Benefits Of Strategic Management

Benefits Of Strategic Management

Management is an exercise that involves dealing with complexity and one particular expression of the complexity that management has to deal with is the need to incorporate strategic management into the organisation. Strategic management seeks to align the business’ plans and actions with its ultimate goals as expressed in its mission and vision statement. A business with a known mission cannot simply engage in activities lest they get caught in an activity trap. The benefits of strategic management are many but before we can go through them let’s define strategic management.

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What Is Strategic Management?

Strategic management is the ongoing planning, monitoring, analysis and assessment of all necessities an organization needs to meet its goals and objectives. Changes in business environments will require organizations to constantly assess their strategies for success. The business environment continually changes as it acted upon by many factors both men made and imposed upon us. Strategic management involves setting objectives, analyzing the competitive environment, analyzing the internal organization, evaluating strategies, and ensuring that management rolls out the strategies across the organization. Thus many strategic management benefits can be realised based on this definition of strategic management.


Creates a Proactive Mentality

The first strategic management benefit we can identify is that it creates and fosters a proactive mentality. Management reporting is for the most part backwards-looking and while that does inform management on past performance it does very little to align the actions of management with the future of the business. strategic management benefits the organisation by keeping management looking forward through goals and objectives and thus aligning current actions with where they want to be.


It Sets Up a Sense Of Direction

This is an overlooked strategic management benefit but one of the most important ones. It changes the question of management from “where are we going” to “how do we get where we want to go”? This is the difference between deploying considerable resources to figuring out where the organisation is going and deploying those resources to finding the method to achieve known goals. This strategic management benefit keeps the organisation focused in the right direction.


It Increases Operational Efficiency

The strategic management benefit of increasing operational efficiency comes more from what strategic management does not do than what it does. Strategic management allows an organisation to focus on those activities that move it towards its objectives. In the absence of this, a business may be tempted to focus on trends in the market which are pushed by competitors or market segments that are not the target market of the business. The greatest cost comes as a combination of the opportunity cost of the capital invested and the cost of correcting course on such investments.


It Can Make a Business More Durable

In times of crisis, there is a tendency to panic and in the process, decisions may be made that react to situations that seem urgent but may not be important to the goals of the organisation. With strategic management in place, not only are reactions to crises adjustments to existing plans rather than completely new courses of action but they are also defined within the context of overall strategic objectives.


It Allows For Identification, Prioritization, And Exploitation Of Opportunities

Strategic management has an eye on developments within the industry and other adjacent or ancillary industries for an organisation. This means that when strategic management is practised properly, it keeps management abreast of important changes in the environment including new opportunities and markets. As such strategic management benefits the organisation because management is always informed on opportunities and forward-looking on their exploitation.


It Helps To Increase Market Share And Profitability.

With strategic management being focused on identification and exploitation of opportunities another strategic management benefit is helping increase market share and profitability. Market share is increased by keeping the business in a good position to anticipate customer demand and trends to improve product quality. The other strategic management benefit presented is the ability to be first or early to new markets developing within industries. There are great benefits for businesses realised from being first or early to market.


It provides an objective view of management problems.

Strategic management views all strengths, opportunities, weaknesses and threats in an organisation through the strategic lens. This means that strategic management benefits the organisation by keeping management views objective when it comes to these matters. It is easy to get carried away with concepts for subjective reasons such as their popularity but they are not always congruent with the strategic objectives of the organisation.


It Represents a Framework For Improved Coordination And Control Of Activities.

We’ve already mentioned activity traps and how they can be detrimental to a business. Strategic management benefits a business by providing a framework for coordinating activities to work toward the benefit of the organisation’s goals. An example can be loosely drawn from the collapse of Kodak which invested heavily in the development of digital photography while at the same time believing print photography would continue to dominate and as such continued to invest in it.


It Allows Major Decisions To Better Support Established Objectives.

Strategic management establishes the objectives by which management performance will be measured. It is very easy to get caught up in only using measures such as profitability and return on equity to measure management performance but strategic management encourages organisations to look at measures that support the longevity of an organisation. As such strategic management benefits management by helping focus decisions and resources in support of objectives.


It Allows Fewer Resources And Less Time To Be Devoted To Correcting Erroneous Or Ad-Hoc Decisions.

The strategic management benefit of reducing the expenditure of time and resources in correcting erroneous decisions cannot be understated and is a benefit of strategic management worthy of mention. It doesn’t sound like much but consider the resources that go into research, identification, preparation and operation in a new area or idea. Finding out sooner rather than later that you should not pursue a particular idea will also have the additional cost-saving of avoiding clean up or disposal costs. Strategic management benefits and organisation by preventing them from going down the wrong path in the first place.


The benefits of strategic management are the enhancements they bring to planning, leading, organising, coordinating and controlling the organisation’s resources towards their strategic objectives. These five elements make up the definition of management by its roles and therefore mean strategic management benefits an organisation’s entire management function.

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