Why Strategy Is Important to an Organisation Essay Example
âDiscuss why strategy is important to an organisationâ âResearch has revealed that organizations that engage in strategic management generally outperform those that do notâ 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 & Hungerâs said in their book âStrategic Management and Business Policy: tenth editionâ that after âa survey of nearly 50 corporations in a variety of countries and industries foundâŠthree most highly rated benefits of strategic managementâ (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, âRhyme found that firms with planning systems more closely resembling strategic management theory exhibited superior long term financial performanceâ (Thibodeaux & Favilla, 1996).
Strategic management provides the framework for operational planning by âchannelling operating decisions and often pre-deciding themâ 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 businessâ area of serving in terms of the consumer and geographical sense.
As the picture becomes clearer from
the strategy, the deployment of resources improves. Moving forward, âthe concept of effectiveness is that the organization is able to achieve its objectives within the given resourcesâ marketing91. com (no date), therefore, it isnât solely required that resources are used efficiently, but also that they are used âin a way which ensures their maximum contribution to organisational objectivesâ marketing91. com (no date).
When it comes to organisational activities and working towards organisational goals or objectives, strategic management clarifies and specifies what activities are to be undertaken in order to achieve those goals. It fine for organisations to state goals, such as to reduce business costs by 10%, but it is vague and doesnât indicate how to reduce business costs by 10%. Strategic management spells out the activities and processes needed to be performed in order to achieve the objective.
If employees know the direction of the organisation and know what is to be done, then employee and organisational performance will improve as a result. This also links in to the final point I made earlier that strategic management leads to employee satisfaction. When employees know precisely what to do, their performance, morale and work ethic will improve accordingly, as employees will feel more appreciated when they themselves feel that they are contributing to achieving organisational objectives, with this showing why strategy is so important to an organisation.
Page Word Count:493 (minus title, name, ID number, course code and references) References: Wheelen, T. & Hunger, J. (2005) Strategic Management and Business Policy Tenth Edition. New Jersey, USA: Pearson Prentice Hall. Thibodeaux, M. & Favilla, E. (1996) âOrganisational effectiveness and commitment through strategic managementâ Industrial Management and Data Systems. Pages
21-25. No author (last updated Feb 6th 2012) marketing91. com, Available at: http://www. marketing91. com/role-of-strategy/ Accessed: Feb 6th 2012
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