Benefits and Disadvantages of Strategic Management

Topics: Strategic management, Management, Social responsibility Pages: 9 (2530 words) Published: July 26, 2012








Strategic management is essential for organisations. There are a few areas that I will be analysing to highlight their effects to an organisation.

Firstly I wish to discuss decision making, which I believe to be, the greatest advantage of strategic management. The decision making element provides an organisation a clearly defined framework to work within, however still allowing for flexibility to achieve its strategic direction. This strategic element allows executives, managers and operational staff to make decisions as and when, required within today’s ever changing business environment.

Secondly I will be highlighting what I perceive as being the greatest weakness within strategic management. It is imperative, in my opinion that organisations involved in- or utilizing strategic management, are fully aware of the biggest pitfall: the implementation of strategic management, which could potentially assist in the avoidance of this shortcoming.

Lastly, my response to Milton Friedman’s statements: “social responsibility of a business is only to maximise profits, and that this needed to be done within the law and “rules of the game” in which I reflect my disagreement as social responsibility is towards the environment, the staff, the community and it is the responsibility of the organisation to support all three areas.

Greatest Advantage of Strategic management

I am of the opinion that strategic management has many advantages, the greatest of them all being decision making. The decision making element provides a clearly defined strategic direction and an all encompassing framework in which adaptive and flexible management and subsequent management decisions can thrive, as long as it does not forsake the overall strategy.

Therefore staff can make day-to-day operational decisions with the, understanding that those decisions are still in keeping with the original strategy. The cumulative effect of these decisions can have a significant impact on the success of the organisation. (ABARIS Consulting Inc.

To substantiate the above statement we can look at the case study of Brake International Products (BPI) as a prime example in which the strategy diamond method was applied. BPI’s new executives developed a new strategic intent by making critical decisions for each of the five elements within the strategy diamond, which are: Arenas, Vehicles, Differentiators, Staging and Economic logic.

The importance of flexible decision making is clearly indicated in the following quotation: “BPI has been able to get their top team on the same page. A whole host of decisions have logically fallen into place in support of their comprehensive strategic agenda. BPI’s turnaround was highly successful. The substance of the company’s strategy was critically important in the turnaround, as was the concise strategy statement that was communicated throughout the firm.” (Donald C. Hambrick & James W. Fredrickson: 57)

Simply put, the flexibility of decision making within the 5 elements, defines the singularity of the outcome by the use of multiple management decision as an entry point to a clearly defined overall objective. Another example would be the IBM case study titled “Who says Elephants can’t dance?” This case study clearly credits managerial flexibility in the day to day decisions as highlighted by Lou Gerstner the CEO of IBM. He stated: “If IBM is as bureaucratic as people say, let’s eliminate bureaucracy fast... we must balance decentralised decision-making with central strategy” (Louw.L and Venter.P: 106)

It is evident from the above case studies that the framework in...
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