Benefits of Strategic Planning

¶ … chief components of a concept like strategic management consist of directing a situational analysis so a business or organization can determine the existing condition within the business/organization in relation to what direction or avenue the leader wants the organization/business to go in the future. This means that these components help steer a business/organization through processes and strategies that promote communication and progress towards objectives. The first component thus becomes goal setting. Goal setting helps an organization clarify their vision of their business. During this stage, the organization will identify both long-term and short-term goals. Then the organization must recognize the process of how to achieve these goals. Lastly, customization of the process lends to communicating to employees what steps to implement for successful completion of goals.

The next component of strategic management means developing a specific mission through analysis in order to concentrate efforts into the completion of explicit mission-based aims. The organization during this stage understand the needs of the business within the context of a sustainable entity and develop its strategy to identify initiatives the promote growth. A business/organization can do this by examining internal or external issues that may prove as a hindrance to goals.

A third component relies in developing an execution plan that an organization may use in order to achieve the strategic initiatives or objectives set forth by the leadership of the business/organization. This may be identified as a strategy formulation. By reviewing information gathered from analysis, the organization determines what resources it currently has that may assist in reaching the defined objectives/goals. By identifying areas that may need to seek external resources, prioritization and formulation of strategy can take place.

The fourth component ensure that the material and human resources needed for completion of the strategic aims are distributed and collected as needed. This means everyone within the organization should be made clear their expected job duties so proper implementation can take place. The fifth and final component of strategic management ensures directives communicated in the previous phase to staff and departments throughout the organization are done so in an effective and efficient manner on an ongoing basis. By constantly monitoring through evaluation and assessment, the organizational outcomes and operations, the organization makes sure employees are meeting objectives.

An organization's values and missions are vital to strategy formulation due to the manner in which strategy formulation must be conducted. Incorporation of the organization's values and mission through its execution methodologies as well as desired outcomes allow for a smoother transition and implementation process. Since employees were hired and made aware to keep the organization's values and missions in mind, they will have a better understanding of what is needed and what to do when strategy formulation considers these things. Focused efforts come from clarity and unity. When an organization is unified under the same values and mission, implementation of processes happens faster with less resistance.

A strategic management process may benefit a health care organization by creating the organization less wasteful and more efficient ways to conduct its operations designed at accomplishing strategic management objectives. For example, a hospital implements a strategic management process to train new nurses. In doing so, everyone responsible for communicating and training new nurses learns what must be done and how to do it so the new nurses can be trained well. A small group may be elected by the hospital to evaluate progress and consistency. Because of these actions, more nurses that are new are receiving the adequate training they need and quality of care in the hospital rises. The hospital benefits from faster and better trained nurses and patients are happy with the increase in quality care.

Strategic management affects organizational decision-making as well as financial performance because strategic management allows for a more organization, mission-based form of decision-making. Furthermore, it allows for a more efficient financial performance as well. When businesses understand clearly what must be done in order to achieve objectives and where in the organization/business there are weaknesses, critical action takes place faster. Communication, an integral part of any successful business/organization is a key step in strategic management. When including this into decision-making and financial performance, any potential problems or reoccurring problems are recognized and handled. This waste of time and resources and increased focus on productivity. A 1995 study shows how beneficial it is.

This study comprehensively evaluated the links between systems of High Performance Work Practices and firm performance. Results based on a national sample of nearly one thousand firms indicate that these practices have an economically and statistically significant impact on both intermediate employee outcomes (turnover and productivity) and short- and long-term measures of corporate financial performance (HUSELID, 1995, p. 635).

Strategic management affects the way an organizational/business reacts to its environment through forcing an organization to familiarize to environmental conditions in an effective and efficient manner, thus increasing the probability of achieving its organizational aims in the face of environmental conditions.

They showed that: (1) each environmental cluster had a distinct combination of activities relating to corporate innovation and venturing, and renewal; (2) corporate entrepreneurship activities varied in their associations with measures of company growth and profitability; and (3) the associations between corporate entrepreneurship and company financial performance varied among the four environment clusters. The results from this study can help executives in selecting specific entrepreneurial activities that match the demands of success in their business environment to improve their company's performance (Zahra, 1993, p. 319).