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Limitations:
a. Complex Process
It involves continuous assessments of critical components, such as external and internal environments,
short-term and long-term objectives, organizational structure, and strategic control. These components are
interrelated, so a change in one component may affect other areas. For example, in an economic downturn,
a company may need to reduce its workforce. The external factor, which is the poor economy, changes the
internal environment, which is the number of people employed. Then, a company may need to review
objectives and make necessary adjustments. All of these factors ultimately influence a companys
management, leadership and structural systems, which have a bearing on decision-making.
b. Time Consuming
Managers spend a great deal of time preparing, researching and communicating the strategic
management process, which may impede day-to-day operations and negatively impact the business. For
example, managers may overlook daily issues needing resolution, and inadvertently cause a decrease in
employee productivity and short-term sales. When issues are not resolved in a timely manner, higher
employee turnover can result. This could force a company to redirect critical resources, putting strategic
management initiatives on a side track.
c. Difficult Implementation
The implementation process requires a clearly communicated plan, implemented in a way that requires
full attention, active participation, and accountability of not only company leaders, but also of all members
across the organization. Managers must continuously develop and improve synergies among employees to
ensure buy-in and to garner support for the companys objectives and mission. There are instances where
this can become particularly challenging. For example, if a manager was involved in the strategic
formulation process, but not equally involved in the implementation process, he in turn may not feel
accountable for decisions made.
Although strategic plans help reduce uncertainty in meeting long-term objectives, the planning process
itself provides opportunities for missteps. An organization needs to anticipate the future, which involves
various degrees of change as well as risks. In order to avoid pitfalls, managers need to have the right skill
sets to plan the strategy and mitigate risk factors. For example, managers should monitor as well as
develop business contingency plans to address possible future changes in the external environment, such
as market conditions, competitive forces, and economic factors that may negatively affect the business.
Advantages:
2. Establish direction
Clearly defines the purpose of the organization and establishes realistic goals and
objectives consistent with the mission which can be clearly communicated to
constituents. Provides a base from which progress can be measured, employees
compensated and boundaries established for effective decision making.