Page 159 - Fundamentals of Management Myths Debunked (2017)_Flat

158 Part 2 • Planning
Why Is Strategic Management
Important?
Unlike many other mall-based clothing chains experienc-
ing disastrous sales declines, retailer The Buckle Inc.
suffered from weak sales only during the last stages of
the most recent economic downturn. And being smart
about strategies, it didn’t take long for Buckle to regain its
footing. One important element was its location strategy.
Only a few of its 450 stores were located in states that
suffered the worst from the recession. Another part of
its strategy was offering customer perks such as custom
Ton Koene/Newscom customer service enhancements like this helped differen-
pants fittings and free hemming on its jeans. Focusing on
tiate The Buckle in an overly crowded teen clothing mar-
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ket. These managers obviously understood why strategic
management is important!
Zhang Xin, co-founder and CEO of SOHO Why is strategic management so important? One reason is that it can make a difference
China, poses in front of skyscrapers the firm in how well an organization performs. Why do some businesses succeed and others fail, even
built in Beijing. Xin and her husband started
SOHO with a narrowly focused and highly when faced with the same environmental conditions? Research has found a generally positive
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successful strategy of developing commercial relationship between strategic planning and performance. Those companies that strategi-
real estate in prime locations in Beijing and cally plan appear to have better financial results than those organizations that don’t.
Shanghai that features architecture reflecting
the spirit of a changing modern China. Another reason it’s important has to do with the fact that managers in organizations of all
types and sizes face continually changing situations (recall our discussion in Chapter 2). They
cope with this uncertainty by using the strategic management process to examine relevant
factors in planning future actions.
Finally, strategic management is important because organizations are complex and
diverse and each part needs to work together to achieve the organization’s goals. Strategic
management helps do this. For example, with more than 2.2 million employees worldwide
working in various departments, functional areas, and stores, Walmart uses strategic manage-
ment to help coordinate and focus employees’ efforts on what’s important.
It’s important to note that strategic management isn’t just for business organizations.
Even organizations such as government agencies, hospitals, educational institutions, and
social agencies need it. For example, the skyrocketing costs of a college education, competi-
tion from for-profit companies offering alternative educational environments, state budgets
being slashed because of declining revenues, and cutbacks in federal aid for students and
research have led many university administrators to assess their colleges’ aspirations and
identify a market niche in which they can survive and prosper.

Watch It 1!

If your professor has assigned this, go to the Assignments section of mymanagementlab.com to
complete the video exercise titled Rudi’s Bakery: Strategic Management.

What Are the Steps in the Strategic Management Process?

The strategic management process (see Exhibit 5–2) is a six-step process that encompasses
strategy planning, implementation, and evaluation. The first four steps describe the planning
that must take place, but implementation and evaluation are just as important! Even the best
strategies can fail if managers don’t implement or evaluate them properly.

strategic management Step 1: Identifying the organization’s current mission, goals, and strategies. Every
process organization needs a mission—a statement of its purpose. Defining the mission
A six-step process that encompasses strategy forces managers to identify what it’s in business to do. For instance, the mission
planning, implementation, and evaluation
of Avon is “To be the company that best understands and satisfies the product,
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mission service, and self-fulfillment needs of women on a global level.” The mission of
A statement of an organization’s purpose
the National Heart Foundation of Australia is to “reduce suffering and death from