The Importance Of The Strategic Management Process

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The Importance of the Strategic Management Process

Strategy enables businesses to evaluate the external opportunities and threats that effect their success and competitive advantage in the market. This paper explains the importance of strategy in business, and analyzes the main components of the strategic management (three-tier) process. It also discusses the significance of having a future oriented plan by defining an organization’s vision, mission statement, purpose, philosophy, and goals. In addition, the paper expounds upon the strategic process as an input for future business decision-making.
The Importance of Strategy in Business
Pearce and Robinson define strategy as “large-scale, future-oriented plans for interacting with the competitive
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3). Strategic management follows a process in the hierarchy of a company wherein businesses pass information through organized levels and stages in order to accomplish a certain goal (Pearce & Robinson, 2013, p. 15). The three-tiers of an organization consist of corporate top-level executives (Chief Executive Officer, Chief Financial Officer, and board of directors), middle-level department managers, and the functional level employees (Human Resource, marketing, accounting, and sales personal) (Pearce & Robinson, 2013, p.7). Each level of the firm is responsible for specific task and duties to ensure the execution of the grand strategy. Top executives are in control of the firm’s financing decisions and allocation of resources, setting long-term goals and accountability to stakeholders. The middle level managers are in charge of disseminating corporate objectives to personal of the functional level departments. Moreover, functional level employees are responsible for carrying out task such as customer service, to accomplish short-term goals for the organization (Pearce & Robinson, 2013, …show more content…
4). Hence, strategy is a “large-scale, future-oriented plan” that mirror a firm’s consciousness “of its purpose and how, when, where that purpose should be executed” (“Strategic Planning”, n.d.). Having a future oriented plan is important for defining a company’s mission statement, purpose, philosophy, and goals. It is also critical to the development of a business based upon its strengths, weakness, opportunities, and threats. In addition, a future oriented plan is important to the formulation of strategy, selecting long-term goal objective, short-term objectives, budgeting, and distribution of resources, relating information to functional level employees, monitoring and controlling the success of the entire strategic process (“Strategic Planning”,

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