Role of Strategic Management

Role of Strategic Management – In Business Organisations: Strategic

Visionary, Strategic Leader and Decision Maker, Integrative Role and a Few
More 

Strategic management plays some very important general roles in business organisations. 

These are discussed below: 

Role # 1. Strategic Visionary: 

Strategic manager points an organisation in a particular direction. He charts a strategic path

for it to follow. He then communicates the strategic vision down the line to lower-level
managers and employees. This has motivational value. He can convey a larger sense of
purpose —so that employees see themselves as “building a cathedral” rather than “laying
stones”. When strategic managers can point an inspiring picture of the company’s strategic
vision they can arouse a committed organisational effort. 

Role # 2. Strategic Leader and Decision Maker: 

Strategic leaders use Strategic Management process to help the firm reach its vision and
mission. They are decisive and committed to nurturing those around them. They create value
for customers and returns for shareholders and other stakeholders. Changing external
conditions and new strategic priorities call for new approaches to leadership. It is necessary
to make better use of information to make good decisions. 

Eisenhardt and Zbaracki write, “It is important that strategic managers learn to make better
use of the information they have and understand the reasons that sometimes they make poor
decisions. One important way in which managers can make better use of their knowledge and
information is to understand how to become an effective or strategic leader and to learn how
to understand and manage their emotions during the course of decision making.” 

Charles Hill and Jones state, “One of the key strategic roles of both general and functional
managers is to use all their knowledge, energy, and enthusiasm to provide strategic leadership
for their subordinates and develop a high-performing organisation.” 

Thompson and Strickland write, “Companies whose managers neglect the role of thinking
strategically about the company’s future business path are prone to drift aimlessly and lose
any claim to being an industry leader.” 

Role # 3. Creating Superior Performance and Competitive Advantage: 

In the business world, superior performance is typically thought of in terms of one company’s
profitability relative to that of other companies in the same kind of business or industry. The
profitability of a company can be measured by the return that it makes on the capital invested
in the enterprise. The return on invested capital that a company earns is defined as its profit
over the capital invested in the firm. 
Much of strategic management is about identifying and describing the strategies that
managers can pursue to attain superior performance and a competitive advantage for their
organisation. If a company’s strategy results in superior performance, it is said to have a
competitive advantage. A company can best maximize shareholder returns by pursuing
strategies that maximize its own profitability. 

Role # 4. Integrative Role: 

Strategic management also plays the role of integrator. It requires managers to take an
integrative view of the organisation and assess how all of the functional areas and activities
fit together to help an organisation achieve its goals and objectives. It motivates isolated
functional areas to strive and work towards overall goals. It promotes ‘integrative thinking’
and acting at all levels. While challenge is great, so is the potential payoff. It helps to harness
the collective genius of the people in his organisation. 

Role # 5. Adapting to Change: 

The strategic management believes that organisations should continually monitor internal and
external events, trends and crises so that timely changes can he made as needed. The rate and
magnitude of changes that affect organisations are increasing dramatically. This needs
strategic managers that allow organisations to adapt effectively to change over the long run.
In today’s business environment, the only constant is change. Successful organisations
effectively manage change through dynamic strategies. 

The need to adapt to change leads organisations to key strategic management questions, such
as “What kind of business should we become” “Are we in the right field(s)?” “Should we
reshape our business?” “What new competitors are entering our industry?” “What strategies
should we pursue?” “How are our customers changing?” “Are new technologies being
developed that could put us out of business?” 

Role # 6. Thinking through the Overall Mission: 

Peter Drucker says that the prime role of strategic management is thinking through the overall
mission of a business. To play this role, the managers must ask these questions – “What is
our Business?” This leads to the setting of objectives, the development of strategies, and the
making of today’s decisions for tomorrow’s results. 

This clearly must be done by a part of the organisation i that can see the entire business; that
can balance objectives and the needs of today against the needs of tomorrow; and that can
allocate resources of men and money to key results. 

Role # 7. Protecting Natural Environment: 

Today, the natural environment has become an important strategic issue. Global warming,
bioterrorism, and increased pollution suggest that perhaps there is now no greater threat to
business and society than the continuous exploitation and decimation of our natural
environment. Mark Starik says, “Halting and reversing worldwide ecological destruction and
deterioration…is a strategic issue that needs immediate and substantive attention by all
businesses and managers.” 
Role # 8. Managing in an Economic Crisis: 

In times of economic crisis, strategic management plays a great role. Strategic managers can
develop promising new strategies during a severe recession, business cycles, a serious
economic downturn or business breakdown. In hard and severe economic times and financial
crisis, strategic management adopts dual strategies – “Surviving today and competing
tomorrow.” 

It can make the most of the firm’s existing resources and capabilities to maximize
performance in the present while also developing to meet the requirements of the future.
Strategic managers can safeguard core capabilities and can make shrewd investments to
prepare the firm for the next upturn. They then invest in technology, human resources and in
improving capabilities. 

In recessionary times strategic management offers opportunities for doing things differently,
adapts low-cost technical solutions, develops products at low cost for emerging market
countries, finds low-cost customer solutions, and discovers the markets for product. Such
strategies can bring massive industrial change and economy can flourish. 

Role # 9. Marching with Globalisation: 

Strategic management always walks with global trends and changes. It considers global
economies. Globalisation increases the range of opportunities and challenges. One of the
challenges for firms is to understand the need for culturally sensitive decisions when using
the strategic management process and to anticipate ever-changing complexity in their
decisions and operations. Globalisation also affects the design, production, distribution and
servicing of goods and services. 

Strategic managers very well understand that globalization has led to higher levels of
performance standards in many competitive dimensions, including those of quality, cost,
productivity, product introduction time, and operational efficiency. They also understand that
globalization is not risk free – it has a “liability of foreignness.” 

Two risks are important to consider for strategic managers – (a) One risk of entering the
global market is that typically a fair amount of time is required for firms to learn how to
compete in markets that are new to them. (b) Secondly, a firm’s performance may suffer with
substantial amount of globalization. 

It is important to note the words of Fred R. David – “Global considerations impact virtually
all strategic decisions! The boundaries of countries no longer can define the limits of our
imaginations. To see and appreciate the world from the perspective of others has become a
matter of survival for businesses. The underpinnings of strategic management hinge upon
managers’ gaining an understanding of competitors, markets, prices, suppliers, distributors,
governments, creditors, shareholders, and customers worldwide. The price and quality of a
firm’s products and services must be competitive on a worldwide basis, not just on a local
basis.” 

Role # 10. Creating a Learning Organisation: 

Strategic management plays an important role in helping an organisation operate successfully
in a dynamic, complex environment. It helps the firms become less bureaucratic and more
flexible to be competitive in dynamic environments. It helps develop strategic flexibility—the
ability to shift from one dominant strategy to another. It helps to get competitive advantage. 

Strategic management helps the company become a learning organisation — which becomes
skilled at creating, acquiring, and transferring knowledge and at modifying its behaviour to
reflect new knowledge and insights. It demands everyone to be involved in the process of
actively learning and adapting. To adapt to change, foster creativity, and remain competitive,
strategic managers are creating learning organisations. 

Strategic management has become a self-reflective learning process that familiarizes

managers and employees with strategic issues and feasible alternatives for resolving those
issues. Fred R. David says, “A key role of strategists is to facilitate continuous organisational
learning and change.” 

R. T. Lenz writes, “Remember, strategic management is a process for fostering learning and
action, not merely a formal system for control. It stimulates creativity and builds a culture of
learning”. No organisation has unlimited resources. There is no such thing as a permanent
competitive advantage. Therefore, no organisation can pursue all the strategies that
potentially could benefit the firm. Strategic decisions thus are always made on the basis of
continuous learning. 

Strategic management shows employees “paths of learning”. It builds learning organisation to

avoid stagnation through continuous experimentation and learning. It suggests changes to
strategies and programmes to take advantage of environmental shifts. It creates organisations
that are willing to experiment and are able to learn from their experiences.