Any system or approach or line of thinking has both brighter and darker side. Strategic management has edge over general management in that it is able to prepare an organisation to be a fit a perfect-fit working in an environment which is constantly changing its colours threatening the units with possible consequences. However, all is not well with the strategic management. There are certain limitations which are to be taken into account before one is going to invite strategic management and its practices with principles. Experts pin point some serious limitations which are outlined as under :
Limitations of Strategic Management
(1) It Inflicts Rigidity in the Organisation – Some claim or complain that strategic management brings in rigidity in the organisation through the strategic planning process. Under the umbrella of strategic management, the strategies are selected and implemented in a given set of environment-both external and internal. When these variables are taken into account, the organisations set different parameters for its functioning. Thus, organisational design may be changed, new rules and procedures are brought in, resource allocation pattern may change. So over or later, the employees are accustomed these changed para-meters. However, the changing strategies warranted by changed environment, bring in change is not easy. It is the internal inflexibilities encountered such as human and procedural, making strategic management in-effective and discourging.
In way, it true that it is really very genuine complaint. However, this problem of rigidity can be overcome by encouraging open-systems approach in strategic management.
Here, open-system approach means that managers take into account the environmental variables namely, technological, social, cultural, legal, political, economic and physical and also the internal variables namely, how the organisations function in the changed environment-keeping alert and making continuous adjustment. There is need for balancing the ever changing external variables and the strategy refinement that encourages the perfect directions of organisation’s internal variables and resources. That is, there is no frigidity allowed to concentrate and becoming a stumbling block for progress. The organisation is made so flexible that it move up with the changing external environment. That is, the firm’s strategic planners and implementers are keeping pace with the changes that are taking place externally, and hence, internally.
(2) Its Inadequate Appreciation – The real problems crop up when the managers-now called strategic managers-not appreciating fully the implications and results of strategic management. First, they fail to isolate strategic work form work in general. Many managers give much importance to working or operating problems than the real strategic dimension of work in general. Further, they are more interested in short-term analysis than long-term-analysis of operations. The benefits of strategic management are not measurable by short term financial results. It is only long term assessment that mirrors the achievements of strategic management. This limitation can be overcome by proper implanting of concept of strategic management and its contributions in terms of both financial and non-financial terms. They are to be told the very ABC of strategic- management to be longer vision, horizon and future orientation rather than wasting their valuable time, treasure and talents on short-term achievements. The managers should be brain-washed turning them ‘mere managers’ to ‘strategic managers’.
(3) Ever Changing, Complex and Dynamic Environment – As management is getting refined and reinforced from general management to strategic management, the environment is changing its colour with new complexities and intricacies. The pace of change is faster than it was in the past; the social and technological changes are causing wide variation and the steps taken by the government regulatory measures in the areas of licensing monopolies, restrictive trade practices, forex regulations on one hand and other policies towards business in facts of monetary, physical and fiscal policies are inconsistent. What is there today, is not there tomorrow. Government policies, in India come in to effect at ‘Zero hours’ without pre-notice.
A simple case of SAARS. virus has created a panic in the minds of people with mere resources or controlled publicity. Once upon a time, terrorism was a wonderful word to hear-but it has thunderous effect on business. In case are business in affected, because of backward and forward linkages, the whole business environment changes beyond control. These ‘bundhs’ and ‘strikes’ have badly affected the entire economy and each segment is being influenced. The cost of one-day all India bandh works out 100 crores in rupees, invisibles apart. The environmental changes are so deep and fast that it is almost impossible to predict it. Strategic management is said to be effective tool in reading the future and adjusting the internal organisation between its internal variables and external challenging variables.
The knowledge of the future trend in the environment is lacking; even if one, has, there is no guarantee of its accuracy. Thus, strategic management also fails. On its own effective boasting of being strategic. It is true that environment is vibrant, complex and dynamic. However, if the variables are more predictable, one can not do away with strategic management. It is like a touch in hand in the dark to find out what is missing than mere groping in dark without it. It is well-known that future is uncertain. However, we cannot sit with crossed fingers. Something has to be done. Only thing is that, it more time to refine the trend reading; the technology and the knowledge should be blended in tracing the future. Hence, we can not do away with strategic management, as it is the latest weaple, unless and until we get better way of managing the future.
(4) No Match in Strategy Formulation and Implementation – This is considered to be another limitation that there is wide gap between strategy formulation and its actual implementation. The strategies are framed and implemented at three levels namely corporate, business and operational. Take the case of the strategies framed at the top level. Let us take the top management has to be very-very stringent and objective in framing the strategies. However, persuasive, articulate and specific strategy of top management will mean different thing to different people at middle level and the bottom of the enterprise. These strategies framed cannot be taken for granted that everyone has understood the unity of thought, purpose and action. Management is a joint action and so long as groups are there, divisions and industrial differences are there, it is almost impossible to implement them in toto. Organisational problems can not be solved by any kind of management. One should accept this and there is no exception to that of strategic management. From distance everything looks nice and bewitching. Micro- scopic and spot-light view says that the things are not as they look from distance.