Studies have revealed that organizations following strategic management have outperformed those that do not. Strategic planning ensures a rational allocation of resources and improves
co-ordination between various divisions of the organization. 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 organization’s future between the hierarchical levels in the organization. In short, the most highly rated benefits of strategic management are:
- Clarity of strategic vision for the organization
- Focus on what is strategically important to the organization
- Better understanding of the rapidly changing business
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 environment. It is becoming increasingly difficult to predict the environment accurately. The internal and external environments of organizations are now driven by multitudes of forces that were hitherto non-existent. 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 as the customers and stakeholders have become
more aware of their rights.
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 obsolescence 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 world market are now far too many and too often. Over reliance on experience in such situations may really work out to be very costly for companies. E.g. 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 fictionalized departments and developing specialization of labour is losing its credibility.
Organizations are becoming more responsive, flexible, and adaptable to changing business situations. In such environments that are charged with high level of competition, developing competitive edge for survival and growth has become imperative for companies.
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 organizations is being
increasingly realized these days. The evolution of objectives after setting directions for growth of organizations has become necessary. The technique of strategic management is used as a major vehicle for planning and implementing major changes in organization. The implementation of the strategic plans needs good teamwork and understanding of the concept at grass root.