Need for Strategic Management

 What is Strategic Management Need? Strategic management provides the route map for the firm. It makes it possible for the firm to take decisions concerning the future with a greater awareness of their implications. It provides direction to the company; it indicates how growth could be achieved.

Firms are using strategic management for the following needs:

1.      It helps the firm to be more proactive than reactive.

2.      It provides the roadmap for the firm.

3.      It allows the firm to anticipate change and be prepared to manage it.

4.      It helps the firm to respond to environmental changes in a better way.

5.      It minimizes the chances of mistakes and unpleasant surprises.

6.      It provides clear objectives and direction for employees.

Benefits of Strategic Management

Today’s enterprises need strategic management to reap the benefits of business opportunities, overcome the threats and stay ahead in the race.

The benefits of strategic management is to exploit and create new and different opportunities for tomorrow; while long-term planning, in contrast, tries to optimize for tomorrow the trends of today.

Strategic management has thus both financial and non-financial benefits:

1. Financial Benefits: Research indicates that organisations that engage in strategic management are more profitable and successful than those that do not.

                   Financial Benefits of Strategic Management

Businesses that followed strategic management concepts have shown significant improvements in sales, profitability and productivity compared to firms without systematic planning activities.

·         Improvement in sales

·         Improvement in profitability

·         Improvement in productivity

2. Non-financial benefits: Besides financial benefits, strategic management offers other intangible benefits to a firm.

      Non Financial benefits of Strategic Management

They are;

·         Enhanced awareness of external threats

·         Improved understanding of competitors’ strategies

·         Reduced resistance to change

·         A clearer understanding of the performance-reward relationship

·         Enhanced problem-prevention capabilities of an organisation

·         Increased interaction among managers at all divisional and functional levels

·         Increased order and discipline