Reasons for Failure of Strategic Management
Strategic Management – Reasons for Failure
Following are the important reasons for failure of Strategic Management:
Change Dislodges Strategic Decisions:
Even the most technically perfect strategic plan will serve little purpose if it is not implemented. Many organizations tend to spend a large amount of time, money, and effort on developing the strategic plan, treating the means and circumstances under which it will be implemented as afterthoughts! Change comes through implementation and evaluation, not through the plan. The turbulent change dislodges the strategic plan and decision rendering the strategic choice futile.
Presence of Bureaucratism:
Strategic management must not become a self-perpetuating bureaucratic mechanism. Lack of autonomy in the strategy implementation makes the strategy failure. Therefore, strategic management must not become ritualistic, stilted, orchestrated, or too formal predictable, and rigid. A key role of strategists is to facilitate continuous organizational learning and change.
Strategic Decisions Lack Psychological, Social and Political Dimensions:
Most of the strategic decisions give less or no importance to psychological feelings of the persons involved. It also lacks social interaction which is essential for success of the strategy. Strategic decisions need to consider political, information infrastructure and administrative procedures supporting it.
Closed-Mindedness of the People Involved in Strategy Implementation:
An important aspect of effective strategic management open-mindedness. But the people who are responsible for strategy implementation are not ready to consider new information, new viewpoints, new ideas and new possibilities. To remove this flow, all organizations members must share a spirit of inquiry and learning.
Scarce Resources for Implementing Strategic Decisions:
No organization has unlimited resources. No firm can take on an unlimited amount of debt or issue an unlimited amount of shares to raise capital. Therefore, no organization can pursue all the strategies that potentially could benefit the firm. Strategic decisions thus, always have to be made to eliminate some courses of action and to allocate organizational resources among others.
No Trade-Off between Long-Term and Short-Term Considerations:
One of the reasons for the failure of the strategic management decisions is lack of trade-offs such as long-range versus short-range considerations, or maximizing profits versus increasing shareholders’ wealth. Strategy trade-offs require subjective judgments and preferences like that of social responsibility and organizational culture.
Lack of Objectivity in Formulating Strategy:
In many cases, a lack of objectivity in formulating strategy results in a loss of competitive posture and profitability. Subjective factors such as attitude towards risk, concern for social responsibility, and organizational culture will always affect strategy formulation decisions, but organizations need to be as objective as possible in considering qualitative factors.
Participants Shirking the Responsibility:
One of the lacunas in strategy formulation and implementation relate to the risk of participants shirking the responsibility of inputs in the decision-making process and the conclusions drawn thereafter. This may happen if those associated with the formulation of strategy are not intimately involved with the implementation of strategy. Therefore, assurances about the results of strategic decisions should be confined to the performance that can be achieved by the strategists and their subordinates.
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