Discuss about the Approaches of Strategic Management.
Strategic management can be defined as reorganization and the details of the strategies which are carried out by the managers of the company in order of achieving growth and good performance for the particular organization (Hussler et al., 2012). By seeing the profits if the company and the average profitability of all other companies in the same market, it can be analyzed as to how much competitive advantage a company possess. This management is also termed as the bucket of decisions and actions that managers work on and decide the outcome of the organization performance. For this, a manager should have a profound knowledge and analysis of the organizational environment as to how competitive it is for taking the right decisions. For conducting the analysis of the environment, SWOT analysis is helpful as the organization comes to know about the internal Strengths and Weakness and Threats and opportunities that a company should look after (Rastislav & Silvia, 2015). Strategic Management is actually a continuous process which monitors and controls the business. It also evaluates any organization’s competitors and the goals and strategies for coming up to the level of the potential competitors. After the goals set, the strategies are revaluated for determining the way to implement them and whether they would be successful or not. There are a few approaches of Strategic Management (Angriawan et al., n.d.). This report focuses on three of the strategic management approaches out of the few. They are Stakeholder Approach, Dynamic Capability and Sustainable Practices approach. All these approaches being a part of strategic management favor the organization by one or the other strategy for determining the competitive advantage (CARRAHER , 2014).
In the late 1980’s, Stakeholder Approach was introduced in the domain of business management. At that point of time, the major objective of this approach was to determine the force which is exerted on managers or other stakeholders constantly and strength of the change that is being executed in the environment (Zafar et al., 2013). The traditional frameworks of the strategic development was not providing any chance of making or creating opportunities which are different and new at the time of change in situations. Then those traditional norms of this management were rewritten by taking help of the conversions in the economic origins of the literature which were related to the strategic management (Mcvea & Freeman, 2001). With those redefined norms, new concepts were being directed to the defined stakeholders and also the implications with respect to the organization. All the stakeholders were being identified as singles or in groups which are responsible for the effected performance of the company or have the impact on the company (D’Aveni et al., 2008). The elements which were needed for the research in this approach consist of the processes like designing and implementing of the actions that refers to the needs of the individuals and the groups with having the considerable stake in the organization (Freeman, 2004).
Stakeholder approach is majorly linked with the goal of integrating the needs and the relations of the employees, users, shareholders and other groups who are important for the company as all these people are linked with the long-term growth of the company (Ackermann & Eden, 2011). The features of this approach with respect to the strategic management would be to sustain and determine the feasible application of the approach. It is always characterized by the existence of the framework which is single for the creation and also is noted for characters like flexibility and adoptability the strategic archetypes which are changing. This flexibility will prove to be helpful for the limitation of the redundancy of continuous need of the solutions for resolving the firm’s problems pertaining to the environmental shifts.
This approach concerns with the management instead of any sort of planning. The new or modern approach believes in the development of the various new strategic directions for the firm instead of prediction of the future and designing various action plans for the firm. On the other hand, the focus on the effect of the company in the environment and vice versa forms the important marker for this sort of approach (Harrison & Abreu, 2015).
Issue of sustainability or the capability of survival in a certain type of market environment should be referred through identifying the entities that can support the existence of the firm instead of framing strategies for optimization of the current output levels. Entities that majorly affects the organization’s sustenance consist of the stakeholders and the implications of the relations with them. Hence, the new approach will always be responsible of the scope for many objectives and relations instead of the enhancement of the interests of stakeholders in the whole. The indications of the stakeholder approach are towards identifying the few stakeholders account for the firm’s liability to exercise the strategic practices in coordination with the beliefs that are linked with the various stakeholders. It is also domineering that the link with the different set of stakeholders are responsible for the success of the firm. This approach also takes a structure which is flexible and facilitates perspective and detailed ways and therefore, allows a detailed sketch of the economical and moral traits of the firm’s atmosphere. One more important characteristics of this approach is seen in the analysis of the behavioral preferences of the stakeholders instead of understanding the perspective of the stakeholder’s role. Lastly, this approach can easily be characterized by a method of integration which is adopted for the formulation of the strategy. There included a concern of different stakeholders in strategies with wavering stress on different stakeholders in this approach is liable for satisfying the interests of stakeholders concurrently.
Implementation of this approach can be seen by the example of Coca Cola. Coca cola assumed about the approach of dialogue with the stakeholders was the important contribution towards the maintainable improvement of the firm. Within the organization, when the framework of coca cola was built, the firm assumed the formal and informal approaches in order to involve the stakeholder groups. The link of the company with the stakeholders was seen on different levels like local national and regional where firm was involved in encouraging dialogues with the suppliers and the consumers (Mahoney , 2013). Coca cola also has a good relation with the World Economic Forum and the UN Global Compact as initiatives for solving global problems and hence, satisfying many stakeholder goals. Involvement which is very active in the firm with different external stakeholders has allowed the firm unite the expertise and talent of many individuals and firms. These types of initiatives also benefitted the promising growth of measured for providing social and environmental demands of the environment of the business. The case of coca cola if taken in the implementation of strategic management should be considered as an important attribute for tightening the stakeholder relations in between the communities in which the firm operates. Generally, it means adopted for the strengthen ties with the stakeholders consist of reference to the users, unions of trade and industrial as well as policy organizations, staff, suppliers and NGO’s and Government policies. Various modes of communication consist of the planning and projection for bottling the partners. Communication with the users are referred through market investigation and studies. Foreign Investment advisory councils and also as retrieval initiatives form the base of communication between the firm and government authorities if seen from the perspective of the stakeholder administration. Staff are the assets in the firm who can regulate the possible prospects for sustainability of the coca cola. Hence, staff should be engaged with the help of the employee communications, hotline, ethics, senior executives and individual plans. The firm keeps on working on differentprolific facets of strategic management and approach for acquiring reliable outcomes like feasible collaborations with the locals.
This approach for strategic management is taken for acquiring the market which is competitive in a specific environment. Operations which are flexible in a company in the global market should be appreciated with quick answers in the changing environments. The capabilities which are modern should be increased with involving of scope for dynamics and realization of the actions for identifying new competencies in changing atmosphere. Issues which are strategic have become complexed with time since the new setbacks have emerged like hostile competition and new competencies (Kindström et al., 2012). The profitable investments areas are taken to be as uncertain decisions which are being faced by the managers. In a few cases, all the managers track a particular trail for the growth with the competency which consists of an explanation of capitals which are available and the course of act in the future. Moreover, this accounts for rigidity of chances in the future and hence, restrictions on capabilities needed for the summary of the dynamic approach (Ferdinand et al., 2004). The utilization of the references in this approach the capability in the strategic management is helpful in the abstraction of the extreme prospective from current abilities in the external and internal context as well. To renew the competencies and acquisition of capabilities appropriate to the firm are deep with results of this approach as seen with respect to strategic management. The ability of the employees to adopt new challenges would work in service of the firm and also would serve as a factor of the plasticity of managing with the rising associations in business (Schwarz et al., 2010).
Apple can be considered as a good example of this approach in strategic management. The production and the marketing of the firm is planned to refer the complicated atmosphere of struggle prevailing in the province of high-technology industries. Apple went successful in the market which was dominant enough by companies like IBM and Microsoft could be accredited to focus of Apple’s management strategy on innovation of the product (Gizawi, 2014). The strategy which Apple followed did not approve of the emphasis of strategy that explains the scope in acquiring dynamic capabilities. As a result of this approach in the example of Apple is been seen in different devices such as iPad, iPod and iPhone series that are only advertised just on the basis of new features in every product of Apple. The framework in this dynamic capability assist in the integration of experimental and theoretical base which is linked with strategic management with reference to changing preferences of the user and the environment of the market.
Business firms are founded with the primary goal of coming profit from the particular amount of asset. The sustainability of the firm when it is in the inception phase is greatly dependent on economic outcomes acquired by the firm. The revenue is financially earned by the firm allows it to recover its primary investments and continue the operations (Petrini & Pozzebon, 2010). Though, the firm too required to contemplate other critical aspects like strong link with the locals and prospects for sustainability in the certain environment of the market. The chance of sustainable practices consists of cultural initiatives, protection of environmental measures and CSR. For the improvement and the strengthening of the relationships with the stakeholders as well as for laying the foundation of the long term sustainable firm in a very specific environment, it is necessary to culturally interact and have experiences with the market (Pappas, 2012). The development principles for sustenance are formed on the foundation of the cumulative realization of this approach in strategic management. These principles which are linked with the analysis of the stakeholder’s thinking of the strategy, policies and goals framed for the improvement and the execution of the implemented strategy and flexible corporate culture, reporting systems, culture performance and internal monitoring processes. Different elements are considered and referred to above managers who are able to acquire sophistication in each phase of strategy development. Focus on sustainability could be taken from a comprehensive review of the stakeholder’s interests and their impact on the prospects for the development of the organization. The formation standards of strategy and apt methods for obedience with regulatory outlines suggests in calculating the various goals for sustainable growth. The managers who are senior and other executives are hugely linked with the sustainable practices approach in strategic management. Foundation of the implementation plan with the goals and policies would assure that staff is assured of the requirements estimated by the firm. Various implications of the culture of corporate for inducing sustainable practices approach in management also have worked towards accomplishment of cognizable exercises for growing relations in the outer and inner environments of the firm (Laitamaki et al., 2016).
The best example of this approach is Proctor and Gamble. The new framework is hugely linked with the production of the sustainable and unique products and services which accounts for approx. 11% of the combination of sales of the firm in the period ranging from 2007 to 2012. The product characterized sustenance via their applications in decreasing of water and energy use, material which is used for packaging and transportation. The focus on the usage of the recyclable resources and energy in the strategy of the firm allows the firm to raise the image of the company which is answerable to the environment shifts. Hence, it can aptly be concluded that linking of sustainable practices in the strategic management in the structure of the firm would labor as an apt action in addressing the changed necessity of the environment of business (Brons & Oosterveer, 2017).
Conclusion
This report focusses on the critical references for the alternative approaches for the strategic management. The strategic management is being adopted as the initial resource for carrying out the plans or goals of the firm in real time in real world. Though, the decreased performance of the liner models of the formulation of the strategy is creating the need for involvement of new approaches in formulation of the strategy and management. The three approaches: stakeholder, dynamic capability and sustainable approach have been mentioned in the report with the example of each approach. Even when the advantages posed by each approach to strategic management, they are identifying with flaws. The approaches are based on selective portions of literature and their application in diverse strategic management contexts requires further research.
References
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