategic management creates a structure for holding people accountable for the decisions they make and the actions they take. This allows for better oversight of the organization and better management of resources.
3. Improved Efficiency: Strategic management provides a way to evaluate and analyze the performance of the organization and its employees. This allows for better identification and execution of efficiency improvements.
4. Improved Innovation: Strategic management encourages the exploration of new ideas and processes. This allows for an organization to become more inventive and creative, which can lead to breakthroughs in products and services.
5. Improved Risk Management: Strategic management allows for a better assessment of the risks associated with various activities and decisions. This can help organizations better identify and manage risks and reduce the likelihood of unexpected losses.
6. Improved Financial Performance: Strategic management helps businesses to better allocate resources and identify areas for cost savings and improved profitability. This can lead to improved financial performance for the organization.

Limitations of Importance of strategic management

The importance of strategic management is undeniable, but it is important to consider some of its limitations. These include:

• Limited access to resources and data: Strategic decisions require access to accurate and complete data, which can be difficult to obtain in many cases. Additionally, resources are often limited, making it difficult to implement strategies.
• Difficulty in predicting future: Strategic management requires forecasts of the future, which can be difficult to make accurately.
• Problem of conflicting interests: Strategic management must consider the interests of all stakeholders, which can be difficult to reconcile.
• Risk of failure: Strategic management involves making decisions which could have long-term consequences, and it is difficult to predict the outcome of these decisions.
• Complexity of problem solving: Strategic management problems can be complex, making it difficult to find a solution that meets all the requirements.

Other approaches related to Importance of strategic management

• In the following, the importance of strategic management is discussed through the following approaches:
• Strategic planning: Strategic planning is a process that helps an organization set goals and determine the best way to achieve them. It involves analyzing the current situation, identifying the desired end state and then outlining the steps needed to get there. Strategic planning is important for any organization because it helps ensure that resources are used effectively and efficiently to support the organization’s objectives.
• Strategy formulation: Strategy formulation is the process of developing a plan of action that will allow an organization to reach its goals. This involves researching the current situation, analyzing the competitive landscape and customer needs, and determining the best approach to achieve desired results. This process helps organizations make informed decisions and develop strategies that will ensure long-term success.
• Strategy implementation: Strategy implementation involves putting the plan into action. This includes allocating resources, developing organizational structures, and designing processes that support the plan. It also includes monitoring progress and making adjustments as needed. This is important for ensuring that the plan is effectively implemented and that the organization stays on track with its goals.
• Strategy evaluation: Strategy evaluation is the process of determining whether the plan is achieving its intended outcomes. This involves measuring performance against the goals and objectives set out in the plan, as well as examining external factors such as customer feedback, competitor activity, and market trends. This helps organizations adjust their strategy as needed to remain competitive.

In conclusion, strategic management is important because it helps organizations create a plan of action and allocate resources in order to reach their goals. It involves researching the current situation, formulating a strategy, implementing the plan, and evaluating the results to ensure that the desired outcomes are achieved.

References

• Graetz, F. (2002), Strategic thinking versus strategic planning: towards understanding the complementarities, MCB University Press
• Hill C., Jones G., Schilling M. (2014).'Strategic management: theory', 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.
• Jemison, D. B. (1981). The importance of an integrative approach to strategic management research. Academy of Management Review, 6(4), 601-608.

Footnotes

Author: Agnieszka Pytel