The Impact of Strategic Management on Organizational Performance

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The face of business is always changing such that there are more competitors, different technology and diverse customer demands. Strategic management is a method of dealing with these changes. Strategic management is the process in which a management team develops a mission and vision, goals and objectives, roles and responsibilities and values which ensure the success of the organization. An organization’s performance is, thus, intricately dependent on how it develops and implements its strategies.

Competitive Advantage

Competitive advantage is the set of factors that differentiates an organization from its competitors. In developing, implementing and managing global and national strategies, an organization sets itself apart. In terms of performance, this means that the organization becomes more efficient in its operations, such as manpower planning or manufacturing and in reaching its customers. Strategic management also enables an organization to identify ways of penetrating new markets, globally and nationally.

Culture

Organizational culture significantly influences an organization’s performance. Additionally, strategic management helps in creating the organizational culture through developing the mission, vision and values. Proper strategic management facilitates the formation of a culture of integrity, competitive work ethic, embracing technology, value creation for customers and shareholders. With this type of sustained organizational culture, an organization can expect exemplary performance.

Leadership

Strategic management develops, makes clear and monitors the roles and responsibilities of its personnel. This clarification and accountability of personnel is especially crucial to an organizations’ leadership. The process of strategic management ensures that an organization only keeps leaders who can connect the organization’s vision, goal and culture to the business’ challenges and to find solutions. Strategic leadership and thinking is paramount if an organization is to stay in business and perform better than its competitors.

Competencies

Prahalad and Hamel first developed the term core competencies to mean “collective and coordination skills” that drive an organization. To develop its core competencies an organization must identify and incorporate technologies (processes) relevant to the success of the company. Also, the organization must be able to coordinate the various skills within its workforce. These two factors entail strategic management of processes and of people. Once an organization develops its core competencies, it is able to understand and monitor its performance.

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