Importance of Strategic Management
Strategic management has become a crucial success factor for the organization. Composing an effective strategy and implementing it appropriately and adapting rightly to uncertainties is possible through strategic management.
Setting and implementing righty the strategies – strategic management helps to act in the dynamic business environment, achieve organizational goals, get a competitive advantage, and sustain in long run.
The major importance/benefits of strategic management can be mentioned below:
Implementation of the strategy is a translation of written strategy into action. Strategic management is the means to implement the strategy in the best possible way.
It logically studies the market, identifies threats & opportunities, sets strategies, implements, and controls so that implemented strategy performs well. Strategies are further revised when don’t work as planned and strategic management never stops until the strategy does not perform well.
Strategic management includes top management’s decisions and actions that influence the long-run function of the organization. It gives a clear direction on what to achieve and how to achieve it.
The study of various direct and indirect factors of the organization’s strategic management gives a clear goal that strategically fits with the organization’s capability and resources and enables organizations to work in a particular direction in a more determined manner. It helps management focus on the bigger picture to avoid deviation from the actual goal.
Making competent enough firms to get a competitive advantage is one of the main roles of strategic management. Competitive advantage is the advantage that is comparatively higher than other competitors.
Competition is an inevitable part of today’s business environment. Strategic management ensures the formulated strategy is different, unique, valuable, and superior to competitors as a result, competitors easily do not copy or imitate the strategy, and firms realize competitive advantage.
Strategic management does not only make the best strategy and implement it. It also ensures appropriate management of employees of the organization. It develops a positive attitude among employees, creates a better workplace, builds trust, and increases motivation so as to produce joint efforts which is greater than the sum of the parts, developing synergy.
Synergy can be best understood as 1+1=3. It helps the organization to attain an advantage with respect to cost, market power, technology, or management skills. In addition, synergy can create a positive yet increased value with existing resources improving organizational performance.
Organizational efficiency can be defined as the ability of the organization to manage things when they do not work well. Strategic management helps organizations to be prepared for any future consequences through support, communication, coordination, and unifying the organization.
Delivering value to the customer is the heart of strategic management. Value is the combination of benefits received and costs paid. Strategic management always focuses on competitive advantage through superior customer value.
Build Core Competency
In the literature on strategic management, a core competency is the organization’s activity or process that has the potential to achieve a competitive advantage. And, strategic management efforts are always directed to build core competencies.
The process of acquiring, allocating, and utilizing resources for building up organizational capability is called resource management. Strategic management facilitates resource management effectively. As a result, it increases productivity with more customer value.
Strategic management is a powerful tool for pushing a company forward, and it symbolizes a sort of unity in which all personnel shares a common vision and objective. It is a thorough process that aids in the organization’s unification by enhancing collaboration across departments and units. It is thorough and encompasses the entire business.
Deals with Opportunity and Threats
The most advantageous state in the organization’s surroundings is an opportunity. A threat, on the other hand, is a major negative circumstance in the organization’s surroundings.
Strategic management enables a company to exploit opportunities and protect itself from threats posed by the outside world. It also tries to turn the threat into an opportunity. It encourages a more proactive management style that focuses on future possibilities.
The term “strategic fit” refers to how well a company’s strategies align with its internal strengths and external opportunities. It analyses the organization’s resource base and considers how it might be best leveraged to produce optimum benefits. Strategic fit is ensured by effective strategic management.
A company’s capacity to integrate, grow, and reconfigure internal and external competencies to handle a quickly changing environment is known as competitive capability.
Strategic management improves an organization’s competitive capability and helps it survive and expand in a chaotic and competitive environment. It also improves the organization’s ability to foresee change and successfully manage or adapt to it.
Last but not least, strategic management helps organizations to get long-term success since it’s concerned about the long-run performance of the organization. In addition, all the above-mentioned importance of strategic management are proof that how it supports organizations to achieve long-term success.