Importance of Strategic Management

Importance of Strategic Management

Strategic management is important to organizations for several reasons. 

Strategic management helps organizations to identify and develop a competitive advantage, which is a significant superiority over the competition in dealing with competitive forces. For example, Disney has been able to gain a competitive advantage in the family entertainment industry by creating enjoyment parks, movies, and products based on the renowned Disney characters.

It provides a sense of direction so that organization members know where to expend their efforts. 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.

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. 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.

Finally, studies support the existence of a link between strategic management and organizational financial performance, although results have not always been consistent.