Discuss about the Alternative Approaches to Strategic Management for Sociological Approach.
This report discusses about different alternative approaches of strategic management. Mainly three approaches are discussed and analyzed – the industrial organizational approach, the sociological approach and organizational change approach. In the beginning, the core concepts behind these three strategic management approaches are discussed. After that the application of the approaches are evaluated with the help of the case study of Woolworths Limited. The report also analyzes the effectiveness of the three strategic management approaches by identifying the benefits and limitations of the approaches. During this report, these three approaches are also compared and at the end of the report few recommendations are provided for better implementation or use of strategic management approaches.
Strategic management is a vast area of discussion. Ward and Peppard (2016) stated that the effectiveness of the strategic management process depends on the correct selection of strategic management approach. At the same time, it also depends on the skills and ability of the management team. There are several approaches of strategic management. However, here only three approaches are discussed below:
Industrial Organizational approach – This approach of strategic management is primarily based on the economic theory that focuses on solving the issues like, resource allocation, competitive rivalry and the economies of scale. David and David (2016) mentioned that the industrial organization approach of strategic management helps the business organizations to survive in the industry. At the same time, this particular approach also helps the business organizations in understanding the industrial relationship with the other companies (Grant 2016). This approach of strategic management assumes that the companies within a particular industry always try to maximize the profit percentage by taking rational action and maintaining the self discipline. The approach also suggests that the companies within a particular industry can achieve the competitive advantage by minimizing the cost level and maximizing the profitability (Rosemann and vom Brocke 2015).
Sociological approach – This particular approach guides the business organizations in managing the customers and satisfying them in a better way. The basic assumption behind this particular approach is that the organizations always try to satisfy their customers by showing proper behavior (Booth 2015). As per this approach, the human behavior is the main element that helps the business organizations to manage its business activities. This approach considers the management activities from the psychological point of views (Heizer, Render and Munson 2016). The sociological approach believes that the companies are the parts of the society and to achieve success, the companies must act as per the social norms.
Organizational change approach – The organizational change approach is adopted by the business organizations to bring some improvements in some difficult situations. This particular approach of strategic management uses different techniques of behavioral science. Engert, Rauter and Baumgartner (2016) stated that the organizational change approach of strategic management is used by the companies at the time of bringing some change in a systematic manner. However, Chen, Delmas and Lieberman (2015) commented that this approach cannot bring a sudden change, rather it takes much time to bring the change.
Therefore, from the above discussion, it can be said that the business organizations can achieve success or reach to their goals easily if they apply different strategic management approaches. Every strategic management approach provides the guidance to manage the business from a different perspective (Chang 2016). Hence, it is clear that in today’s competitive business world, the application of these strategic management approaches is essential.
As stated in the above discussion, the strategic management approaches are essential in current business context. However, the application of these strategic management approaches can be better understood if the business of Woolworths Limited is analyzed. At Woolworths Limited, the above-mentioned three strategic management approaches have been applied (Woolworthslimited.com.au 2016).
Woolworths Limited is one of the top most retail organizations in Australia (Woolworthslimited.com.au 2016). It indicates that the organization deals with high level of competition in the national as well as in the international market. In order to deal with the high level of market or industrial competition, the organization has applied the industrial organizational approach of strategic management (Woolworthslimited.com.au 2016). This particular approach helped Woolworths Limited to better management of resources and sustain in the competitive market by achieving the economies of scale. This particular approach has been applied by the company with the help of following strategies:
The above three strategies have shown how Woolworths Limited has applied the industrial organizational approach in its strategic management process. The management of the company has also adopted the sociological approach in the process of strategic management, which can be identified and understood by evaluating, the below strategies:
Along with the industrial organizational approach and sociological approach, the organization has also adopted the organizational change approach of strategic management. In the recent past that is in 2015, the company has changed its top management team (Woolworthslimited.com.au 2016). Before the change, the financial performance of the company was declining and the higher authority of the company identified that the aggressive takeover strategies of the management has pushed the company towards weak financial health (Woolworthslimited.com.au 2016). However, changing the higher management team could not be done in one or two days. It took much time to change the top level management team. The former CEO of the company resigned and at the same time, many board of director’s members of the company also resigned from their specific job role (Woolworthslimited.com.au 2016).
The new CEO of the company built a new top management team. The new team of the company aims to improve the financial health of the organization. The company became more conscious about their corporate tie up strategies (Bromiley et al. 2015). Along with that, the company has also rechecked the investment strategy. All of these changes have been done by the company by applying the organizational change approach. After applying this approach, the company has started to regain its profitability and financial health (Daft and Marcic 2016).
Therefore, in the above discussion, it can be identified that Woolworths Limited has adopted or applied three strategic management approaches. The company has applied each strategic management approach to improve separate areas of business operations and at the same time, it has been also disclosed that All of these approaches have helped the company in improving its performance level at different areas.
In the above discussion, the application of the three strategic management approaches has been evaluated. In the evaluation or analysis, it has been identified that the strategic management approached have helped the company to improve the performance standard. However, there are some areas where these strategic management approaches failed to make any change (Karepova et al. 2015). Therefore, before considering the approaches as perfect or effective, it is important to analyze the effectiveness by identifying the benefits and limitations of each strategic management approach.
The first approach that is industrial organizational approach is analyzed, then it can be identified that this particular approached helped the company to gain economies of scale in the market (Formentini and Taticchi 2016). The company has achieved profitability after implementing the economies of scale. At the same time, this particular approach has also helped the company to improve the profitability. However, Daft and Marcic (2016) mentioned that the industrial organizational approach of strategic management is beneficial for the large business organizations. In case of the small business firm, it is not possible to achieve economies of scale in the market (Monczka et al. 2015). Therefore, may be the industrial organizational approach has been effective for the giant organization like Woolworths Limited but it may not be that much usable for the small organization.
On the other side, if the sociological approach of strategic management is analyzed then it can be identified that the approach has provided several benefits to the Woolworths Limited (Cameron and Green 2015). This particular approach helped the company to improve its relationship with the customers. It became able to satisfy the customers in better manner. However, Kotler, Berger and Bickhoff (2015) argued that the approach is mainly emphasized on the relationship between the company and the customers. However, there are other stakeholders in the company, whose interests are conflicting. The sociological approach suggests maintaining good social behavior but if the interests of the stakeholders’ conflict and then it is very difficult for the company to maintain good behavior with all of the stakeholders (Monczka et al. 2015).
If the organizational change approach of the strategic management is analyzed then it can be said that this approach is very effective in bringing the organizational change in a systematic manner. This indicates that this particular approach acts like a change management approach (Cameron and Green 2015). However, this approach has also some limitations. This main limitation of the approach is that the approach is very time consuming. The organizational change approach takes much time to bring change in the organization. However, in this context, Pearlson, Saunders and Galletta (2016) mentioned that slow movements help to bring the change properly and in slow change, the chance of making mistake is less. On the other side, Daft and Marcic (2016) noted that the organizational change approach also depends on the other strategic management approaches like, cultural approach and collaborative approach.
Therefore, from the above discussion it can be said that the strategic management approaches like, sociological approach, industrial organizational approach and organizational change approach are helpful for improving the performance of the business organizations. The approaches have also helped Woolworths Limited in improving its performance (Woolworthslimited.com.au 2016). However, each of the strategic management approach has some limitations. If the comparison is made among these three strategic management approaches, then it can be identified that the industrial organizational approach is more effective than the other strategic management approaches (Formentini and Taticchi 2016). This is because in case of industrial organizational approach, the company can improve the overall performance level.
For example, in case of Woolworths Limited, the company has improved its overall performance by adopting this particular approach. The economic pricing strategy not only helped the organization in increasing the customer base, but it also helped the organization increasing the customer loyalty also. On the other side, implementation of lean management has helped the company to reduce the waste level as well as helped to improve the internal management technique (Woolworthslimited.com.au 2016).
However, this much of improvement cannot be brought with the help of sociological approach or organizational change approach. In the words of Heizer, Render and Munson (2016), the sociological approach and organizational change approach are effective in improving a particular area of the business. These two strategic management approaches are not effective for the overall business performance (Formentini and Taticchi 2016). Hence, it can be said that the industrial organizational approach is better than the other two approaches of strategic management. However, it does not mean that the sociological approach and the organizational change approach are not efficient. The business organizations also require these types of strategic management approaches for some specific reasons.
Conclusion and Recommendation
In this study, it has been identified that strategic management approaches are very important for every business organization. The strategic management approaches help the companies in enhancing their performance standard. The study has identified mainly three popular strategic management approaches and these are – sociological approach, industrial organizational approach and organizational change approach. As per the discussion in the study, the industrial organizational approach helps the companies to achieve economies of scale, proper resource utilization and survive in the competitive market. The sociological approach helps to build better relationship with the society and the other approach that is organizational change approach is effective during the change within the companies.
As per the analysis and evaluation in this study, the Woolworths Limited has implemented all of these strategic management approaches for different reasons. The company has also gained several benefits due to the application of these approaches. However, the study has identified that the organization has gained highest benefit from the industrial organizational approach. Apart from the identification of the benefits, the study has also pointed out that the strategic management approaches have some limitations. However, on the basis of overall analysis, it has been considered that the industrial organizational approach is better strategic management approach than the other two approaches.
As per the results in the analysis of the study, the following recommendations are made for better utilization of the strategic management approaches:
Identify the actual issue of the organization – Before applying or adopting any strategic management approach, it is essential for the organization to identify the specific problem area. This is because each strategic management approach is effective in specific problem areas. Therefore, the companies must use the strategic approach as per the need.
Adopt the industrial organizational approach along with the other – The business organizations must adopt the industrial organizational strategic management approach along with the other strategic management approaches because this particular approach in effective in most of the situations.
Maintain the time span at the time of implementing the organizational change approach – The organizational change approach is time consuming. Due to this, the management of the companies must take special care of the time span at the time of implementing the organizational change approach.
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