Formality refers to the degree to which participation, responsibility, authority, and discretion in decision-making are specified in strategic management. Formality is an important consideration in the pursuit of strategic management, because greater formality is usually positively correlated with the cost, comprehensiveness, accuracy, and success of planning. A number of forces determine how much formality is needed in strategic management. The size of the organization, its predominant management styles, and the complexity of its environment, its production process, its problems, and the purpose of its planning …show more content…
Strategic planning helps management understand the current situation. This in turn allows management to plan for the future. In a world of rapid change, it has become imperative for management to think strategically (plan for the future). And since the rate of change seems to be escalating, the importance of strategic planning continues to grow due to the high turbulence of operating environments as evidenced by the unexpected changes occurring throughout the world, be it natural disasters, wars, economic booms and downturns among others. However, as results show the best managed companies tend to engage in continuous systematic strategic planning.
Strategic planning by an organization in a global environment mostly denotes the necessity of understanding the interrelatedness of processes that allow border crossing inside and outside the organization. Thus, monitoring change in the environment and adjusting internal operating processes to meet the challenge which in turn, leads to new products, markets and in the process gaining competitive advantage. Competitiveness is now a global fact of business life and all organizations must plan globally. Even if the organization in question markets its products only domestically, its strategic planning must take into consideration the nature of the industry worldwide, the politics of national government or international issues, its regional and cultural environment, financial and global trade