Discussion of Strategic Management - Case Study Example

Discussion of the Strategic Management Student’s Name Course – Management Tutor: Date: Introduction In today’s fast-paced market, business enterprises are adopting new business strategies using modern technologies, generation of new business ideas and managerial practices in the attempt to achieve goals. Business strategies are techniques that contemporary business is using to analyze the current organizational situation the future and articulating objectives to propel the organization confidently for mission and vision accomplishment. In other words, the strategy is another way of formulating, identifying and evaluating organizational external, internal dynamics; competitive organizational abilities. Additionally, business strategy is a complex, and it takes long implementation period, requires human and economic resources, and strategized to help the organization gain competitive advantage. Therefore, the strategy is an organizational process that dictates the directions that the company should follow to exploit and achieve opportunities rising within an industry. Additionally, strategy offers an organization with a competitive advantage and in turn meeting the customers’ demands; it is a systematic pattern of aligning resources and meets the demand of markets as well as shareholders expectations. More importantly, business strategies allow the top managers to set the fate of the organization as a way of embracing innovative products and gain competitiveness. Globalization effects, stiff competition, consumers’ changing demands, technology evolution, and scarce resources are major drivers that stimulate global organizations to embrace strategic management. This paper addresses the strategic management function and the importance of strategic management in organizational structures and forms, high-performance systems and corporate resources. The paper articulates different theoretical frameworks from various secondary resources are addressing the concepts of strategic management. For more understanding, the paper evaluates and analyzes the major elements of the strategic management and how these elements are subjects to organizational functional units at different levels. Additionally, the article concludes with the writes recommendation concerning the importance of having strategic management systems within an organization for competitive advantage. Strategic Management definitions Different business professionals define strategic management indifferently. According to Yang et al. (2013) strategic management presents organizational strategic formulation, strategic implementation and evaluation; the primary purpose of having strategic management within a company is to develop and come up with new business ideas and opportunities for the future of the organization. Chornous (2014) defines strategic management as the strategic direction that an organization takes for long terms goals achievement by formulating ways of gaining and sustaining competitive advantage by analyzing business environmental dynamics and configuration of the available resources. In other words, strategies management aims to improve organizational development activities by reorganization of the functional units. From a different perspective Chornous (2014) define strategic management as a set of managerial decision and actions that formulate the long-term performance of the organization. A managerial decision such as environmental scanning, strategic formulation, strategic implementation and evaluation and control defines the organizational strategic management. Therefore, strategic management involves combination or integration of management, marketing techniques, finance management, production, and research and development as well as information and communication technologies. In other words, strategic management is a business field of study that helps managers to incorporate and integrate business policies in spite of having evolving business environments; ways of escalating company's competitive advantage to high levels. In this aspect, strategic management is the core organizational process that explores the problems that the company faces, and can result in either business failure or success. Chornous (2014) conclude that strategic management is a set of actions and decisions dictated by top organizational executives to develop and formulate corporate objectives for long-term goals achievements. Basing on these four definitions, strategic management focuses on monitoring and evaluating corporate external and internal opportunities, and threats in light of organizational strengths and weaknesses (Chornous, 2014). Stages of Strategic Management According to Ong et al., (2010), strategic management process involves strategies that an organization uses to allocate resources and activities for dealing with business environments to gain competitive advantage and goals achievement. Competitive advantage is sets of organizational techniques that meet clients’ needs; these techniques not found in other companies within an industry. Ong et al., (2010), states that strategic management process begins by evaluating the current situation of the organization by defining company's strengths and weaknesses in alignment to organizational objectives, mission, vision, and goals. In the current business environment, managers from performing and successful organizations has realistic and effective strategic plan with the high competitive position in their market segments (Rowley and Jackson, 2010). There are four main stages of strategic management: environmental scanning, strategic formulation, strategic implementation, and evaluation and control mechanisms. The chart below summarizes stages of strategic management. (Adopted from Ong et al., (2010), http://2012books.lardbucket.org/books/strategic-management-evaluation) Environmental scanning In today’s business environment, competition within an industry has become more crucial. Environmental scanning is one of the major tools that organizational managers are using to make the decision to determine the type of products consumers need by scaling trends of the competition. International business environments constitute monitoring, evaluating and disseminating internal and external organizational settings. There are three types of environmental scanning: ad-hoc scanning, regular and continuous environmental scanning. Ad-hoc scanning involves short-term strategies that business managers use to scan the business environments at the moment. Regular scanning is a strategic managerial environment scanning done periodically, mostly annually. Continuous scanning involves the collection of environmental information for purposes of fitting company's products at different times. According to Nickols (2016) every organization should scan its environment before formulating any strategy for proper identification of business opportunities and threats as well as strengths and weaknesses revolving around the organization. Enterprises use environment scanning to ensure that the company retains health operations as well as create the positive relationship with its conditions and in turn, make a profit. Therefore, environmental scanning is of great importance in every business. The underpinning factor is that scanning environment requires qualified human capital, resources, and long-term commitments. In this aspect, most of the organizations do not carry out proper environmental scanning to avoid adding operational and production costs. Strategic Formulation Strategic formulation involves long-term plans of articulated by organizational managers for effective and efficient business expansion and environmental management. In other words, strategic formulation involves the definition of the company's mission identification of core objectives and setting organizational culture for competitiveness. An effective strategic formula constitutes corporate strengths, weaknesses, opportunities and threats for these elements determines the type of the business the company is venturing in within the industry. Moreover, strategic formulation allows managers to decide what an organization should embrace, abandon, execute, marketing tactics and how to gain competitive advantage to avoid and overcome hostile business environments. According to Rajnoha et al. (2016) managers should come up with several alternating strategic formulas and adopt the most effective and efficient. There are six following strategic formulation processes: the definition of the organization, strategic mission, strategic objectives, competitive strategy, strategic implementation and evaluation of the strategies. Organization constitutes the definition of the customers' base that the enterprise is targeting in the market. Therefore, it is important for a company to evaluate factors that have a direct impact on customers such as culture, economy, and technology. In modern times, customers are no longer buying the features of the product but the quality and the benefits of the products. In this aspect, the organization is the core element that defines products that the company is willing to provide to the market about customers' preferences. Definition of the organizational mission is the second step, and it involves formulating long-range perspective of the company. According to Rajnoha, et al. (2016) formulating strategies require the complete evaluation of the business's performance. In this aspect, most of the contemporary companies hire first organizations to carry out the market analysis on their behalf due to the cost. Additionally, company eyeing to operate internationally employs intelligence professionals to the scope and generate ideas concerning global environments. The importance of formulating strategy is to ensure that the company operates under realistic plans with a capacity of satisfying customers as well as the creation of a healthy competition business arena. However, some of the organizations face difficulties of employing analysts due to limited resources, and hence, they use alternate strategies to formulate plans that will benefit the company. Therefore, organizational managers must have best perception and understanding concerning the effects and importance of having formulation strategies. In this aspect, top managers should authorize and commit corporate resources effectively for implementation. Competitive strategy is articulation and formulation of the plans that the company will use to position the products and services in the market. Competitive strategy is one of the most critical marketing components that every organization competing in the global markets should have. For a company to gain competitive advantage, it should present its products in unique way in comparison to what other companies within an industry are offering. According to Rajnoha et al. (2016) there are five generic strategies that a company should select from when designing competitive advantage; cost leadership, differentiation, focused differentiation, cost leadership, and integrated cost leadership or differentiated. In this regard, competitive advantages are strategies that managers use to position the company's products and services to face market competitiveness. In the strategic formulation, managers should analyze the company's production processes and leadership structures to offer development and creation of the products that will meet the market demands, and hence, gain competitive advantage (Rajnoha et al., 2016). In modern times, competitive advantage has been gaining popularity across the planet due to charging consumers' demands, unpredictable competition within an industry and evolvement of technologies. Global organizations are operating in various markets where other brands exist, and hence, for the company to succeed it must come up with a unique way of presenting their products to the customers. Therefore, competitive advantage is an integral part of strategic management and managers should accept competitive advantage together with other marketing disciplines for long-term benefits of the organization. Furthermore, competitive advantage is also an academic business field that defines different organizational ideologies of conducting business and making enterprises to thrive in amidst of the competitors. In this context, competitive strategy offers business techniques, and in turn, they shape corporate competitive strength by capturing different operational techniques applied within an industry. The emergence of new technologies has given global companies another dimension of developing competition techniques. In this aspect, competitive advantage theories aim to help organizational managers formulate ways of making the organizational brand to stand out within an industry. According to Peters et al. (2013) managers should come up with new dimensions of developing competition techniques by exploiting modern technologies. In every organization setting objectives is of great importance for it helps the managers to articulate and allocates great roles for each employee. According to Rupčić (2013), formulation strategy involves techniques the top managers use to allocate resources, diversify the products across the market segments, avenues to use to enter into various market segments, merging and forming joint ventures with other companies and participation in product development using technologies. Additionally, the strategic objectives are a trading map that dictates the avenues the company should invest in production. In this aspect, company's objectives endow the companies' culture or features, services it offers and scaling the entire organizational performance. Therefore, the purpose of having the strategic objective is to set and convert organizational vision into a realistic production of the products and services. Moreover, strategic objectives depend on the governing organizational structures decisions and the number of the departments as well as the description of the roles that each agency should play during strategic implementation. Nickols (2011) purports that; good organizational objectives are realistic and implementable such that each objective covers a specified period. Therefore, a strategic goal executes company's goals, mission, and vision internal and external analysis of the enterprise. More importantly, the organizational managers should identify and classify short-term and long-term objectives of the initiative. The execution of the set objectives determines the success of the company. Nickols (2011) suggests that managers should communicate the business's goals and make sure all the key stakeholders has a clear understanding of the corporate strategies. Strategic implementation Strategic implementation involves all organization activities that managers designs to pool together the functional units to execute the company's set objectives. Strategic implementation the most critical stage of strategic management for it requires the top managers to establish roles of each employee, their annual targets, production policies, allocation of various resources and staff' development. Case (2012) state that a strategy becomes a fallacy without successful implementation, and therefore, many companies focus much on developing strategies rather than how to implement them. In this aspect, a good strategy does not translate that the firm will gain competitive momentum and fulfill the organizational goals. Therefore, managers should focus much on how to implement formulated strategies rather than focusing on how good they are. Therefore, implementing policies means executing and putting expressed and objectives into action (Weiner, 2012). More importantly, for a company to successfully implement the designed strategies, managers should identify the drawbacks that might incubate during execution processes. Apparently, before implementation of the formulated strategies, it is important for managers to clearly state and address the corporate goals and business models to use to put the formulated strategies into action. According to Peters et al. (2013) strategic implementation is the heart of company for it converts the organizational objectives, policies, and plans into the action by assigning tasks to various departments and continuous development of production programs. According to Germanos (2012) there are four main elements of strategic implementation: organizational culture, organizational structure, organizational governance and ethics and corporate controls. Corporate culture is a collection of attitude, values, norms and beliefs shared among the employees. The business culture is of great importance within an organization for it supports the managers coordinate and integrate different talents within an organization. Additionally, in strategic implementation, organizational culture primary purpose is to appreciate employees’ productivity while understanding their career diversity for the benefits of both workers and the entire organization. A strong corporate culture enhances development and allocation of different workforce identities during tasks executions and propagates organizational goals (Peters et al., 2013). For managers to create strong corporate culture, they must identify and promote the right employees' behaviors across all the departments. Organizational structures involve aligning employees in different operational levels to facilitate the achievement of the organizational goals. Organizational structure is of great importance in strategic implementation for it determines proper execution of the organizational objectives by the formation of hierarchies responsible for full implementation of the corporate goals. In this aspect, appropriate division of the functional units within the company ensures that there are an effective and efficient definition and allocation of responsibilities among the employees. Organizational governance and ethics is the central part of the corporate for it involves evaluating and analyzing the execution mechanisms that will meet shareholders demands. Governance mechanisms include managerial activities of monitoring and directing the organization towards the goals and objectives achievements. Strategic implementation requires effective management responsible for aligning strategic decisions of the company. Additionally, organizational managers ensure that employees in various departments are executing corporate strategies efficiently. Therefore, governance not only focuses on allocating duties and roles across all departments but also monitoring and supervising whether the employees are following formulated objectives. Ethics within an organization aims to govern the employee's behaviors as well as supporting administrative, legal formalities in production processes. Alu Andersen and Lie 2014) define ethics as the principles or right and wrong that shape an individual behavior about the professional field as well as the actions of the organization. In his aspect, a real implementation plan basis on employees and organizational production ethics. According to Rowley and Jackson ( 2010) the manager or an employee becomes unethical when they place their personal interests above that of the corporate and other employees. The company should have a strong governance to monitor and manage ethical behaviors of all staff' behavior. Organizational culture also plays the vital role in shaping corporate governance and ethics. Corporate controls are the last but most important component of strategic implementation for it involves corporate systems that stimulate workers to pursue right activities for organizational goals achievements. Additionally, regulatory controls facilitate in the evaluation of the accomplishments in a given period. Moreover, control systems allow managers to formulate ways of dealing with unexpected business events that might interfere with organizational production. Nijkamp (2016) suggests that Strategic control systems become effective when managers have the capacity to define the accomplishment of employees' achievements. In this aspect, control systems require personal control mechanisms, departmental control, and organizational behavior control. Human resource managers are responsible for formulating and implementing employees' motivation control systems. Motivating employees is the most efficient control system for it stimulates workers to engage fully in accomplishing and executing the targets set by the organization. Therefore, control systems allow managers to scale individual employee's performance and the impact they have on the entire organizational productivity. Finally, Strategic implementation also constitutes the utilization of technologies to enhance quality production and generation of customer's information. Strategic implementation links the corporate performance to human capital about salaries and wages paid but the company. In his aspect, organizational managers should embrace modern technologies to enhance proper implementation of designed corporate strategies. Strategic implementation stage of strategic management determines the successes or the failure of the organization. Evaluation and Control Evaluation and control are the last and crucial stage of the strategic management for it involves assessing strategic implementation processes. It is important for all organizational stakeholders to know the progress and performance of the corporate by scaling the extent of proper implementation of the organizational strategies. There are some fundamental functions of the evaluation and control systems. Firstly, monitoring and assessment systems review the organizational performance by evaluating company's external and internal environmental factors. Additionally, control systems allow the managers to formulate corrective actions to fill the implementation gaps. Moreover, monitoring and evaluation systems allow managers to compare organizational performance to expressed objectives. In other words, every organization requires monitoring systems to measure and benchmark the organizational achievements and to identify areas that need improvement. According to Nijkamp (2016) evaluation of the organizational performance is the source of the control systems that the organization has. Evaluating the past and present corporate performance allows managers to develop monitoring systems that will inhibit or promote objectives that drive organizational productivity. In this aspect, managers have the capacity to correct and reorganize activities within the company for better implementation of the strategies. According to Sarros et al. (2011) evaluating and controlling systems correct employees’ activities and at the same times managers have the capacity to identify weaknesses basing on previously executed strategies. From this perspective, an effective strategic management is the end product of the evaluation and controls that modify the production process within an organization. Levels of Strategic Management Strategic management has three levels: corporate strategy level, business strategy level, and operational strategy level. Zander and Butler (2010) corporate strategic level as the overall scope of the organizational and various mechanisms used to stabilize, expand and reduce expenditure. Michael Potter (2009) suggest that an organization should formulate a strategy that integrates cost leadership, differentiation and most significant focus on how to sustain competitive advantage for long-term success within an industry. Machulskyi and Bogomyagkov, (2012) adds that every company should create a blue ocean strategy with a capacity to break value cost tradeoffs experienced in the past for high growth and high-profit achievements of an organization; integrating and pursuing differentiation and low-cost strategies. Business strategic level involves how the managers include other companies competitiveness in particular markets in the strategy. Another term for enterprises strategy is a competitive strategy for it is concerned with how managers plan to integrate organizational pricing, innovative and differentiation of the companies' production to offer quality products for competitiveness. According to Michael Hendry (2012) managers should come up with strategies to retain and have a continuous competitive strategy of the organization. In this aspect, competitive strategy determines the successes of the organization by shaping the performance progress in the midst of stiff competition. To have an effective competitive strategy, managers should cortically evaluate the business environments to identify ways of positioning their products in the market. The operational plan is the last type of strategic management, and it involves formulating ways of implementing organizational activities. The functional units within and the company determines the success of the enterprise. Managers should choose the most effective and efficient operational strategy for quality production. Linkage between Strategic Management Function and Organizational Structure and Form Organizational structure involves organizational grouping of functional units across the departments. Organizational structure also includes job division for goals, mission, and vision and objectives achievements. According to Hendry (2012) structure relates to the formulation of corporate activities in an organization and allocation of specified roles. A good organizational structure illuminates managerial ability to monitor and evaluates the execution of strategies formulated. The human element is the core factor of the organization chart and form for the structures designs encourage employees to exploit their experience, knowledge, and abilities in their fields of work. Moreover, organizational structure increases the morale of employees resulting in job satisfaction. In this aspect, the company's real skeletal frameworks lead to overall organizational performance. The link between strategic management and organizational structures and forms is very clear. Firstly, organizational structure and strategic management are inseparable for the proper implementation of the formulated strategies the company requires structures to coordinate the objectives. In other words, organizational structure constitutes a human element that executes formulated plans. Secondly, the organization chart represents top managers in various departments who play a vital role in making corporate decisions. Furthermore, strategic management designs are the products of the structures and forms within an organization. On the other hand, strategies within an organization determine the type of structures that the company requires to implement the formulated strategies (Rowley and Jackson, 2010). Therefore, organizational policies and structures are major components that allow the managers to reach the desired results of the organization. From this perspective, for a company to achieve and accomplish overall tasks, managers should allocate required activities to various organizational groups to execute objectives. Therefore, the structures allow the top executives to align workers in reaction to the activities strategized. Linkage between Strategic Management and high-performance working systems High performance working systems (HPWF) involves the combination of human capital, social and organizational capital resources (Rowley and Jackson, 2010). There is a close relationship between high-performance working systems and strategic management. Firstly, strategic management involves generating ideas and converting them into actions using available resources. In this aspect, strategic management implementation strategies require high performance working systems for a company to accomplish goals. According to Nijkamp (2016), organizations adopt HPWS to stabilize and retain competitive advantage within the industry. According to Yang et al. (2013) point of view, high-performance working systems constitute the number of employees the organizational has, staff motivation mechanisms and involvement of all workers during strategic decision-making. The primary purpose of having high-performance working systems within an organization is to improve the quality of the work of employees. Formulating and implementing strategies in a company require qualified personnel, and hence, assimilating skilled workers from the labor market is f great importance (Youndt et al., 2011) additionally, high-performance working systems enhance organizational competitive advantage. By developing employee’s abilities to produce goods and services that satisfy market demands. Therefore, there is a linkage between strategic management and high-performance working systems Liaison between Strategic Management and Organizational Resources Organizational resources involve tangible and intangible assets, which a company uses to execute the set objectives. There are two main types of corporate resources: human resources and material resources. Human resources within an organization involve the top managers, line managers' departmental supervisors and general employees (field workers). In strategic management, human resource plays vital role in propelling and executing organizational strategies. For instance, top managers are responsible for making corporate decision monitoring and articulating desired regulatory policies. Line managers and supervisors are responsible for following up and evaluating the department performance while field workers are responsible for executing and implementing corporate objectives (Yang et al., 2013). In this aspect, there is the linkage between strategic management and organizational human resources. Moreover, different professionals working in various departments within an organization formulate a good strategy. Material resources involve finances, raw materials, finished products, machinery and building within an organization. Material resources are essential tools used to by human resources to execute the company's objectives and at the same time in the achievement of organizational goals. Conclusion This study clarifies various aspect of strategic management. The notion of strategic management practice has become the core source of competitive advantage within the industries. Strategic management constitutes four sequential stages: environmental scanning, strategic formulation, and strategic implementation and control systems. These stages of strategic management are inseparable. The effectiveness of strategic management rests heavily on organizational structures, culture and competitive advantage. This study reveals major trends, which compel the importance of human resource and material resource in the strategy. References Alu Andersen, M. and Lie, M.S., 2014. The Theoretical Development of Strategy Implementation. Case, D.O., 2012. Looking for information: A survey of research on information seeking, needs and behavior. Emerald Group Publishing. Chornous, G.O., 2014. Intelligent Technologies Of Strategic And Operative Management Support For Enterprises. Ekonomika, 93(2), P.159. Germanos, G., 2012. The process of the strategy formulation in small and medium enterprises in Greece and the role of accounting information (Doctoral dissertation, University of Birmingham). Hendry, C., 2012. Human Resource Management. London: Rutledge. Machulskyi, I. and Bogomyagkov, Y., 2012. Corporate and business strategy at MNEs: A managerial practice view. Nickols, F., 2011. Strategy, strategic management, strategic planning and strategic thinking. Distance Consulting LLC, pp.1-8. Nickols, F., 2016. Strategy, Strategic Management, Strategic Planning and Strategic Thinking. Distance Consulting LLC, 109. Nijkamp, Y., 2016. Leadership styles and strategy process research: A study of Dutch small and medium-sized enterprises (Master's thesis, University of Twente). Ong, J.W., Ismail, H.B. and Goh, G.G.G., 2010. The competitive advantage of small and medium enterprises (SMEs): The role of entrepreneurship and luck. Journal of Small Business & Entrepreneurship, 23(3), pp.373-391. Peters, T., Thiel, J. and Tucci, C.L., 2013. Protecting Growth Options in Dynamic Markets. California Management Review, 55(4), pp.121-142. Rajnoha, R., Novák, P. and Merková, M., 2016. Relationships Between Investment Effectiveness Controlling and Business Performance. Montenegrin Journal of Economics, 12(2), p.29. Rajnoha, R., Stefko, R., Merková, M. and Dobrovic, J., 2016. Business intelligence as a key information and knowledge tool for strategic business performance management. E+ M Ekonomie a Management, (1), p.183. Rowley, C., Jackson, K., 2010. Human Resource Management: The Key Concepts. New York: Rutledge. Rupčić, N., 2013, January. Building socially responsible learning systems–implications for the European Union. In 8th International Forum on Knowledge Asset Dynamics: Smart Growth: Organizations, Cities and Communities. Sarros, J.C., Cooper, B.K. and Santora, J.C., 2011. Leadership vision, organizational culture, and support for innovation in not-for-profit and for-profit organizations. Leadership & Organization Development Journal, 32(3), pp.291-309. Weiner, S.A., 2012. Institutionalizing information literacy. The Journal of Academic Librarianship, 38(5), pp.287-293. Yang, N., Colvin, C. and Wong, Y.Y., 2013. Navigating corporate social responsibility components and strategic options: the IHR perspective. Academy of Strategic Management Journal, 12(1), p.39. Youndt, M., Snell, S., Dean, J. and Lepak, D., 2011. Human resource management, manufacturing strategy and firm performance, Academy of Management Journal, 39 (4), pp 836–66. Zander, L. and Butler, C.L., 2010. Leadership modes: Success strategies for multicultural teams. Scandinavian Journal of Management, 26(3), pp.258-267. Read More