strategic planning process advantages and disadvantages

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strategic planning process advantages and disadvantages

What are the advantages and disadvantages of strategic planning?

Jalil Damus
strategic management

Every year companies prepare their strategic planning, and it is common for organizations to get involved in this planning to develop, implement and evaluate strategies of a different nature.

But you may be thinking: is it worth embarking on a strategic planning process? The fact is that there are some advantages and disadvantages to this process, and this is what we will show you throughout this article. Keep reading!

What you will see in this post:

What is strategic planning?

Strategic planning is the process that generates new ideas and actions that provide a central structure for the company to project its future. It is with him that the company decides today what it wants to be in the future, and how it intends to get there.

For this reason, you can have an immediate and decisive influence on your organization. But is it enough to apply some of the types of strategic planning for everything to turn out well? The answer is no.

There are advantages and disadvantages of strategic planning. And it is up to each company to carry out the appropriate process that helps it to benefit from all these advantages and avoid suffering the disadvantages that may exist.

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Understand the importance of strategic planning

If your company is small, medium, or large, if you are not already planning the next steps and performing your actions well, stay tuned: you may be missing great opportunities to create a competitive advantage in your business.

A company that does not plan, does not know what it wants to achieve and does not direct its actions towards it. In practice, that is “management in the dark.”, and at best, it means stagnation.

No matter what your goal is, one thing is certain: any team that does not have good planning on its hands cannot act decisively. Developing a strategic vision for the future of your company brings benefits to both your company and your customers. After all, it guarantees a healthy and stable growth of the business and, at the same time, manages to generate value for the public, that is, everyone wins.

So why not start now?

5 advantages of strategic planning

1- proactive and not reactive organizations.

Strategic planning can help your business be more proactive than reactive in countless situations.

This type of document allows organizations to predict their future and be adequately prepared. In other words, organizations are better able to keep up with constantly changing market trends, always staying one step ahead of the competition.

2- Establish a sense of direction

A strategic plan helps define the direction an organization should take. In addition, it helps to set realistic goals and objectives, which are aligned with the vision and mission of the company.

3- Increased operational efficiency

Well-structured strategic planning provides a kind of road map to align the functional activities of the organization to achieve the established objectives. It guides management discussions and decision-making to determine resource needs to achieve previously defined objectives and thereby increase operational efficiency.

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4- Increase market share and profitability

A well-targeted and structured approach to turning all sales and marketing efforts into the best possible results can go a long way in increasing profitability and market share.

5- Increased business durability

Many companies end up closing their doors very soon precisely because they have not been strategically prepared. With markets increasingly globalized and in constant transformation, organizations that do not have a solid foundation, focus, and forecast will have difficulties in the middle of the road, being able to close their activities much sooner than one might think. However, the chances are more favorable for those who have a strong and well-defined strategic plan.

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3 Disadvantages of strategic planning

1- application difficulties.

Strategic planning includes various types of continuous processes that check all the major critical components of a business. Being a complex process, it requires a lot of patience, discipline, and persistence. And that, for some, can be a great disadvantage.

2- Time-consuming process

The implementation of strategic planning is not an overnight process. The management team of the company must take a long time to get the new processes correct.

Because it is a long process, weighing the advantages and disadvantages of strategic planning, immediate companies end up rushing. This type of thinking ends up sidelining the strategy, which can hurt the business much more soon.

3- High cost for small and medium enterprises

A good strategic plan can be expensive for small and medium-sized businesses or those just starting out. This is because additional efforts are needed, for example, to analyze indoor and outdoor environments.

In addition, some specific tools are needed to implement strategic planning accordingly, as well as the possible recruitment of competent personnel.

Technology as a way to help the implementation of strategic plans in your company

An institution that manages to build and delegate a good Strategic Plan has great possibilities of overcoming the adversities of the globalized world and becoming a benchmark in the field in which it operates. However, it is important to note that a company that has not defined its planning will end up being part of the group of “another institution with plans for the future”, running the risk of not having that “future”.

However, it cannot be forgotten that to achieve the desired objective of Strategic Planning it is necessary to have the support and commitment of the entire functional body of the company, since those responsible for the different phases of the process are the members of the organization themselves.

Therefore, I invite you to discover Seed , a software capable of taking your company to a new stage and helping the process of strategic planning of your organization. Do you want to receive more content like this? Don’t forget to follow Actio on Instagram , Linkedin and Facebook .

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Author: joe david.

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.

Advantages and disadvantages of franchising, organic growth – definition and examples.

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Short posts about strategic planning topics you need!

Tuesday 2 April 2013

Advantages and disadvantages of strategic planning, strategic planning advantages and disadvantages, disadvantages, 24 comments:.

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Strategic Planning is a systematic process of envisioning a desired future, and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them. Change Management Training in Bangalore | Presentation Skills Training Bangalore

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18 Advantages and Disadvantages of Strategic Planning

Strategic planning is a process that involves defining an organization’s goals, developing strategies to achieve those goals, and allocating resources to implement those strategies.

It is a comprehensive and systematic approach that helps organizations achieve competitive advantage and adapt to changing environments.

Redaction Team
September 28, 2023
Business Planning , Entrepreneurship

Advantages of Strategic Planning

Clear Direction : Strategic planning provides a clear sense of direction for an organization, helping leaders and employees understand where the organization is headed and what it aims to achieve.
Alignment : It aligns the efforts of employees and departments toward common goals, fostering a shared vision and purpose within the organization.
Prioritization : Strategic planning helps organizations prioritize initiatives and allocate resources effectively to focus on high-impact activities.
Adaptability : While it sets long-term objectives, strategic plans are often flexible and adaptable, allowing organizations to adjust to changing circumstances and seize opportunities.
Resource Management : It assists in the efficient allocation of resources, including finances, time, and personnel, to support the organization's strategic goals.
Performance Measurement : Strategic plans often include key performance indicators (KPIs) that enable organizations to track progress and assess the success of their strategies.
Enhanced Decision-Making : Having a strategic plan in place can guide decision-making processes and reduce uncertainty by providing a framework for evaluating options.
Communication : It facilitates effective communication both internally and externally, ensuring that stakeholders, employees, and partners are aware of the organization's objectives.

Disadvantages of Strategic Planning

Time-Consuming : The strategic planning process can be time-consuming, requiring significant input from leaders and employees, which can divert resources from day-to-day operations.
Costly : Developing and implementing a strategic plan can be expensive, especially when consultants or specialized software are involved.
Rigidity : Overly rigid strategic plans can hinder an organization's ability to respond quickly to unexpected challenges or opportunities.
Resistance to Change : Employees may resist changes that are part of the strategic plan, leading to internal conflicts and morale issues.
Complexity : Strategic planning can become overly complex, making it difficult for employees at all levels of the organization to understand and execute.
Uncertainty : The future is inherently uncertain, and strategic plans may not always account for unforeseen events or market shifts.
Limited Focus : In some cases, strategic planning may lead to a narrow focus on achieving specific goals, potentially overlooking broader organizational or societal responsibilities.
Implementation Challenges : Developing a strategic plan is only the first step; ensuring successful implementation can be challenging, and many strategies fail due to poor execution.
Lack of Accountability : Without clear accountability and monitoring mechanisms, strategic plans may not be effectively executed, leading to unmet goals.
Overemphasis on Process : Some organizations become overly focused on the process of strategic planning rather than the outcomes, leading to bureaucratic and time-consuming procedures.

One of the main advantages of strategic planning is that it helps organizations set clear goals and objectives. By having a well-defined strategic plan, organizations can align their resources and efforts towards a common purpose. This clarity of purpose allows employees to understand their roles and responsibilities, which leads to increased motivation and productivity.

Strategic planning also helps organizations identify and leverage their strengths. By conducting a thorough analysis of the internal environment, organizations can identify their core competencies and unique capabilities. This information can then be used to develop strategies that capitalize on these strengths and give the organization a competitive advantage.

Another advantage of strategic planning is that it helps organizations anticipate and adapt to changes in the external environment. By conducting a thorough analysis of the market, industry trends, and competition, organizations can identify potential threats and opportunities. This early identification allows organizations to proactively respond to changes and stay ahead of the competition.

Strategic planning also provides a framework for resource allocation. By setting priorities and making informed decisions about resource allocation, organizations can use their limited resources effectively. This ensures that resources are allocated to the most important and strategic initiatives, maximizing the organization’s impact and return on investment.

In addition, strategic planning helps organizations align their internal processes and functions. By involving different stakeholders and departments in the planning process, organizations can create a shared understanding and commitment to the strategic goals. This alignment improves coordination and collaboration, leading to increased efficiency and effectiveness.

Furthermore, strategic planning provides a basis for evaluating performance and progress. By setting clear goals and key performance indicators, organizations can track their progress and make necessary adjustments along the way. This monitoring and evaluation process allows organizations to learn from their experiences and continuously improve their performance.

Despite its many advantages, strategic planning also has some drawbacks that organizations should be aware of. One of the main disadvantages is the complexity of the process. Strategic planning requires a significant amount of time, effort, and expertise. It involves analyzing large amounts of data, conducting market research, and engaging stakeholders. This complexity can make the planning process challenging and resource-intensive for organizations.

Another disadvantage of strategic planning is the resistance to change it may encounter. Implementing a strategic plan often involves making significant changes to the organization’s structure, processes, and culture. This can create resistance among employees who may be reluctant to change and may fear the unknown. Overcoming this resistance requires effective change management strategies and strong leadership.

Moreover, strategic planning may not always guarantee success. While a good strategic plan provides a roadmap for the organization’s future, its implementation is not always straightforward. External factors, such as changes in the market or unexpected competition, can affect the business and its ability to achieve its strategic goals. Internal factors, such as lack of resources or poor execution, can also hinder the successful implementation of the plan.

Lastly, strategic planning can sometimes overlook the importance of human resources. While strategic plans focus on organizational strategies and objectives, they may not pay enough attention to the people who will execute those strategies. It is essential for organizations to consider the capabilities, skills, and motivation of their employees when developing and implementing strategic plans.

Conclusion of Advantages and Disadvantages of Strategic Management Planning

In conclusion, strategic planning has both advantages and disadvantages for organizations. It helps set clear goals, leverage strengths, adapt to changes, allocate resources effectively, and align internal processes. However, it is a complex process that requires time, effort, and expertise. It may face resistance to change and does not guarantee success. Therefore, organizations should carefully consider these factors when deciding to engage in strategic planning.

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Advantages and Disadvantages of Strategic Planning Assignment Help

Advantages and Disadvantages of Strategic Planning

Students must note that not all strategic planning will be the same, rather it will vary between organizations. Different organizations will approach the process with different degrees of sophistication, thoroughness and commitment. Some organizations due to resource limitations may be unable to follow the formal process of strategy formulation. Other organizations may lack the necessary managerial commitment to implement a strategic plan. Managers who utilize the concepts of strategy development informally without implementing a formal process could still earn significant benefits from it.

Advantages:

• It provides consistent guidelines for the organizations activities. • The planning process helps managers anticipate problems before they arise and to deal with them before they become too severe. • It helps managers make decisions as the careful analysis provided by strategic planning gives managers more of the information they need to make decisions. • It minimises the chance of mistakes and unpleasant surprises, because goals, objectives and strategies are subjected to careful scrutiny and analysis. Disadvantages:

• It requires considerable investment in time, money and people, for example it can take years for it to function smoothly. • It involves many start up costs, training of planners, hiring new people, market research, survey and expensive data processing. • Sometimes it tends to restrict the organization to the most rational and risk free option, as managers learn to develop only those strategies that can survive the detailed analysis of the formal planning process. This means attractive opportunities that are difficult to analyze may be overlooked.

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The advantages and disadvantages of strategic management

Introduction

This article is designed to provide you with a realistic understanding of some of the advantages and disadvantages of implementing a strategic management system.

Strategic Management vs. Strategic Planning

I have deliberately used the words strategic management and NOT strategic planning. Webster’s defines planning as “a proposed or intended course of action, or a formulated scheme setting out stages of procedure”. Oxford defines planning as a “formulated or organized method by which a thing is to be done”. Yet, when we think of management we tend to think of a systems approach to the optimization of the organization.

Strategic planning still has the connotation of a process that is discrete, separate, and independent from the business of an organization. While strategic management connotes the planning, implementation, evaluation, on-going maintenance, and adjustment of the organization’s strategy. Because I believe that strategic management is an integral aspect of an organization’s business and not just a once per every three-year retreat, I have used the term strategic management throughout this article.

The Advantages of Strategic Management

Discharges Board Responsibility

The first reason that most organizations state for having a strategic management process is that it discharges the responsibility of the Board of Directors.

Forces An Objective Assessment

Strategic management provides a discipline that enables the board and senior management to actually take a step back from the day-to-day business to think about the future of the organization. Without this discipline, the organization can become solely consumed with working through the next issue or problem without consideration of the larger picture.

Provides a Framework For Decision-Making

Strategy provides a framework within which all staff can make day-to-day operational decisions and understand that those decisions are all moving the organization in a single direction. It is not possible (nor realistic or appropriate) for the board to know all the decisions the executive director will have to make, nor is it possible (nor realistic or practical) for the executive director to know all the decisions the staff will make. Strategy provides a vision of the future, confirms the purpose and values of an organization, sets objectives, clarifies threats and opportunities, determines methods to leverage strengths, and mitigate weaknesses (at a minimum). As such, it sets a framework and clear boundaries within which decisions can be made. The cumulative effect of these decisions (which can add up to thousands over the year) can have a significant impact on the success of the organization. Providing a framework within which the executive director and staff can make these decisions helps them better focus their efforts on those things that will best support the organization’s success.

Supports Understanding & Buy-In

Allowing the board and staff participation in the strategic discussion enables them to better understand the direction, why that direction was chosen, and the associated benefits. For some people simply knowing is enough; for many people, to gain their full support requires them to understand.

Enables Measurement of Progress

A strategic management process forces an organization to set objectives and measures of success. The setting of measures of success requires that the organization first determine what is critical to its ongoing success and then forces the establishment of objectives and keeps these critical measures in front of the board and senior management.

Provides an Organizational Perspective

Addressing operational issues rarely looks at the whole organization and the interrelatedness of its varying components. Strategic management takes an organizational perspective and looks at all the components and the interrelationship between those components in order to develop a strategy that is optimal for the whole organization and not a single component.

The Disadvantages of Strategic Management

The Future Doesn’t Unfold As Anticipated

One of the major criticisms of strategic management is that it requires the organization to anticipate the future environment in order to develop plans, and as we all know, predicting the future is not an easy undertaking. The belief being that if the future does not unfold as anticipated then it may invalidate the strategy taken. Recent research conducted in the private sector has demonstrated that organizations that use planning process achieve better performance than those organizations who don’t plan – regardless of whether they actually achieved their intended objective. In addition, there are a variety of approaches to strategic planning that are not as dependent upon the prediction of the future.

It Can Be Expensive

There is no doubt that in the not-for-profit sector there are many organizations that cannot afford to hire an external consultant to help them develop their strategy. Today there are many volunteers that can help smaller organizations and also funding agencies that will support the cost of hiring external consultants in developing a strategy. Regardless, it is important to ensure that the implementation of a strategic management process is consistent with the needs of the organization, and that appropriate controls are implemented to allow the cost/benefit discussion to be undertaken, prior to the implementation of a strategic management process.

Long Term Benefit vs. Immediate Results

Strategic management processes are designed to provide an organization with long-term benefits. If you are looking at the strategic management process to address an immediate crisis within your organization, it won’t. It always makes sense to address the immediate crises prior to allocating resources (time, money, people, opportunity, cost) to the strategic management process.

Impedes Flexibility

When you undertake a strategic management process, it will result in the organization saying “no” to some of the opportunities that may be available. This inability to choose all of the opportunities presented to an organization is sometimes frustrating. In addition, some organizations develop a strategic management process that become excessively formal. Processes that become this “established” lack innovation and creativity and can stifle the ability of the organization to develop creative strategies. In this scenario, the strategic management process has become the very tool that now inhibits the organization’s ability to change and adapt.

A third way that flexibility can be impeded is through a well-executed alignment and integration of the strategy within the organization. An organization that is well aligned with its strategy has addressed its structure, board, staffing, and performance and reward systems. This alignment ensures that the whole organization is pulling in the right direction, but can inhibit the organization’s adaptability. Again, there are a variety of newer approaches to strategy development used in the private sector (they haven’t been widely accepted in the not-for-profit sector yet) that build strategy and address the issues of organizational adaptability.

Like any process or tool, there are both advantages and disadvantages to a strategic management process. Unfortunately, many of the disadvantages are because of inappropriate application (often by poor consultants) as opposed to inherent limitations. As with any tool or process, you as the client have the final responsibility to ensure that the strategic management process you are using is appropriate for your needs. While I believe that strategic management in some form can be beneficially applied to most organizations, it is you – the client – who is ultimately responsible for its use or lack thereof.

Ron Robinson is the president of ABARIS Consulting Inc. He can be reached at (519) 472-9788 or [email protected] . This article is provided free of charge, for information purposes only and is not intended, represented or to be inferred as providing advice. ABARIS Consulting Inc. makes no warranty, express or implied, or assumes any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.

ABARIS Consulting Inc. is credited as the source on all copies, reproductions and distributions, and CharityVillage.com is credited as the original publisher.

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Module 3: Planning and Mission

Pros and cons of planning, learning outcomes.

Explain benefits of planning.
Explain the drawbacks of planning.

Achieving business goals starts with planning.

Planning is the process of setting goals and defining the actions required to achieve the goals.

Planning begins with goals. Goals are derived from the vision and mission statements, but these statements describe what the organization wants to achieve, not necessarily what it can achieve. The organization is affected both by conditions in its external environment—competitors, laws, availability of resources, etc.—and its internal conditions—the skills and experience of its workforce, its equipment and resources, and the abilities of its management. These conditions are examined through a process called a SWOT analysis. (SWOT will be discussed in greater detail in another module.) Together, the vision and mission statements and the results of the situation analysis determine the goals of the organization. This idea is illustrated by the figure that follows.

The words “Values,” “Vision,” and “Mission” are in a box. The words “Situation Analysis” are in another box. Both these boxes have arrows pointing from them to a third box, which has the word “Goals” in it.

Using the mission, vision, and values of a company, along with situation analysis, can help the company set goals.

The rest of the planning process outlines how the goals are to be met. This includes determining what resources will be needed and how they can be obtained, defining tasks that need to be done, creating a schedule for completing the tasks, and providing milestones to indicate progress toward meeting goals. The planning process will be discussed in more detail in the following section.

Benefits of Planning

In today’s chaotic environment, planning more than a few months in advance may seem futile. Progress, however, is rarely made through random activity. Planning does provide benefits that facilitate progress even when faced with uncertainty and a constantly changing environment. Some of the benefits include the following:

Planning provides a guide for action. Plans can direct everyone’s actions toward desired outcomes. When actions are coordinated and focused on specific outcomes they are much more effective.
Planning improves resource utilization. Resources are always scarce in organizations, and managers need to make sure the resources they have are used effectively. Planning helps managers determine where resources are most needed so they can be allocated where they will provide the most benefit.
Plans provide motivation and commitment. People are not motivated when they do not have clear goals and do not know what is expected of them. Planning reduces uncertainty and indicates what everyone is expected to accomplish. People are more likely to work toward a goal they know and understand.
Plans set performance standards. Planning defines desired outcomes as well as mileposts to define progress. These provide a standard for assessing when things are progressing and when they need correction.
Planning allows flexibility. Through the goal-setting process, managers identify key resources in the organization as well as critical factors outside the organization that need to be monitored. When changes occur, managers are more likely to detect them and know how to deploy resources to respond.

Practice Question

Drawbacks to planning.

Planning provides clear benefits to organizations, but planning can also harm organizations if is not implemented properly. The following are some drawbacks to planning that can occur:

Planning prevents action. Managers can become so focused on planning and trying to plan for every eventuality that they never get around to implementing the plans. This is called “death by planning.” Planning does little good if it does not lead to the other functions.
Planning leads to complacency. Having a good plan can lead managers to believe they know where the organization is going and how it will get there. This may cause them to fail to monitor the progress of the plan or to detect changes in the environment. As we discussed earlier, planning is not a one-time process. Plans must be continually adjusted as they are implemented.
Plans prevent flexibility. Although good plans can lead to flexibility, the opposite can also occur. Mid- and lower-level managers may feel that they must follow a plan even when their experience shows it is not working. Instead of reporting problems to upper managers so changes can be made, they will continue to devote time and resources to ineffective actions.
Plans inhibit creativity. Related to what was said earlier, people in the organization may feel they must carry out the activities defined in the plan. If they feel they will be judged by how well they complete planned tasks, then creativity, initiative, and experimentation will be inhibited. Success often comes from innovation as well as planning, and plans must not prevent creativity in the organization.

Goals and plans do not have to be formal documents. In small organizations, they may exist only in the minds of the manager. But research and experience have shown that planning brings clear advantages to an organization, whether through formal procedures or informal intuition. However, when plans become the object instead of a means to an objective, they can have negative consequences for the organization. For example, General Motors missed the opportunity to become the first American automaker to produce an electric car because it was committed to its plan rather than its goals. GM had EV-1 prototypes designed and produced in the 1990s and literally destroyed the cars rather than sell them.

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Pros and Cons of Planning. Authored by : John/Lynn Bruton and Lumen Learning. License : CC BY: Attribution
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Strategic management essentially means the implementation and formulation of various strategies in order to achieve the goals of the company.

This is the detailed initiative which is taken by the top management – these strategic decisions are taken on the basis of available resources – they also take into consideration the effects of the external and internal environment on their decisions.

Strategic Management Advantages Disadvantages

Strategic Management vs. Strategic Planning:

Every process in an organization basically begins with strategic planning. Both the strategic planning process and strategic management process are totally different but work for the same goal of the organization.

The strategic planning process in every business decides the way the organization should lead along with its objectives.

On the other hand, strategic management plans the process to follow to achieve the defined objective.

Sectors in which strategic management accounting works well:

Improves in employee performance as well as the organization
Supply chain

Sectors in which strategic management accounting does not work well:

Substitution of SMA in inventory
Master plan scheduling

Strategic Management Accounting in different Departments:

Value chain analysis:
Actual financial reporting
Cost control
Transportation
Variance analysis

Strategic Management Process:

In 1981, Ken Simmonds defined Strategic management process as the collection of management accounting information about a business and its competitors for use in developing and monitoring the business strategy.

Strategic management helps in processing the ways in which the goals of the organization can be attained. The two important objectives of using the strategic management process are

To obtain a higher level on your competitors
Act as a guide which helps in business development.

It also helps in adapting new changes which are both internal as well as external. The internal changes comprise of company policies, procedures etc and the external factors like new changes which affect business, customer’s likes and wishes, competitors’ strategic steps, etc.

Strategic Management Process Model:

Defining strategic intent:.

Establishing a vision
Designing mission
Setting objectives

Strategy formulation:

Performing environmental and organizational appraisal
Considering strategies
Carrying out a strategic analysis
Making strategies
Preparing a strategic plan

Strategy implementation:

Putting strategies into practice
Developing structures and systems
Managing the behavioural and functional implementation

Strategic Evaluation and Control

Performing evaluation
Exercising control
Recreating strategies

Importance of Strategic Management:

Shows the right direction to the organization
Helps companies or organizations to turn proactive rather than reactive
Guides the companies to prepare and face the challenges which may occur in future
Plays an important factor in decision making
Make sure to fight the competitions and have long term survival assurance
Have a competitive edge over the market
Last but not least, helps in business development and success

Steps of Strategic Management Process:

The strategic management plan has various facets which are being discussed here. The strategies are applied in order to have proper planning and appropriate allocation of funds for the accomplishment of the goals of the company .

Step 1: Formulation:

The formulation of the strategies essentially involves the environment within which every company has to survive. Here various important decisions are made in order to figure out how the company will reach out to the competition.

Here the external environmental analysis is done. The political, economic, legal and social aspects are assessed during the formulation of the strategies.

1. Industry Environment:

The strategic decision-maker checks for the competitor environment. They try to assess the resources available with the rivals and also their bargaining power with the customers. It is also important to understand the trend of the suppliers; check if there are any latest threats of the new entrants in the industry.

2. Internal Environment:

Though most of the companies do not take care about the internal environment this is amongst the most important while implementing strategic management fundamentals. You should have a clear SWOT analysis about your employees, processes, and resources.

Step 2: Implementation:

This is the next important step in strategic management – here the management has to take the decision as to how the resources will be utilized in order to reach out to the goals formulated by the company. The implementation phase also checks how the resources of the organization have been structured.

Advantages of Strategic Management Process:

The process of strategic management is a comprehensive collection of different types of continuous activities and also the processes which are used in the organization. Strategic management is a way to transform the existing static plan in a proper systematic process.

Strategic management can have some immediate changes in the organization. The following mentioned are few pointers that help you identify the relevance of strategic management and its benefits

1. Creating a better future:

There is always a difference between reactive and proactive actions. When a company practices strategic management – the company will always be on the defensive side and not on the offensive end. You need to come out victorious in the competitive situation and not be a victim of the situation.

It is not possible to foresee each and every situation but if you know that there are chances of certain situations then it is always better to keep your weapons ready to fight the situation.

2. Identifying strategic directions:

Strategic management essentially and clearly defines the goals and mission of the company. The main purpose of this management is to define realistic objectives and goals – this has to be in line with the vision of the company.

The strategic management provides a base for the organization on the basis of which progress can be measured and on the basis of the same, the employees can be compensated.

3. Make Better business decisions:

It is important to understand the difference between a great idea and a good idea. If you do have a proper and clear vision of your company – then having a mission and methods to achieve the mission always seems to be a very good idea. You need to make better decisions and that too within less time.

Here come the benefits of a strategic approach. It turns into a great idea when you decide what is the type of project that you want to invest your money; how do you plan to invest your time and also utilize the time of your employees.

Once you are clear with your ideas about the project and the time each of your employees and yourself will have to allocate, you will need to focus your attention on the financial and human resources.

4. Business Longevity:

The times are changing fast and there are dynamic changes happening every day. The industries worldwide are changing at a fast pace and hence survival is difficult for those companies which do not have a strong and perfect base in the industry.

The strategic management ensures that the company has a thorough stand in the related industry and the experts also make sure that the company is not just surviving on luck and better chances or opportunity. When you look at various studies you would know that the industries which are not following the strategic management will survive for not more than five years.

This suggests that companies should have a powerful focus on the longevity of the business . This suggests that without strategic management, it is not possible for a company to survive in the long run.

5. Increasing market share and profitability:

With the help of strategic management, it is possible to increase the market share and also the profitability of the company in the market. If you have very focused plan and strategic thinking then it is possible for all the industries to explore better customer segments, products and services and also to understand the market conditions of the industry which you are operating in.

Strategic management skills will help you to approach the right target market. The experts will guide for better sales and marketing approaches . You can also have a better network of distribution and also help you to take business decisions which at the end of the day results in profit.

6. Avoiding competitive convergence:

Most of the companies have become so used to focusing on the competitors that they have started imitating their good practices. It has become so much of competition that is becoming difficult to part the companies or identify them differently.

With the help of strategic management this magic is possible – try and learn all the best practices of a company and become a unique identity which will keep you apart from your competitors.

7. Financial benefits:

The firms which follow the process of strategic management proves to have more profits over a period of time as compared to the companies that do not opt for strategic management decisions.

Those firms which are involved in using strategic management use the right method of planning – these companies have excellent control over their future. They have a proper budget for their future projects; hence these businesses continue for a long time in the industry.

8. Non-financial benefits:

Companies using strategic management also provides various financial and non-financial benefits of strategic management. The experts informed that the firms which practice strategic management are always ready to defeat the external threats.

They have a better understanding of the strengths and weakness of the competitor and hence they are able to withstand the competition. This paves way for better performance and rewards for the company over a period of time.

The main feature of this management system is that it has the capacity of problem prevention and problem-solving skills . It also helps in bringing about discipline in the firm for all types of internal and external processes.

Disadvantages of Strategic Management Process:

The process of strategic management includes a set of long term goals and objectives of the company – using this method helps the company in facing the competition in a better manner and also increases its capabilities.

These are definitely some of the strategic management benefits but every coin has two sides – the same is the case with strategic management. Here are some of the limitations of strategic planning in management.

1. Complex process:

The strategic management includes various types of continuous process which checks all type of major critical components. This includes the internal and external environments, long term and short term goals, strategic control of the company’s resources and last but not the least it also has to check the organizational structure. This is a lengthy process because a change in one component can affect all the factors.

Hence it is vital that one understands the issues with all the concerned factors. This generally takes time and at the end, the growth of the company is affected.

Being a complex process it calls for lots of patience and time from the management in order to implement the strategic management.

In order to have proper strategic management, there should be strong leadership and proper structured resources.

2. Time-consuming process:

In order to implement strategic management, it is necessary that the top management spends proper quality time in order to get the process right. The managers have to spend a lot of time researching, preparing and informing the employees about this new management. This type of long term and time-consuming training and orientation would hamper the regular activities of the company.

The day to day operations are negatively impacted and in the long term, it could affect the business adversely. For e.g. there are many issues that require daily attention but this is not taken care because they are busy researching the details about strategic management.

In case, proper resolution of the problems are not done on time then there could be a great amount of attrition increase. Besides this, the performance of the employees will also go down because they are not getting the required resolution of their problems. This type of situation may lead the management to divert all their critical resources towards employee motivation and performance – while doing this your strategic management process will be sidelined.

3. Tough implementation:

When we speak the word strategic management then it seems to be a huge and large word. But it is also a fact that the implementation of this management system is difficult as compared to other management techniques. The implementation process calls for perfect communication among the employees and employer.

The strategic management has to be implemented in such a way that the employees have to remain fully attentive; there should be active participation among the employees and besides this, the employees have to be accountable for their work. This accountability is meant not only for the top management but for all employees across the hierarchy. The experts mention that implementation is difficult because they have to continuously strive to make the employees aware about the process and benefits of this system.

For e.g. if a manager was involved in forming of the strategic process and he/she has not been involved in the implementation process then the manager will never be accountable for any processes in the company.

4. Proper planning:

When we say management systems then it calls for perfect planning. You just cannot write things on paper and leave them. This calls for proper practical planning. This is not possible by just one person but it is a team effort.

When these types of processes are to be implemented then you need to sideline various regular decision-making activities which would adversely affect the business in the long run.

Conclusion:

In recent years, most of the firms have understood the importance of strategic management – it plays a key role in the upbringing and downfall of any company. In a nutshell, we can conclude that the purpose of strategic management is possible if a company can provide dedicated resources and staff in order to formulate and implement the entire system.

If strategic management is implemented in the company thoroughly then there is no doubt that the company will survive all types of odds and competition and remain in the market for a long period of time. This is required in the present situation for all companies. It just calls for proper planning and the right people in order to implement them in the company.

You need to keep a regular check on all external and internal factors affecting your industry; besides this check all your financial resources whether they are enough to expand your business. If you could keep in mind these things, the implementation will become very easy and quick for any organization irrespective of their sizes.

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