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Financial BenefitsResearch indicates that organizations using strategic-management concepts are moreprofitable and successful than those that do not.17 Businesses using strategic-managementconcepts show significant improvement in sales, profitability, and productivity comparedto firms without systematic planning activities. High-performing firms tend to do systematicplanning to prepare for future fluctuations in their external and internal environments.Firms with planning systems more closely resembling strategic-management theory generallyexhibit superior long-term financial performance relative to their industry.High-performing firms seem to make more informed decisions with good anticipationof both short- and long-term consequences. In contrast, firms that perform poorly oftenengage in activities that are shortsighted and do not reflect good forecasting of future conditions.Strategists of low-performing organizations are often preoccupied with solvinginternal problems and meeting paperwork deadlines. They typically underestimate theircompetitors’ strengths and overestimate their own firm’s strengths. They often attributeweak performance to uncontrollable factors such as a poor economy, technologicalchange, or foreign competition.More than 100,000 businesses in the United States fail annually. Business failuresinclude bankruptcies, foreclosures, liquidations, and court-mandated receiverships.Although many factors besides a lack of effective strategic management can lead to business failure, the planning concepts and tools described in this text can yield substantialfinancial benefits for any organization. An excellent Web site for businesses engaged instrategic planning is www.checkmateplan.com.Nonfinancial BenefitsBesides helping firms avoid financial demise, strategic management offers other tangiblebenefits, such as an enhanced awareness of external threats, an improved understanding ofcompetitors’ strategies, increased employee productivity, reduced resistance to change,and a clearer understanding of performance–reward relationships. Strategic managementenhances the problem-prevention capabilities of organizations because it promotes interactionamong managers at all divisional and functional levels. Firms that have nurtured theirmanagers and employees, shared organizational objectives with them, empowered them tohelp improve the product or service, and recognized their contributions can turn to themfor help in a pinch because of this interaction.In addition to empowering managers and employees, strategic management oftenbrings order and discipline to an otherwise floundering firm. It can be the beginning ofan efficient and effective managerial system. Strategic management may renew confidencein the current business strategy or point to the need for corrective actions. Thestrategic-management process provides a basis for identifying and rationalizing the needfor change to all managers and employees of a firm; it helps them view change as anopportunity rather than as a threat.Greenley stated that strategic management offers the following benefits:1. It allows for identification, prioritization, and exploitation of opportunities.2. It provides an objective view of management problems.3. It represents a framework for improved coordination and control of activities.4. It minimizes the effects of adverse conditions and changes.5. It allows major decisions to better support established objectives.6. It allows more effective allocation of time and resources to identified opportunities.7. It allows fewer resources and less time to be devoted to correcting erroneousor ad hoc decisions.8. It creates a framework for internal communication among personnel.9. It helps integrate the behavior of individuals into a total effort.10. It provides a basis for clarifying individual responsibilities.11. It encourages forward thinking.12. It provides a cooperative, integrated, and enthusiastic approach to tackling problemsand opportunities.13. It encourages a favorable attitude toward change.14. It gives a degree of discipline and formality to the management of a business.
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