Why Strategy Is Important to an Organisation

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“Discuss why strategy is important to an organisation”

‘Research has revealed that organizations that engage in strategic management generally outperform those that do not’ Wheelen & Hunger (2005, p.5). An organisation will perform to a high standard when there is a matching correlation between the organisational environment and the strategy, structure and processes of that organisation. Wheelen & Hunger’s said in their book ‘Strategic Management and Business Policy: tenth edition’ that after ‘a survey of nearly 50 corporations in a variety of countries and industries found…three most highly rated benefits of strategic management’ (2005, p.5). The three benefits for corporations who strategically manage are a clearer sense of strategic vision for the firm, sharper focus on what is strategically important and improved understanding of a rapidly changing environment.

The role of strategy in an organisation provides a framework for operational planning, increases organisational effectiveness, it can clarify the direction of organisational activities and can also result in personal employee satisfaction. Firstly looking at operational planning and increasing organisational effectiveness through strategic management, ‘Rhyme found that firms with planning systems more closely resembling strategic management theory exhibited superior long term financial performance’ (Thibodeaux & Favilla, 1996). Strategic management provides the framework for operational planning by ‘channelling operating decisions and often pre-deciding them’ marketing91.com (no date). Companies that strategically manage will show considerable increases in sales, profit, and efficiency. With this, the fundamental goal of many research projects about organisational theory and strategic management is to assess and develop the effectiveness of an organisation. Strategy provides structure as to the business’ area of serving in terms of the consumer and geographical sense. As the picture...
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