Page 10 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes 1.3 Dimensions of Strategic Management

The characteristics of strategic management are as follows:
1. Top management involvement: Strategic management relates to several areas of a firm’s
operations. So, it requires top management’s involvement. Generally, only the top
management has the perspective needed to understand the broad implications of its decisions
and the power to authorize the necessary resource allocations.
2. Requirement of large amounts of resources: Strategic management requires commitment
of the firm to actions over an extended period of time. So they require substantial
resources, such as, physical assets, money, manpower etc.

Example: Decisions to expand geographically would have significant financial
implications in terms of the need to build and support a new customer base.
3. Affect the firm’s long-term prosperity: Once a firm has committed itself to a particular
strategy, its image and competitive advantage are tied to that strategy; its prosperity is
dependent upon such a strategy for a long time.
4. Future-oriented: Strategic management encompasses forecasts, what is anticipated by the
managers. In such decisions, emphasis is placed on the development of projections that
will enable the firm to select the most promising strategic options. In the turbulent
environment, a firm will succeed only if it takes a proactive stance towards change.
5. Multi-functional or multi-business consequences: Strategic management has complex
implications for most areas of the firm. They impact various strategic business units
especially in areas relating to customer-mix, competitive focus, organisational structure
etc. All these areas will be affected by allocations or reallocations of responsibilities and
resources that result from these decisions.

6. Non-self-generative decisions: While strategic management may involve making decisions
relatively infrequently, the organisation must have the preparedness to make strategic
decisions at any point of time. That is why Ansoff calls them “non-self-generative
decisions.”

1.4 Need for Strategic Management

No business firm can afford to travel in a haphazard manner. It has to travel with the support of
some route map. 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.
The external environment influences the management practices within any organisation. Strategy
links the organisation to this external world. Changes in these external forces create both
opportunities and threats to an organisation’s position – but above all, they create uncertainty.
Strategic planning offers a systematic means of coping with uncertainty and adapting to change.
It enables managers to consider how to grasp opportunities and avoid problems, to establish
and coordinate appropriate courses of action and to set targets for achievement.
Thirdly, strategic management helps to formulate better strategies through the use of a more
systematic, logical and rational approach. Through involvement in the process, managers and
employees become committed to supporting the organisation. The process is a learning, helping,

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