Strategic Management as Science - Case Study Example

Strategic management: Assessing whether business strategy is more of an art than a science BY YOU YOUR ACADEMIC ORGANISATION HERE HERE DATE HERE Strategic management: Assessing whether business strategy is more of an art than a science Introduction The concept of strategic management can best be defined as "a series of actions that a company undertakes to gain competitive advantage" (Bryan and Joyce, 2007, p.20), boost overall business profitability and the development of internal processes which best suit a firm's long-term business strategy. Business strategy has also been called a blend of luck, opportunism, design and judgement which, when considered appropriately based on an analysis of the external market environment, can bring a company success in their existing marketplaces. This report identifies a variety of different theoretical frameworks and professional opinion regarding strategic management and its role in today's businesses. The report highlights differentiation strategies through marketing, the role of internal business culture, and a variety of methodologies which contribute to successful business strategy. The evidence would seem to suggest that strategic management is more of a science than an art. Understanding strategic design Michael Porter, a renowned strategic business expert, discusses his Five Forces model which recognises a variety of external forces which can significantly impact business direction. From a competitive viewpoint, this model suggests that the threat of substitute products can impact sales and growth success (Quickmba.com, 2008). Substitute products represent similar product offerings in similar marketplaces which can detract from sales success simply due to these products creating excess competition in a firm's market environment. Bean and Radford (2000) identify that product innovation, creating unique product offerings, is one method to overcome competition and will create a sense of differentiation in different consumer buyers. Innovation might be categorised as an art form, as this is often based on internal staff ingenuity, however innovation would seem to be more scientifically-founded as before an innovative product can be launched, examination of competing products and their function must occur. This requires analysis of the external competitive environment which is grounded more in scientific research on behalf of a company. With the high level of competition in a wide variety of different product markets causing problems with being able to compete successfully, innovation as a strategic tool would seem to point toward business success. Porter's model also identifies threats to businesses in terms of supplier power, such as the level of control which suppliers have over raw material delivery or the development of a low-cost distribution infrastructure. Cohen and Roussel (2005) offer that a successful strategic business practice involves designing a supply-chain metric which measures the impact of supplier power on the ability to launch new and innovative products. The first proposed task is to set up a supply chain strategy objective which examines costs and the feasibility of distribution in a method which is both efficient and satisfies budget restrictions. This again would point toward supply chain considerations as being more of a business science, as it involves face-to-face negotiations with different suppliers and a strategic analysis of the strengths and weaknesses along the existing supply chain network. The role of strategic management in regards to suppliers is to identify whether deficiencies exist in the supply chain and work consistently to improve efficiency and budget. In terms of supply, luck and opportunism would seem to be aspects of business strategy which are not relevant to creating a workable supply network. From a marketing viewpoint, Porter's Five Forces model also recognises the threats stemming from different consumers in terms of their price flexibility (the price they will be willing to pay for products before rejecting them) and also the perceived reputation of the company's brand of products in the minds of consumers (quickmba.com). In marketing, many businesses in multiple industries consider how best to raise consumer awareness of a brand and also seek efforts to create a lifestyle connection with buyers in order to raise sales volumes. This is known as branding strategies at the strategic level, which involves creating positive promotional literature to differentiate products from competing products on the market. Positioning a product involves focusing on elements of the product, such as appealing to the consumer, focusing on pricing competitiveness, or the quality and overall value of the product on the market (Boone & Kurtz, 2007). Positioning, as a strategic business philosophy, can be a mixture of both luck and judgement based on existing company knowledge of what consumers really want in a product and then attempting to use advertising to cater to these needs. Consumers appear to have a very strong influence in how a business conducts its operations, therefore many companies seem to devote a great deal of resources into researching consumer values, behavioural patterns, and price flexibility to establish an appropriate pricing policy for their products. Morgan, Vorhies and Mason (2009) refer to this as market orientation which involves how a business, strategically, decides to position its products on the buyer market. For example, in the clothing retail sector, many companies actively consider the quality of their merchandise offerings, as compared to competition, and then devote marketing resources to differentiating these offerings from other clothing manufacturers. Through external analysis, research may uncover that some clothing competitors focus on quality in their promotional campaigns, such as highlighting the top-notch fabrics being used in manufacture. A qualified strategic leader might then examine the company's resources and capabilities to create a marketing strategy which focuses more on the consumer themselves, creating various slogans which make it appear that that buyer is very savvy for choosing their products over the products which focus on quality of materials. There would seem to be an element of luck in this strategic scenario, however through the use of hard research evidence on consumer markets, positioning their products would be more scientific in nature. Choi and Wang (2009) further offer that maintaining good stakeholder relationships is a key success strategy to gain consumer loyalty. Consumers are considered to be stakeholders in most organisations. This is why marketing is so highly important because creating negative perceptions in consumer audiences can reduce brand loyalty and, at the same time, sales volumes. Outside of promotion and positioning, Marketing Week (2009) supports the importance of viewing the customers are strategic opportunities by offering methods to boost consumer loyalty. The point of marketing products is to give buyers incentives to choose one product's offerings over that of competing firms. Marketing Week suggests that the creation of loyalty schemes, such as discounts or loyalty cards which promote discounts, can be another strategic tool for success. Dobson, Starkey and Richards (2004) mention that the goal of any strategic-focused business should be to give consumers the perception that their business and product offerings should provide unique value to buyers, again reinforcing the importance of positioning at the marketing level. Why was marketing spotlighted so heavily' When measuring the external environment, it is important to fully understand the sales potential of a company's products by understanding consumer needs. Harari (2009) offers that in order to be competitive, a business must always be focused on methods to reduce costs to secure a company's financial health. Marketing, promotion and positioning can be relatively low-cost methods of satisfying consumers and also building loyalty at the same time. The consumer as an external force which represents both opportunities and risk to the business at the same time seems to be one of the strongest considerations at the strategic level. One expert in strategic business offers, "leaders at the most successful companies don't just approve ideas and then wait for launch" (Holloway, 2009, p.68). This means when it comes to product-related strategy, the business leader must be more interactive in product development, marketing principles, and how best to position these products in the minds of consumers. This would seem to represent a more scientific approach by drawing on internal staff competencies and the aforementioned hard research data needed to launch a successful product. In terms of marketing, the role of the strategic manager is complex and very involved in order to guarantee sales success and, potentially, business growth in the process. Yet another business professional offers that many strategic leaders, in a business which is experiencing sales distress, often pay little attention to customers believing them to be the cause for sales declines rather than the cure (Wallace, 2009). When customers have defected to a competing product and profits are being impacted, the strategic manager should focus on how best to regain customer loyalty rather than assuming that the problem lies with the buying markets. If a business takes this approach, which is based more on judgement than science, it is likely that the company will not experience a turnaround. For example, it would make little sense in this situation for the business to begin changing internal processes and procedures to build sales success, rather the strategic leader should begin focusing on the quality of existing marketing and the firm's ability to conduct extensive consumer-related research, such as through surveys or questionnaires which highlight feelings about the products. Also in relation to marketing as a competitive tool, a business must consider whether to benchmark other competing actions, such as branding strategies, to find the most effective method for the message which the firm is attempting to project to the buying audience. Melewar, Bassett and Simoes (2006) identify that many companies rely too heavily on the logo of a company and fail to create more rewarding and profitable marketing strategies. It is well-known that many companies attempt to link instant recognition of their products with a specific symbol or image as a means of differentiating products strategically (Boone & Kurtz). Benchmarking is the process of examining aspects of competitive behaviours which lead to their profit success and then attempting to incorporate these same elements into their own business to achieve similar success (Gomez-Mejia, Balkin and Cardy, 2005). "It is one thing to have a strategically compelling idea, but it is another matter to turn that idea into action" (Hughes and Beatty, 2006, p.16). For firms which are having difficulty finding profit success or satisfying customers through marketing, benchmarking would seem to be the right strategic method available to generate better ideas and help to identify a system which is workable (based on current resource capabilities) and can translate into action. This is a more scientific approach to strategic business management and does not seem to rely on luck or the strategist as an artistic leader. Outside of marketing, Lee, Yeung and Cheng (2009) indicate a further method to gain competitive advantage: the formation of a strategic alliance with suppliers or even with competitors to expand a brand's reputation and visibility. As one example, growth in new technologies can improve the supply chain and through short-term partnered alliances, sharing technologies can be a significant advantage to both the firm and the allied partner. For example, using the clothing retail sector, technologies exist which allow real-time access to current inventory levels at a company as well as consolidating internal business functions. A strategic supplier alliance in this environment could involve the implementation of a company's software at the supplier so that staff at the company can examine current raw material volumes at the supplier. By analysing order and distribution factors, suppliers can be notified in advance of upcoming supply needs simply by communicating through these technologies. This could be a source of significant competitive advantage if, through these alliances, a company manages to outperform competitive supply efforts and reduce the costs of the entire supply chain process. This is a more scientific approach to strategic management over that of luck or as an art form. Goldsmith and Balash (2009) also suggest that some strategic leaders are so gifted and creative about deciding strategy that they fail to communicate new business strategies properly. According to the authors, "they see the vision so clearly that they can't understand why others need to have it spelled out" (Goldsmith and Balash, 2009, p.12). This points more toward the internal culture of the business and the style by which strategic leaders interact and communicate with internal staff members. Human capital can be considered a very strong source of competitive advantage so long as all members of the business remain focused on meeting the long-term goals defined by new strategic direction (Nickels, McHugh and McHugh, 2005). When a strategic leader fails to gain the emotional and intellectual support of staff members by failing to clearly define the business' vision, they are utilising poor judgement and seem to be sacrificing the ability to capitalise on the establishment of a positive, focused, and dedicated organisational structure. The goal of a strategic manager is to create more productive staff and managers as well as utilise staff competencies to make work more rewarding (Bryan and Joyce, 2007). Analysis of what drives internal staff behaviours, and then analysing the ability to reach long-term company goals, and using charismatic leadership style to gain support and dedication would seem to be a very emotionally-linked strategic function which can be a blend of both art, judgement, and design. Failing to utilise internal talents and capitalise on their individual strengths would be a strategic weakness at a firm which would require an analysis of staff capabilities or management training. "Today's business are sensing an increased demand for speed in product development, design cycles, inventory turns and competitive response" (Rotman Management, 2004, p.7). These are external pressures which come from consumers, suppliers, and even investors as stakeholders in business operations. From this viewpoint, the overall organisational design and structure would seem to be a strategic focus to ensure that both human capital and resource capabilities are considered to meet these external pressures. All levels of the business, from senior management to the generic employee, would be responsible for ensuring that processes meet with strategic standards and that the firm puts out a credible, profitable product. Organisational design as part of strategic management would seem to be a blend of both scientific analysis and an art form based on the ability to communicate effectively and gain staff support through emotional leadership skills. Conclusion Most of the evidence provided in this report points toward strategic management as being scientific in nature, with the firm relying on consumer research and tangible resources such as manufacturing or financial capital in order to make decisions which bring the firm competitive advantage and profit success. The clothing retail industry was used as a specific sector in which understanding buyer behaviours is important as well as the establishment of a quality, low-cost, and efficient distribution systems in the supply chain. Clearly, an analysis of the external market environment is necessary to achieve product or overall business success and is a scientific function of the strategist. It seems that luck and artistic planning can really only be related to areas of business which have an element of risk or when perceptions and interpretation are the only tools available to the strategist due to limited research data on buyers. The best assessment is that business strategy is much more scientific in nature. Bibliography Bean, R. and Radford, R.W. (2000). Powerful Products: Strategic Management of Successful New Product Development. AMACOM Books. Boone, L. and Kurtz, D. (2007). Contemporary Marketing. 12th ed. United Kingdom: Thomson South-Western. Bryan, L. and Joyce, C. (2007). 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