Benefits of Strategic Management to Organization

Benefits of Strategic Management to Organization

Strategic management allows an organization to be more proactive than reactive in shaping its own future; it allows an organization to initiate and influence (rather than just respond to) activities and thus to exert control over its own destiny.

Small business owners, chief executive officers, presidents, and managers of many for-profit and nonprofit organizations have recognized and realized the benefits of strategic management.

Benefits of Strategic Management to Organization

Historically, the principal benefit of strategic management has been to help organizations formulate better strategies through the use of a more systematic, logical, and rational approach to strategic choice.

Financial Benefits

Research indicates that organizations using strategic-management concepts are more profitable and successful than those that do not.

Businesses using strategic-management concepts show significant improvement in sales, profitability, and productivity compared to firms without systematic planning activities.

Benefits of Strategic Management to Organization

Nonfinancial Benefits

Besides helping firms avoid financial demise, strategic management offers other tangible benefits, such as an enhanced awareness of external threats, an improved understanding of competitors’ strategies, increased employee productivity, reduced resistance to change and a clearer understanding of performance-reward relationships.

Strategic management enhances the problem-prevention capabilities of organizations because it promotes interaction among managers at all divisional and functional levels.

Firms that have nurtured their managers and employees, shared organizational objectives with them, empowered them to help improve the product or service, and recognized their contributions can turn to them for help in a pinch because of this interaction.

Benefits of Strategic Management to Organization

Strategic management offers the following benefits:

  • It allows for identification, prioritization, and exploitation of opportunities.
  • It provides an objective view of management problems.
  • It represents a framework for improved coordination and control of activities.
  • It minimizes the effects of adverse conditions and changes.
  • It allows major decisions to better support established objectives.
  • It allows more effective allocation of time and resources to identified opportunities.
  • It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions.
  • It creates a framework for internal communication among personnel.
  • It helps integrate the behavior of individuals into a total effort.
  • It provides a basis for clarifying individual responsibilities.
  • It encourages forward thinking.
  • It provides a cooperative, integrated, and enthusiastic approach to tackling problems and opportunities.
  • It encourages a favorable attitude toward change.
  • It gives a degree of discipline and formality to the management of a business.

 

BY BIZEDUCATOR

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