Like other big-box retailers, Best Buy struggled to find its footing in a retail environment totally disrupted by Amazon. And like many of those retailers, Best Buy had to find a way to not just defend itself against Amazon, but to thrive. The company’s CEO, Hubert Joly, a positive and cheerful Frenchman, said the company’s turnaround strategy involved reshaping nearly every piece of the company’s business. From top to bottom, all aspects of the company’s business model were restructured. And the company’s revenues have beaten Wall Street’s expectations in six of the last seven quarters.15 This company’s team of managers obviously understood why strategic management is important!

Why is strategic management so important? One reason is that it can make a difference in how well an organization performs. Why do some businesses succeed and others fail, even when faced with the same environmental conditions? Research has found a generally positive relationship between strategic planning and performance.16 Those companies that strategically plan appear to have better financial results than those organizations that don’t.

Another reason it’s important has to do with the fact that managers in organizations of all types and sizes face continually changing situations (recall our discussion in Chapter 2). They cope with this uncertainty by using the strategic management process to examine relevant factors in planning future actions.

Finally, strategic management is important because organizations are complex and diverse and each part needs to work together to achieve the organization’s goals. Strategic management helps do this. For example, with more than 2.3 million employees worldwide working in various departments, functional areas, and stores, Walmart uses strategic management to help coordinate and focus employees’ efforts on what’s important.

It’s important to note that strategic management isn’t just for business organizations. Even organizations such as government agencies, hospitals, educational institutions, nonprofit arts organizations, and social agencies need it. For example, the skyrocketing costs of a college education, competition from for-profit companies offering alternative educational environments, state budgets being slashed because of declining revenues, and cutbacks in federal aid for students and research have led many university administrators to assess their colleges’ aspirations and identify a market niche in which they can survive and prosper.