David, research studies indicate that organizations using strategic management concepts are more profitable and successful than those that do not.
The more intense the environmental uncertainty, more critical is the need for strategic management.įinally, studies support the existence of a link between strategic management and organizational financial performance, although results have not always been consistent.
It is environmental uncertainty that makes strategy and strategic conduct essential in a business. Its ultimate burden is influencing the environmental forces in its favor, working into the environs and shaping it, instead of getting carried away by its turbulence or uncertainties. It seeks to prepare the corporation to face the future and even shape the future in its favor. It is not just a forecasting job it is concerned with ensuring a good future for the firm. It is not just a matter of projecting the future. For example, Disney has been able to gain a competitive advantage in the family entertainment industry by creating amusement parks, movies, and products based on the renowned Disney characters.
Strategic management has the ultimate burden of providing a business organization with certain core competencies and competitive advantages in its fight for survival and growth. In addition, the process can be used to involve managers at various levels in planning, thus making it more likely that the managers will understand the resulting plans and be committed to their implementation. Yet another reason for the importance of strategic management is that it can help highlight the need for innovation and provide an organized approach for encouraging new ideas related to strategies. Without a strategic plan, managers throughout the organization may concentrate on day-to-day activities only to find that a competitor has maneuvered itself into a favorable competitive position by taking a more comprehensive, long-term view of strategic directions. In a successful corporation, strategic planning works as the pathfinder to various business opportunities simultaneously, it also serves as a corporate defense mechanism, helping the firm avoid costly mistakes in product market choices or investments.Īnother reason for the importance of strategic management is that it provides a sense of direction so that organization members know where to expend their efforts. Strategic management provides the framework for all the major business decisions of an enterprise such as decisions on businesses, products and markets, manufacturing facilities, investments and organizational structure.
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