Different Approaches To Strategic Management

Introduction to Strategic Management

Question:

Discuss About The Different Approaches Strategic Management?

Strategic management can be referred to as the control, planning, directing and analyzing of an organization’s resources with an aim of achieving its set goals and objectives. Strategic management gives a business a clear and direct sense of direction (Bergh et al, 2016). Therefore, it a process through which business managers set objectives, identify resources and implement their strategies to enable the business increase or improve its performance and gain competitive advantage in the market or industry (Rothaermel, 2015). Through strategic management, organizational managers have the opportunity to evaluate and analyze the organization’s competitive advantage, the organizations internal status and evaluate every business and management operation. Strategic management helps the business managers to focus and concentrate on their priorities by directing their energy and resources towards improving the overall business operations (Trigeorgis et al, 2017). This is mostly possible when all the organizational employees are in board or rather understand the overall objective and goal of the organization. This basically motivates most employees into working towards something they understand and believe in, simply because they have a common goal to achieve. In that case, strategic management has proved to be a very important and useful tool or process for ensuring every business’s success and objective achievement.

Every business organization’s management team has to have its own strategic management strategy. Different organizations use completely different management strategies based on their size, number of employees, value of their employees, organizational goals and objectives, effect of the strategy to its employees among other things (Rothaermel, 2015). However, every management team must also have their own approach to their strategic management. This basically means a personal way engineered specifically for making strategic decisions. There are currently a number of different types of strategic management approaches. There are the general approaches and the alternative approaches.

The Standard Linear Approach management strategy focuses on the planning, control and directing of business goals and objectives towards their actual achievement and success. Basically, it concentrates on Nursing that the organization always has a competitive advantage over its competitors in the market. This means that the approach helps a business device ways to beat its competitors by achieving their objectives and goals. Through this approach, business managers are able to make sound and smart decisions (objectives and goals) and create an effective plan on how to achieve them.

Different Management Strategies

• The business managers have the opportunity to make better, smart objectives for the organization
• The managers are the only ones to make organizational decisions and not involving the Board of Directors
• Increases the chances of organizational productivity and success
• Provides methods of dealing with competitors
• Creates a better future for the business by identifying strategic directions

• It is an expensive process in case changes happen
• Discourages flexibility of the business

The stakeholder approached emerged in the 1980’s when the publication of R. Edward Freeman’s strategic management in business and public policy was underway. This approach was discussed in details in the stakeholder theory article that was published during that time (Freeman et al, 2011). This approach is entirely based on issues that are related to or affect a business’s stakeholders. A stakeholders is an individual who is likely to be affected by the performance of an organization or in the outcome of a decision making process (Freeman, 2010). They include parties like, employees, managers, owners who are called the internal stakeholders and suppliers, society, government, investors, customers, financiers, shareholders, creditors to name a few, often known as the external stakeholders (Fassin, 2012). The approach focuses on addressing the morals and values of the business stakeholders. In other words, it tries to build a framework that concentrates on ensuring that the stakeholders concerns and wishes are met. The approach is able to help the business managers develop effective strategic decisions as well as create new opportunities for organizational growth and development (Harrison et al, 2013). The main purpose of this approach is to create different ways of managing and achieving the stakeholder’s objectives and maintain their relationships in a positive way. An example of a business organization that uses this approach is the RELX Group Company. Which is an international/Global company whose headquarters are based in London, United Kingdom. Also, it located in other developed countries like USA, Australia, Asia and China among others. The mining industry as well as the education industry e.g. University of Virginiaaresome of the industries that use this approach to manage their business operations. Through this approach, most businesses have been able to coexist with the surrounding society for as long as they have existed.

• The product brand is strengthened due to the ethics support provided by t5he stakeholders and the corporate social responsibility support as well
• There is better management relationships in the business
• Increases the chances of making better strategies and decisions
• Encourages better acceptance of the business actions by the stakeholders in general

• It is difficult to determine who the primary or secondary stakeholders are. This therefore limits the organization in knowing who will be most relevant when making decisions and who will not.
• There is frequent disagreements because of the confusion of purpose of every stakeholder
• There are conflicts regarding power and authority distribution among the stakeholders
• It is basically more of society success that business success which limits the overall business performance and success

To implement the stakeholder approach, the following steps can be followed (Freeman et al, 2011):

• Identification of the organization’s stakeholders. This includes categorizing then into external or internal, secondary or primary, active or inactive.
• Create a value proposition for each stakeholder, i.e. determining what the business is expecting from the stakeholders group. This can be either emotional value, financial value or functional value for the business.
• Compare the value provided with the expected value for the business
• Create a profit model to use in managing the inevitable trade-offs among the stakeholders groups
• Identify the business’s key performance indicators to help you tract the organizations effectiveness.

• Its rules vague and impractical in the real world
• It does not clarify the specific stakeholders
• Does not give the specific benefit for the business
• It is not easy to identify the person involved with benefit allocation to the stakeholders

In general terms, dynamic capability of a business is the ability of the business to adapt to the organizational resources use. However, dynamic capabilities refers to the ability of a business to adapt to changes (external changes) in an effective and efficient way (Barros et al, 2016). Therefore, dynamic capabilities approach focuses on encouraging the business managers to develop their strategic decisions with an aim of maintaining the organizations operations and competitive advantage (Giniuniene and Jurksiene,2015). For instance, the current world technology improvement and advancement. This approach forces the business managers to manage the strategic changes induced by the technology development and maintain optimum business capability and achievement. In that case, the approach helps the managers to adapt to their ordinary business schedules and make use of the resources available and still plan for the organization’s future state (Ambrosini and Bowman, 2009). This approach basically is used to determine the manager’s competence and effectiveness towards achieving the business goals and objectives and maintaining its competitive advantage in the current business world.

Stakeholder Approach

This management approach is mostly used by business organizations that deal with technological changes. This basically means the businesses that produce products like technology applications, software systems, technology devices or information technology devices among other things like mobile phones, computers, software developers to name a few. Examples of such companies are: Apple and IBM. These are international companies which are growing and developing at very high rates based on technology advancement. These companies have been able to manage their environmental changes (specifically technology continuous change) and have also been able to maintain their competitive advantage. In other words, the companies have actually used the dynamic changes in their environment to develop their products and services which leads to their growth marketing development (Teece, 2017).

• It encourages the business managers to work harder and be more focused
• Encourages the managers in making the most strategic and effective strategic decisions
• Enables the business to maintain and understand its sustainable advantage in dynamic environment
• Enable the business to expand its resource base view
• Enables a business organization to maintain its competitive advantage in a dynamic environment
• Helps the managers in creating an effective plan and determining a business’s future state efficiently

• A business is not able to comprehend or predict the future state of its environment. This does not allow it to plan for the future effectively in terms of resource identification and use.
• The business organization may not have the resources needed to manage the changes in the environment as well as maintain its competitive advantage and success.
• This approach limits a business when it comes to determining the future effects or consequences related to future change or dynamism

• There is a lot of uncertainty for the business that is using this approach. The business is not able to predict either the change or the impact that will accompany the change itself.
• It interferes with an organization’s daily operations or schedule. In case of a drastic change in the environment, the business must change its resources or tactics to match the change.

Business sustainability is a process by which companies manage their overall operations which consist of the financial, social, technical, internal and external operations. In addition to that, sustainability also involves the management and maintenance of a business’s environmental status (both internal and external environments), its strengths and weaknesses and the opportunities and threats (Aarseth et al, 2017). Therefore, Strategic management is the actual control, planning and directing of all the activities that affect a business’s sustainability (Adams et al, 2016). This means that it’s the evaluation and analysis of the techniques and strategies that a business management team takes to maintain its sustainability. In other terms, sustainability approach is used by business managers to ensure that they have created an effective and efficient environment for the business to sustain its development and growth in all aspects (Baumgartner and Rauter, 2017). This approach ensures that the business has a sustainable opportunity to earn maximum revenue, maintain its competitive advantage, effectively used and allocated the available resources among other things (Adams et al, 2016). Sustainable approach enables the business managers to make not just the right decisions for the business but also to ensure that the decisions made are capable of maintaining the business in its position and position as well as maintaining its growth and development levels high.

However, this approach does not only focus on the business but also its surrounding environment. It ensures that the business encourages other environmental aspects like agriculture, society development and economic growth. Sustainable management focuses on improving the quality and status of the environment and effective use and allocation of the resources (Aarseth et al, 2017). Examples of companies that have implemented and made use of this approach are: Starbucks, Coca Cola and Ford which are all international companies. These companies have managed to implement this approach effectively for a long time now. This is simply because their operations basically depend on the environmental success and quality. The growth and development of these companies is prove that this approach is certainly dependable and reliable.

• The business managers are able to take control of the business operations and the environmental success as well
• Decisions made are mainly in consideration of both the organization’s and the environment’s success
• Helps an organization establish its own direction and plan for success
• Enable business managers to make strategic and effective decisions
• Enable an organization to be ongoing by creating long-term goals and objectives
• Increases the business focus to the future
• Increases employee satisfaction due to the encouragement originating from future focus and meaningful purpose of the employee
• Increases a business’s brand and image recognition

• It limits the organization to the use and implementation of current and uprising technologies around the world
• Limits business development, growth and success. A business can not only focus on its success but has to consider the environmental success and maintenance as well
• Limits the environment into depending entirely on the business actions

• A business may not be able to manage and maintain the success of both the organization and the environment, i.e. in most case, one succeed while the other fail (Baumgartner and Rauter, 2017).
• Requires a lot of funds and commitment to implement which is therefore an added expense to the business organization

Dynamic Capabilities Approach

Conclusion

From the research, strategic management is a very crucial process for every business. Strategic management approaches have proven to be very essential aspects for business success as well. The approach that any business chooses should be focused on its objective and goal achievement. There are actually a good number of strategic management approaches in the business world which have proven to be very effective and efficient for different business organizations. In that case, every business should choose the right and suitable approach to use in its operations. Stakeholder approach basically focuses on the satisfaction of the stakeholders only. Its advantages, disadvantages and implementation issues should guide a business towards choosing it. Sustainability (which focuses on both the business and environmental success, growth and development) and dynamic capabilities (mostly used for the business that use technology or dealing with drastic and unplanned environmental changes) approaches also have their advantages and disadvantages listed above. Every organization should therefore understand all these aspects before choosing an approach to implement in its operations.

References

Aarseth, W., Ahola, T., Aaltonen, K., Økland, A. and Andersen, B., 2017. Project sustainability strategies: a systematic literature review. International Journal of Project Management, 35(6), pp.1071-1083.

Adams, R., Jeanrenaud, S., Bessant, J., Denyer, D. and Overy, P., 2016. Sustainability?oriented innovation: a systematic review. International Journal of Management Reviews, 18(2), pp.180-205.

Ambrosini, V. and Bowman, C., 2009. What are dynamic capabilities and are they a useful construct in strategic management? International journal of management reviews, 11(1), pp.29-49.

Barros, I., Hernangómez, J. and Martin-Cruz, N., 2016. A theoretical model of strategic management of family firms. A dynamic capabilities approach. Journal of Family Business Strategy, 7(3), pp.149-159.

Baumgartner, R.J. and Rauter, R., 2017. Strategic perspectives of corporate sustainability management to develop a sustainable organization. Journal of Cleaner Production, 140, pp.81-92.

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Fassin, Y., 2012. Stakeholder management, reciprocity and stakeholder responsibility. Journal of Business Ethics, 109(1), pp.83-96.

Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge university press.

Freeman, R.E., Wicks, A.C. and Parmar, B., 2011. Stakeholder theory as a basis for capitalism. In Corporate Social Responsibility and Corporate Governance (pp. 52-72). Palgrave Macmillan UK.

Giniuniene, J. and Jurksiene, L., 2015. Dynamic Capabilities, Innovation and Organizational Learning: Interrelations and Impact on Firm Performance. Procedia-Social and Behavioral Sciences, 213, pp.985-991.

Harrison, J.S. and Wicks, A.C., 2013. Stakeholder theory, value, and firm performance. Business ethics quarterly, 23(1), pp.97-124.

Mainardes, E.W., Ferreira, J.J. and Raposo, M.L., 2014. Strategy and strategic management concepts: are they recognised by management students? E+ M Ekonomie a Management, (1), p.43.

Rosenberg Hansen, J. and Ferlie, E., 2016. Applying strategic management theories in public sector organizations: Developing a Typology. Public Management Review, 18(1), pp.1-19.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Teece, D.J., 2017. Dynamic Capabilities and the Multinational Enterprise. In Globalization (pp. 105-129). Springer Berlin Heidelberg.

Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic Management Journal, 38(1), pp.42-63.