Levels, Advantages and Disadvantages of Strategic Management

Corporate Strategy (CRPS) Levels, Advantages and Disadvantages of Strategic Management

Levels of strategic management

We have already indicated that managers at various levels in the organization should participate in the strategic management process.

It is important to note that strategy implementation and deployment should happen at various levels within the organization,
For example, functional strategies are usually the responsibility of divisional managers, whereas corporate strategies are the domain of top management.
As implementation commence, care should be taken that managers not only understand the strategy but also commit to its implementation.
Performance management contracts and incentive schemes can be used to encourage ‘buy-in’ from all role players.

Advantages and disadvantages of strategic management

Several authors have identified advantages of strategic management. Mintzberg et al.(1998: 15-16) identified the following important advantages;

Strategy sets direction
Strategy focuses effort
Strategy defines the organization
Strategy provides consistency

Thomson et al. (2005: 6) expanded on this list and refer to the following advantages:

It guides the entire organization regarding the crucial aspect.
It makes managers, employees and other stakeholders more alert.
It unifies and orientates the organization to common goals and objectives.
It facilitates the evolution of the business model in order to achieve sustained financial success.

If the strategic management process results in the identification and implementation of appropriate strategies and it is benefited by increased profitability and resourcefulness.

There are, however a number of disadvantages to strategic management. Braduta and Sarbu name the following examples:

Strategic management cannot provide a precise and detailed picture of the future.
Strategic management is often reduced to a series of models that are removed from the reality that a company faces
Companies often think that the implementation of a strategy happens immediately after the C-Suite spoke.
Mistakes that are not corrected immediately, can have harmful and long term effects
Often the planning aspect of strategic management is overemphasized.
Often, executives plan a strategy and do not get involved in the implementation.
The promises made by the C-Suite are often not achieved because other stakeholders do not take implementation of the strategy seriously

In day to day practice, the authors often encounter the following disadvantages of strategic management:

There is a strong dogmatism in the plan. In other words, despite all the evidence that may indicate that a plan is not relevant, executives cling to the original plan and try to force fit the reality into the plan
Strategic plans are often vague or confusing, resulting in different departments, divisions, etc.
Strategic plans are often drawn up hastily and in response to a crisis. Thus, the symptoms and not the cause, of the situation, are treated
Strategic plans are often drawn up like a menu in a fast food restaurant.

Levels of strategic management

Strategic management happens at three levels:

Strategic level
Tactical level
Operational level

The strategic level

Strategic management represents the so called ‘ten thousand feet view’ of the business. This is the domain of the C-Suite, where the organization defines the organizational vision and mission. Also, at this level, the organization evaluates the impact the strategy will have on:

The target market
The main products or services on offer
The geographical area in which the strategy must operate
The overall survival; growth and profitability of the organization
The key elements of the organization’s self and public-image
The impact of the strategy on existing customers

Since the strategic level functions at the most senior levels of the organization, at this level the strategy is a set of general directional guidelines that the organization should embrace.

The tactical level

The tactical level of strategic management represents all the senior managers that report directly to the C-Suite.

This is the domain of the various different divisions, departments or business units in the organization.

Depending on the size of the organisation, this level may, or may not, include first level managers.
First level managers represent those to whom supervisors directly report to.
At this level, the guidelines, general plans and budgets that the C-Suite designed, are applied to specific situations.

In addition, at the tactical level, different responsibilities of the C-Suite’s strategy are assumed by each division, department or business unit.