Strategic management can benefit a firm by providing it with a plan to create a competitive advantage. There are, however, some disadvantages to strategic management as well. These disadvantages may be greater than the advantages of strategic management. Managers should, therefore, carefully consider these disadvantages before deciding to implement strategic management.
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Strategic management attempts to predict the future. Unfortunately, however, the future cannot always be predicted. A major environmental, political or financial crisis can create radically different results from those that the firm has anticipated. Additionally, predictions can be difficult to make in an environment characterised by rapid change. In these situations, strategic management can actually have a negative impact on a firm.
Lack of Short-Term Results
Strategic management is focused on long-term results. Investors, however, are interested in short-term results. Strategic management often involves creating short-term losses in order to create long-term value for the firm. These short-term losses can drive down the value of a business and can create a serious risk of bankruptcy.
In business, it is important to be able to react to the environment. Strategic management can make a firm extremely bureaucratic and rigid. This leaves the firm unable to react to changes, meaning that the firm cannot take advantage of opportunities or avoid threats.
Strategic management is not an easy task to take on. Developing and implementing a strategy for a business requires highly trained and specialised individuals. Most business strategists have a master's degree or doctorate in the discipline. These individuals can be costly to employ and as can outside consulting firms which specialise in strategic management.
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