Page 13 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 1: Introduction to Strategic Management

Notes

Notes It is important to note that strategic planning goes far beyond the planning process.
Unlike traditional planning, strategic planning involves a long-range planning under
conditions of uncertainty and complexity Such a planning involves:

l. Strategic thinking
2. Strategic decision-making
3. Strategic approach

A structured approach to strategy planning brings several benefits (Smith, 1995; Robbins, 2000)
1. It reduces uncertainty: Planning forces managers to look ahead, anticipate change and
develop appropriate responses. It also encourages managers to consider the risks associated
with alternative responses or options.
2. It provides a link between long and short terms: Planning establishes a means of
coordination between strategic objectives and the operational activities that support the
objectives.
3. It facilitates control: By setting out the organisation’s overall strategic objectives and
ensuring that these are replicated at operational level, planning helps departments to
move in the same direction towards the same set of goals.

4. It facilitates measurement: By setting out objectives and standards, planning provides a
basis for measuring actual performance.

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. Businesses that
followed strategic management concepts have shown significant improvements in sales,
profitability and productivity compared to firms without systematic planning activities.
2. Non-financial benefits: Besides financial benefits, strategic management offers other
intangible benefits to a firm. They are;

(a) Enhanced awareness of external threats
(b) Improved understanding of competitors’ strategies
(c) Reduced resistance to change
(d) Clearer understanding of performance-reward relationship
(e) Enhanced problem-prevention capabilities of organisation
(f) Increased interaction among managers at all divisional and functional levels
(g) Increased order and discipline.
According to Gordon Greenley, strategic management offers the following benefits:
1. It allows for identification, prioritization and exploitation of opportunities.

2. It provides objective view of management problems.

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