Reasons Why Strategic Plans Fail And Limitations Of Strategic Management

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Reasons why strategic plans fail

There are many reasons why strategic plans fail, especially:

• When the company fails to understand the customer.
• The motive behind customer purchase.
• The real potential of the product.
• Inadequate or incorrect marketing research
• Failure to predict environmental reaction
• Reaction and plans of competitors.
• Competitive brands.
• Price wars.
• Will government intervene?
• Over-estimation of resource competence.
• Can the staff, equipment, and processes handle the new strategy.
• Failure to develop new employee and management skills.
• Failure to coordinate.
• Reporting and control relationships not adequate.
• Organizational structure not flexible enough.
• Failure to obtain senior management commitment.
• Failure to get management involved right from the start.
• Failure to obtain sufficient company resources to accomplish task.
• Failure to obtain employee commitment.
• Lack of well explained new strategy to employees.
• Lack of given incentives to workers to embrace the new strategy
• Under-estimation of time requirements.
• No critical path analysis done.
• Failure to follow the plan.
• No follow through after initial planning.
• No tracking of progress against plan.
• No consequences for above.
• Failure to manage change.
• Inadequate understanding of the internal resistance to change.
• Lack of vision on the relationships between processes, technology and organization.
• Communications barriers.
• Lack of information sharing among stakeholders.
• Exclusion of stakeholders and delegates.

Limitations of strategic management

Although a sense of direction is important, it can also kill creativity, especially if it is strictly enforced. In an uncertain and ambiguous world, flexibility can be more important than a rigidity of strategic compass. When a strategy becomes internalized into a corporate culture, it can lead to group think. It can also cause an organization to define itself too narrowly. An example of this is marketing myopia.

Many theories of strategic management tend to undergo only brief periods of popularity. A summary of these theories thus inevitably exhibits survivorship bias (itself an area of research in strategic management). Many theories tend either to be too narrow focusing to build a complete corporate strategy on, or too general having details shortage and too abstract to be applicable to specific situations. Populism or faddishness can have an impact on a particular theory’s life cycle and may see application in inappropriate circumstances. See business philosophies and popular management theories for a more critical view of management theories.

In 2000, Gary Hamel was the first to use the term strategic convergence to explain the limited scope of the strategies being used by rivals in greatly awkward circumstances. He exaggerated in lamenting that strategies converge, because the more successful ones are implemented blindly by firms like a template so they do not understand that the strategic process involves designing a custom strategy for the specifics of each situation.