Concept Of Strategic Management: Approaches And Advantages

Overview of Strategic Management

Question:

Discuss about the Approaches to Strategic Management.

Strategic management is a process to achieve the organisational goals and objectives by implementing strategies which can assist the management in fulfilling the requirements to compete in the market (Freeman, 2010). It is the formulation of apt strategies that are taken into account after considering the available resources of the organisation as well as analysing the factors that influence the organisational external and internal environment. Strategic management facilitates the required structure to the organisation that entails goals, mission, vision, culture, policies and standards. This research is aimed to provide the description on the concept of strategic management that enhances the productivity and performance of an organisation. Along with this, the sustainable development of the organisation by improving the resource and strength in the market has also been examined in this study. Furthermore, the strategic management prominently emphasises on attaining the competitive advantage that helps an organisation in facing all the unforeseen happenings of future because of market fluctuation as well as the uncertainties of external forces like strong competition from rivalries (Thompson and Martin, 2010).

Additionally, the study illustrates the concept of current standard linear strategic management and drawbacks pertaining to it. In this research paper, alternative modern approaches of strategic management have also been explored that is sustainable approach, dynamic capability and stakeholders approach (Freeman, 2010). Besides this, the study is based on the real life example to enhance the comprehensive understanding on the strategic management and its different approaches used in the organisations. Not only, the study includes advantages and limitations of strategic management but also viability and process of incorporating approaches in the organisation has also been highlighted.

The current standard linear approach of strategic management is a conventional strategic planning model which enables an organisation to develop strategic and effective vision, value and mission prospects of the organisation in a sequential basis. Furthermore, it helps in outlining the objective and goals of an organisation along with formation of strategic action plan to execute these strategies aptly. However, the strategic management linear approach has some limitation like it is not preferred by all types of organisations especially where the flexible strategies are followed as a natural planning process (Thompson and Martin, 2010). Additionally, it neglects the basic strategic management concept of uncertainty and risk management. Thus, in order to solve these issues the traditional and conventional approaches like current standard linear approach of strategic management should be replaced with the effective and appropriate modern approaches to gain success.    

Three different approaches to strategic management

The strategic management approaches will enhance the area to cover more management functions of the organisation appropriately (Sminia, 2014). It helps in maximum utilisation of resources as well as act suitably according to the internal and external environment analysis of the organisation. Alternative approaches also access different ways to maintain the competitiveness in the organisation. Therefore, in the following section three approaches of strategic management has been described briefly as follows:   

Stakeholders are the people who impacts or get affected by the achievements of the organisation (Eden and Ackermann, 2013). Stakeholders approach states that considering all stakeholders whether internal or external and essential factors that embrace the social expectation, the strategies of the organisation are being developed.  The stakeholder approach is a pragmatic approach and it analyse the relation between management and the surrounding environment of the organisation. Stakeholders are the significant resource of the organisation that helps business in development and advancement of the organisation (Eden and Ackermann, 2013). This approach can be implemented in any of the organisation and management system as it is a simple concept that generates new ideas and trends that suits every organisation.     

Limitations of Traditional Linear Approach

Advantage

• This approach helps the human resource management and provides beneficial influence in the decision making process of management.
• It enables to use and cater the best services with the help of human resource which is the most reliable resource of the organisation (Spender, 2014)
• Furthermore, it assists the management in incorporating transparency in the financial and other operations of the organisation that enhances ability of effective decision making
• It builds trust of the stakeholders and improves employees loyalty to the organisation

Disadvantage

• The stakeholder’s involvement in the strategies and management often takes time which is not suitable if a project has a definite timeline
• It also facilitate accountability in supervisory setting that aggravate issues in management as supervisors prime role is decisive action and an effective leadership skill that may offend stakeholders (Spender, 2014)
• Stakeholders opinions and engagement will become one of the most crucial aspect and if advices of stakeholders are not considered while decision making it negatively impact development of the organisation.

Example

Stakeholder approach is used by many multinational organisations to improve their decision making and strategic management such as Coca-Cola Company (MacIntosh and Maclean, 2014). It involves the strategic approach in its mission, standards, policies and values to achieve its goals and objectives. The strategic approach helps the company in providing support of stakeholders such as consumer’s, suppliers, bottling partners, government, shareholders, trade partners, NGO’s associations and communities in international level.  In addition to this, the engagement of stakeholders in the company mission has set example for other companies national and internally on how stakeholders improves the management of an organisation.

The impact of this approach is felt on the environment and community positively around the Coca-Cola Company. It has enhanced the reputation of the company as well as increased the standards in the corporate social responsibility which ultimately helped the company in attaining the competitive advantage (MacIntosh and Maclean, 2014). It also ensures the effective collaboration with its business partners regarding water resources and ecosystem protection. In addition to this, the human resource management problems arise due to integration of stakeholder’s approach in case of any potential management dilemma.

The dynamic capabilities of the company is pertaining the technological changes and adoption as well as source of financial resources (Ansoff, 2016).  It helps in managing the financial requirements by arranging funds and capital for the organisation promptly, the dynamic capability supports the skills of competitive edge in the target market. Therefore, prominent market position of organisation in the market helps in creating more opportunities related to finance acquisition. It also increases managerial productivity and performance as dynamic capabilities framework allows the integration of technological change in the managerial system (Ansoff, 2016). Company Competencies are being used for procurement of the financial assistance by using effective firm-level approach in strategic management.

Advantage

• Dynamic capabilities help in organising and structuring human resource management operations more effectively. Furthermore, it facilitates the innovation and integration of information technology or advance technological change in the management style and strategy orientation to the organisation (Harrison and St. John, 2013).
• These changes of technology and systematic management aids the company in attaining the competitive advantage by promoting sustainable development in the management in the target market
• It facilitates renowned reputation to the organisations which helps it in capturing the attention of financial investors and provides various links and development in sources of wealth creation.
• The technological support through dynamic capability approach increases the flexibility, transparency and accuracy of management operations. Not only, it also helps in the innovative and creative methods of marketing but also provide various research opportunities for better, advanced and qualitative product development.

Disadvantage

• Due to more focus on establishment of technology acquisition and wealth creation through different sources management losses adoptability skill that create problem and substantial challenges in the long run.
• Incorporation of technology and modern changes in the management operations is now taking place of traditional functions in the organisation. Thus, it can threaten the existence of functions in the management system of the firm.
• The technological changes give massive dependency to the modern technology. Management operation will get hampered if the technology is not verified (Harrison and  John, 2013). With each development and changing environment the verification is becoming essential which is leading to dependency in the technological capabilities and lacking to the management sustainability.   

Example 

Apple Inc and IBM companies are the real example that has applied technological changes in their business operations from the start and the dynamic approach in strategic management is helps them in attaining the competitive advantage in the global market (White, 2004). Moreover, the dynamic approach gives the sustainability and growth to IBM and Apple Inc in the electronic industry with the execution of strategic innovation and creation in the operations as well as product line. Today, both the companies are leading the international and national markets of technology sector with the support of research and development department.  IBM is the technological trend setter and Apple Inc is establishing technological innovation in the product lines by producing specialised electronic devices (White, 2004).  Hence, dynamic capability approach in IBM and Apple Inc ensured the sustainability growth and competitive advantage in the market with the help of technological innovation.

Sustainability approach provides long term capabilities in the current business environment that helps in growth and development (Hill, et al. 2016). The concept of sustainability has provided new strategies and focus to the organisations to provide long term success. The most predominant element of sustainable development is economy, society and environment which are emphasised when creating any action plan or strategy. The goals and objectives of the organisation also based on the long term aspects that provide sustainability in the environment (Hill, et al. 2016). Along with this, it is very eminent approach that gives recognition in the market and goodwill to the organisation.   

Modern Approaches to Strategic Management

Advantage

• The sustainable approach ensures the support of society, economy and environment that helps the organisation in improving market effectiveness. The prime focus of the organisation incorporating sustainability prospect to the goals and objectives that gives better hold over the market (Mainardes, 2014).
• It helps the company in establishing goodwill in the market and achievement of competitive advantage over other competitors.
• Moreover, sustainability approach reduces the level of future uncertainties for the organisation pertaining to the risk of environment, society and economy.

Disadvantage

• The sustainability approach comprise of many factors that cost the company high expenses to reach the social expectation. It also amplifies the pressure of work over the existing workforce (Mainardes, 2014).
• Additionally it is become compulsory to the entire organisation in the international level to pass the standards. In order to protect from legal obligations organisation is implementing the sustainable approach of strategic management.

Example

Samsung is the perfect example of acquisition of sustainability approach in the strategic management. Earlier the company was focused on the product innovation but now it has shifted to customer’s service (Hill, et al. 2016). The company is now emphasising on its product development through eco system and environment friendly technology. The company maintains international human resource management policies and standards and has diversified employees in its organisation to promote people welfare.

Conclusion

Viability of Each Approach

Different types of market researches to examine the customers and employees expectation from the company is being determine in case of stakeholder’s approach before executing and formulating it in the organisation. Ecology, economy and environment are considered to make the technology changes and to attain competitive edge in the market in case of dynamic capabilities and sustainability approach.  Thus, market is the critical place to identify the suitable approach applied in the operation of an organisation.

Suggested Benefits

The stakeholders approach facilitates the employee loyalty and establishes good relationship between management and employees. It benefits in resource security as well as improves transparency and accountability in the management.  The competitive advantage is achieved through dynamic capabilities by ensuring technological innovation in the work culture of organisation. The sustainable approach ensures the goodwill of the company in the market that helps in increasing its effectiveness and performance.

Implementation Issues

In case of stakeholder’s approach the top level management only emphasised on their own decision and its enforcement, no consideration of normal workforce is being given. The reason behind that is top level management does not want to give more importance to the voice of workforce so that they do not lose their power of decision making. In case of dynamic capabilities, it is difficult for the employees that are old in the age and new employees to cope up with the technological environment and changes related to it. Legal obligation and expenses are the biggest shortcoming in case of sustainable approach in formulation and implementation of strategies as per social expectations.

Limitations 

Fear of loss of control in the decision making process, in case of stakeholders approach fails the corporation of top level management with other stakeholders. And this attitude is the biggest drawback to the whole purpose of the application of this approach. These strategies are only to provide significant opinions about the establishment of structure of the organisation, but do not allows controlling the final decision making. Lack of finance and workforce limits the dynamic approach to ensure the applicability in the small organisations. Again in the sustainability approach high investment and capital is required that is difficult for every organisation. Therefore, the consideration of apt strategic management approach is selected on the basis of above factors.

References

Ansoff, H. I. 2016. Strategic Management. Springer.

Eden, C., and Ackermann, F. 2013. Making Strategy: The Journey of Strategic Management. SAGE.

Freeman, R. E. 2010. Strategic Management: A Stakeholder Approach. Cambridge University Press.

Harrison, J. S., and  St. John, C. H. 2013. Foundations in Strategic Management. 6th ed. Cengage Learning.

Hill, C. W. L., et al. 2016. Strategic Management: Theory: An Integrated Approach. 12^th ed. Cengage Learning.

MacIntosh, R., and Maclean, D. 2014. Strategic Management: Strategists at Work. Palgrave Macmillan.

Mainardes, E. W. 2014. Strategy And Strategic Management Concepts: Are They Recognised By Management Students? Business Administration and Management 1(18), pp 43-65.

Sminia, H. 2014. The Strategic Manager. Routledge.           

Spender, J.-C. 2014. Business Strategy: Managing Uncertainty, Opportunity, and Enterprise. OUP Oxford.

Thompson, J. L., and Martin, F. 2010. Strategic Management: Awareness & Change. Cengage Learning.

White, C. 2004. Strategic Management. Palgrave Macmillan.