IMPORTANCE OF STRATEGIC MANAGEMENT IN AN ORGANIZATION

An organization without long term goals and objectives will struggle to set its direction, focus
efforts and gain competitive advantage. Yet by applying strategic management, organizations can
not only survive, but thrive. Here’s why strategic management can drive better performance.

WHAT IS STRATEGIC MANAGEMENT?

Strategic management is the management of a firm's resources to successfully achieve its goals
and objectives. It’s an action plan to ensure performance targets are met, and the business continues
to grow. Strategic management provides overall direction by developing plans and policies
designed to achieve objectives and then allocating resources to implement the plans. Ultimately,
strategic management is for organisations to gain a competitive edge over their competitors.

The concept of strategic management has its roots in 1950s economic theory based on industrial-
organizational approaches. Peter Drucker, also known as the Father of Modern Management
Theory, believed that setting objectives and monitoring organizational growth should permeate the
entire organization, top to down.

Whether an organization is small or large is irrelevant when it comes to strategic management.

Even the smallest companies need to know how effective they are within their industry and take
the appropriate actions to achieve their desired outcome for the future.

In a marketplace where workplaces are continually being disrupted through technological

innovation, strategic management can be the key to delivering a solid bottom line. Company
executives who have a strong grasp of their own organisation’s products or services and an in-
depth view of what their major competitors will do next, can forecast and plan timely business
decisions. It also means they can prepare for future opportunities and possible risks.
Developing a strategic vision requires an understanding of global trends, the competitive landscape
and stakeholder expectations. Once a firm knows what its mission is, the right resources can be
allocated to achieve that plan. Through strategic decision-making and commitment to strategic
planning, organizations can strengthen their long-term competitive position.
Apart from financial gains, strategic management can also boost workplace motivation. Setting
effective goals for employees and involving them in organizational objectives can improve overall
performance. Studies show a dramatic increase in both employee and business performance when
goals are aligned.

But it’s not enough to just craft and execute a strategic management plan. Firms that continuously
measure and review the results of their strategic approach are more likely to achieve success and
see improved financial performance. Firms that continually assess whether they are performing
according to their corporate blueprint can respond to fast-changing market forces. They can move
the company along the strategic course that has been charted for it.
SUMMARY OF IMPORTANCE OF STRATEGIC MANAGEMENT IN AN
ORGANIZATION

• Planning for the future – Shaping the future, helps organizations to find directions and go
through a process of assessment and evaluation as well as developing goals.
• Strategic thinking
• External and internal and awareness
• Leading transformation
• Distributing leadership, leaders do not create followers they create leaders
• Attainment of organizational goals
• Evaluate current performance and project future performance
• Analyze strategic factors (SWOT analysis
• Developing structures and systems,
• Allocating resources,
• Overseeing change management,
• Instigating risk management strategies,
• Developing decision-making processes,
• Developing project management capabilities,
• Strengthening competitive capabilities,
• Communicating strategy,
• Managing human resources by aligning individual roles with performance objectives; and
• Rewarding performance.
• Implement selected strategies
• Evaluate implemented strategies