Studies have revealed that organisations following strategic management have outperformed those that do not13. Strategic planning ensures a rational allocation of resources and improves co-ordination between various divisions of the organisation. It helps managers to think ahead and anticipate problems before they occur. The main benefit of the planning process is a continuous dialogue about the organisation’s future between the hierarchical levels in the organisation. In short, the most highly rated benefits of strategic management are:
· Clarity of strategic vision for the organisation
· Focus on what is strategically important to the organisation
· Better understanding of the rapidly changing business environment.
Strategic management need not always be a formal process. It can begin with answering a few simple questions:
1. Where are we now?
2. In no changes are made, where will we be in the next one year? Next two years? Next three years? Next five years?
Are the answers acceptable? If the answers are not acceptable, what actions should the top management take? With what results and payoffs?
Today, as you know that business is becoming more complex due to rapid changes in the environment. It is becoming increasingly difficult to predict the environment accurately. The internal and external environments of organisations are now driven by multitudes of forces that were hitherto nonexistent. Earlier the changes in technology were not so rapid but today the information from all over the globe is pouring in through the computers. The world, in fact, has shrunk. This has created fierce competition for the customers and stakeholders have become more aware of their rights. [ Strategic Management Benefits ]
Think of yourself as a consumer who has got several alternatives to choose from? You as a customer looks for real value for your money. You have become aware of quality and cost ratios and then diligently select the products. You are now more demanding for better service in the least possible time. This has brought in new rules of business that companies all over the world are evolving through their experience. The obsolesce has become so rapid that the time when you are in the process of buying a computer it might have already become obsolete in some part of the globe. The number of events that affect domestic and the world market is now far too many and too often. Over-reliance on experience in such situations may really work out to be very costly for companies. Eg. Reliance has shifted to more creativity, innovation and new ways of looking at business and doing it in novel ways. The earlier concepts of having highly functionalised departments and developing specialisation of labour are losing its credibility. Organisations are becoming more responsive, flexible, and adaptable to changing business situations. In such environments that are charged with a high level of competition, developing a competitive edge for survival and growth has become imperative for companies. [ Strategic Management Benefits ]
What do you think will business strategy concepts and techniques benefit foreign businesses as much as domestic firms?
Give an example.
The need is now to distinguish between long-range planning and strategic planning. The importance of strategic management in setting the directions for growth of organisations is being
increasingly realised these days. The evolution of objectives after setting directions for the growth of organisations has become necessary. The technique of strategic management is used as a major vehicle for planning and implementing major changes in the organisation. The implementation of the strategic plans needs good teamwork and understanding of the concept at grass root Have a look at the difference between the two:
Top Management Decisions on Strategic Issues
To establish the vision of the firm, stating of corporate objectives, and strategic thrust areas, defining a comprehensive corporate philosophy and values, identifying the domains in which an organisation would operate, learning and recognising worldwide business trends, and allocation of resources in line with corporate priorities, are some of the key areas wherein top management of organisations take decisions.
Let us now look at the domain of top management? Strategic Issues for Sharing of Concern and Resources
To meet certain specific needs of certain customers, use of commonly upgraded technologies by certain business units, deployment of people, physical assets or money from internal or external sources and to achieve economies of scale in deployment, certain decisions may be taken by the management. [ Strategic Management Benefits ]
Strategic Issues Likely to Have Long-Term Impact
Strategic decisions for implementing a course of action have broad implications and long-term ramifications and the people of an organisation have to commit themselves to the decisions and plans for a long period of time. Once a firm takes strategic decisions and implements the action programs, the impact is seen slowly on its competitive image and the advantage tied to the particular strategy start pouring in. The companies become known in certain markets, products, or technologies or the decisions may adversely affect the previous progress. In today’s business world, where changes are by leaps and bounds, some organisations may decide for radical changes through re-engineering of their business processes to gain strategically better position. [ Strategic Management Benefits ]