Approaches to Strategic Management - Research Paper Example

Approaches to strategic Management Introduction To survive in the competitive economic conditions in the modern world the importance of strategy has assumed great importance. The strategy of a business organization sets itself apart from the rest of the companies in the economy and helps it to gain the competitive advantage in the business world. Every company in the modern world wants to differentiate its product and services from the rest of the companies in the industry. The main aim of the company is to provide value to the customers and to make the customers realize the importance of the company. Thus, strategic management is one of the most important propositions for the companies in the modern world and the strategic management has gained in importance for this reason. The strategic management deals in combining the strengths of the company to the external environment and derives a winning formula. There have been various companies, which have succeeded in their quest of being one of the leading players in the industry by careful evaluation of the strategic management. Companies like the South West Airlines has developed the value propositions in the industry and created unique values for the customers. (Introduction: what is strategic management, n.d.; Stahl & Grihsby, 1997; Pp 1-6; Sadler & Craig, 1993; Pp 9-13). Strategic management has opened a new dimension for the organizations in the industry. Two strategies have evolved in the field of strategic management like the prescriptive and the emergent approaches and the features of the two approaches have been influential in the growth of the subject. The paper deals in the evaluation of the two approaches and the importance of these approaches in the times of recession. Approaches to strategic management With the evolution of the businesses in the economy various forms of strategic management has evolved. Different schools of thought have emerged in the evolution of the subject. The different approaches in the strategic management process deals in the difference of the construction of the strategy, its uses and the evaluation. Though there have been various approaches to the strategic management, the main difference rises in the structure of the prescriptive and the descriptive approach of the management. The prescriptive approach incorporated in the strategic management deals in the careful planning and the implementation of the strategy. The prescriptive approach in the strategic management follows a set of principles and is often rigid. The new form of the management has evolved where the process of the strategy depends on the various constituents of the environment. The process is more dependent on the outer environment and is more acceptable in the modern world. The different forms of the strategy have been instrumental in the success of the businesses all over the world. The high volatility in the modern world has been influential in the formation of the strategies and the evolution of the strategic management. The strategic management deals in the evaluation of the internal strengths and the weakness of the company and the conditions of the economic environment. (Weigl, 2008;Pp 29-30). The main approaches evolving in the field of the strategic management are the prescriptive and the emergent approaches. The two approaches will be discussed in the following paragraphs. Prescriptive approach The prescriptive approach in the strategic management process is also called the planned approach. True to its name, the approach signifies a planned approach in the strategy formulation in the businesses of the economy. The company follows a definite set of principles in the formulation of the strategy and follows a systematic approach in the implementation of the strategy. The principles of the company establishes to a great scope in the determination of the strategy. The aims and the goals of the company are also taken into account for the formulation of the strategies. The objectives of the company have to be fulfilled by the strategies. Therefore, the management of the company sets the objectives of the company and then evaluates the internal strengths and the weakness of the company as well as the external factors of the environment to formulate the strategies. The strategies formulated by the management have to be in accordance with the objectives, aims and the goals of the company. The prescriptive approach has been called as one of the unsurpassed methods in the different schools of thought. The systematic planning of the approach helps in the setting up of objectives of the company and the methods of realizing it. The complex nature of the activities in the businesses can be united with the help of the systematic approach of the strategic management. This helps in the setting of goals for the company. The company sets targets for the employees to achieve and the systematic process helps in the evaluation of the performance of the employees. This approach in the strategic management helps in establishing control over the business. The prescriptive approach in the strategic management has been helpful for various organizations over the years. This type of management has been instrumental in the development of the organizations that follow a systematic principle in their operations. This type of the strategic management approach is followed in the companies with a higher degree of bureaucracy in their management level. The complex nature of the functions is systematic and follows a definite set of principles and rules. The prescriptive approach in management has thus become one of the most important parts in the strategic management approach. However, there are problems in this type of the approach in the strategic management. The business environment in the modern world is complex and unstable. The environment in the modern business world changes very quickly and therefore, a planned approach is not beneficial for the companies around the world. This approach is not beneficial as there is a major difference between the planned and the execution of the strategies, which makes the existence of the planning in this approach questionable. The systemic approach do not allow the management to be creative in the face of adversity as they follow a general set of rules and regulations of the company. Therefore, the prescriptive approach in the strategic management has benefits but it is not a full proof strategy. Especially in the modern business world, the strategic approach is difficult for the business houses to follow. (Campbell, Stonehouse & Houston,2004; Pp 293-295; Stonehouse, Campbell, Hamill & Purdie,2004; P 22; Jeffs,2008; Pp 14-15; Kotelnikov, n.d.) Emergent approach Another approach in the strategic management is the emergent approach, which has evolved with the change in time. The emergent approach is also called the incremental approach. The approach states that the strategies of the companies are not static and should change according to the situations in the outer environment. The approaches in the strategic management have evolved from the older strategies, which were static. The emergent approach in the strategic management is a newer concept. The main purpose of the approach is to comply with the complex environment of the outside world. The environment is ever changing and there has been a need for taking the conditions of the environment into account before embarking on the formulation of the strategies. The emergent approach states that the strategy of the organization will depend on the outer environment, which changes rapidly. The strategies do not follow a definite set of rules and regulations and only depends on the happenings in the outer environment. The strategies of the company follows a path of natural progression and do not require planning from the company. The strategies are formulated by the interaction with the management and the stakeholders of the organization. The meetings between the two parties are arranged for the formulation of the strategies and the targets are set according to the changing environment. The interactions and the preference of the stakeholders may change from time to time which makes this type of strategy a necessity. The emergent strategy has evolved as one of the most important strategies in the emerging competitive economy. This type of the strategic environment is beneficial in the constantly changing business environment. The strategy helps for the adaptability of the businesses in the environment and helps in the development of the business. This strategy also helps in the creative process of the management. The strategy helps in the creating of teams in the business environment and hails discovery in the management of the company. The problems faced by the management may vary according to the conditions in the environment. The solutions to these problems do not follow the general structures and may require creative thinking process. This type of the strategy helps in this process and is thus more acceptable to the businesses in the modern world. The strategy deals in the formulation of the strategies according to the business environment and hence there is not much difference in the planning and the execution process. The strategy does not require long term planning and is a natural progression of the goals of the organization. The goals change with the time and thus the strategies also change. Thus, it is not necessary for the business organizations in the modern world to follow a definite set of principles in the problem solving method. The approach is more flexible than the earlier approaches and abides by the changes in the environment. The modern global environment of the business world is competitive and depends on different factors like the laws, suppliers, preference of the customers etc. The constituents in the business environment can change anytime, which makes the environment unstable. Therefore, this type of strategy is helpful in dealing with the problems in the modern business environment. However, the strategy is not without drawbacks. The strategies do not follow any set of rules and regulations. The strategy does not follow any systematic methods in the problem solving of the business. Thus, it becomes equally difficult for the business to abide by the long term goals of the business. The strategy only takes into account the short-term goals and thus, it do not take into account the objectives of the business. Moreover, the strategy is not helpful in the setting targets for the business and the employees in the business, which makes it difficult to measure the performance of the business over a period of time. The evaluation of the business becomes difficult and the employees do not get evaluated. The targets are not defined well in this type of strategy and it creates a problem for the employees in the business. The objectives do not speak clearly of the business and thus, it creates a problem for the whole business environment. However, the benefits of the strategy cannot be ignored in the changing business world. The business world is highly unstable and the businesses have realized the importance of the evaluation of the strategies in a short span of time. In conditions of economic instability in the environment, the strategy assumes utmost importance as it allows the business to take decisions with the changing time. (Evans, Campbell & Stonehouse,2003; Pp 322-324; Courtney,2002;Pp 99-100; Ten schools of thought, n.d.). Evaluation of the two approaches In the modern world of the business both the approaches of strategic management is well accepted with different companies opting for different forms of the strategies. The companies have evolved with time and the operations in the organizations have developed to a certain extent. The Companies choose the type of the strategies with careful evaluation of the prevailing conditions in the environment and the organization itself. During the earlier days, the strategy of the company depended on the type if the company and the industry. In the modern times, in addition to these factors, various other factors have evolved for the choice of the strategies. These factors are the internal constituents of the firm like the culture, administration and the reputation of the company, operation techniques etc. (Koper & Zaremba,2000; Pp 143-144) The company takes into account a host of the factors before deciding on the strategy to be followed. The prescriptive approach to the strategic management states a systematic approach to the problem and the evaluation of the results. There are companies, which in the modern world has the necessity to follow this type of approach. The company follows a systematic guide to the objectives and the formulation of the strategies. The systematic approach of the strategy is beneficial for many companies in the world. The choice of the strategies is dependent on the type of the industries as well. However, with the modern development in the business world various details have to be taken into account before deciding the type of the strategy to be followed. One of the industry that follows the prescriptive form of the strategic management is the tourism industry. The tourism industry thrives on the quality of the service provided by the tourism companies. The industry also depends on a systematic approach in the business. A systematic approach is needed because the operations in this industry deal in the satisfaction of the customers. The quality perspective in this industry deals in giving the customers freedom to choose over a host of alternatives and to make them comfortable in traveling and the hospitality aspects. The tourism industry has evolved from the mass marketing to catering to different forms of the diversified markets. Tourism industry now boasts of different forms of tourism like the rural tourism, rural tourism, niche tourism etc. Therefore, in dealing with the different forms of tourism the companies need to develop a definite set of plans and principles. The systematic approach in this regard helps the companies in the industry to serve the customers better so that they are satisfied. With the customer satisfaction and the quality being the most important points in this type of industry, it is imperative that the companies in the industry follow a prescriptive approach to the strategic management. (Kumra, n.d.). Companies in the industry, which deals in the servicing of the customers, need careful planning and the execution. Therefore, it is necessary for the companies to follow the prescriptive approach to the strategic management. The prescriptive form of the strategic management is one of the most important parts in the whole strategic management approach. With the advent of time the business environment has changed and the constituents of the business like the Government, competitors, the suppliers etc. have exerted their influence more in the environment. However, the need for the prescriptive approach to the strategic management cannot be denied. The prescriptive approach to the management deals in systematic analysis of the problems. The companies in the modern world need systematic analysis of the problems. Thus, the prescriptive approach to strategic management still holds true in the modern world. The Emergent approaches in the strategic management deals in formulating the strategies according to the environment. The emergent approach to the management has assumed importance in the modern world. With the high instability in the modern business world, the need for taking decisions in relation to the environment has assumed great significance. The companies in the modern world prefer to take the decisions keeping in view the trends in the economic world. The management has become more accustomed in taking creative decisions to accelerate the growth of the business. Almost all the industries in the modern world follow the emergent approach of the strategic management. The decisions are taken in accordance with the modern trends in the business. This allows the businesses in the modern world to be more flexible to the situations. The performance of the business develops and follows the implications of the stakeholders of the company. Hangzhou Fuxing Chemical Fiber Co.,LTD is one of the many companies in China. The company has been one of the leaders in the market. The company deals in the production of the chemical fibre. With the development in the market of the fibre industry, the company decided to extend its business globally and opened its operations in countries like Turkey. The company seeing the growth in the European market set up its base in the continent. The company sets its strategies according to the performance in the past years. However, the time horizon of the strategy is never more than one year. The company follows a emergent approach of strategic management. (strategic management perspectives, n.d.). However, every company in the world follows a combination of the two approaches for the development of the company. The emergent approach of the strategic management deals in the changes in the environment while the prescriptive approaches help in the proper planning of the procedure. Thus, it helps in the careful evaluation of the company’s performance and it helps in the development of the company. Therefore, it can be said that the combination of the two approaches is the most beneficial for the companies in the modern world. (Levy, Alvesson & Wilmott,n.d.) In times of recession During the times of recession, the economic condition in the global world is affected. The business organizations all over the world suffer with less amount of sales and the condition of the global business world goes down. During these conditions, the business organizations have to set their plans for the tough times and have to communicate with the constituents of the business. The plans may change from time to time because the conditions in the economy change fast. The condition may offer an opportunity for the business organizations to grow its business. Therefore, the conditions in the business world have to be carefully analyzed. Thus, the business organizations in the world follow a combination of the prescriptive and the emergent approaches. (Colvin, 23rd January, 2009) Conclusion The strategic management has evolved as an important field in the modern business world because for the success of the business the formulation of the strategies is important. The strategic management has evolved into two approaches as the prescriptive and the emergent approaches. The prescriptive approach deals in the systematic approach in the formulation of the strategies while the emergent approach helps in the formulation of the strategies in accordance with the environment. It has been inferred that the both approaches is essential in the decision making process and the companies in the modern business environment follows the combination of both the strategies. Appendix Comparison between the strategic management schools: Schools Base Discipline Intended messages Realized messages School category Shortfalls Design None Fit Think Prescriptive Not analytical, too static Planning Urban planning, cybernetics Formalize Program Prescriptive Do not support real-time strategy but encourages creativity. Positioning Economics Analyze Calculate Prescriptive Strategy is generic positions which are selected through analysis of industry situations. Entrepreneurial None Envision Centralize Descriptive (some prescriptive) Importance on leader’s vision Cognitive Psychology Create Worry Descriptive Subjective approach Learning None Learn Play Descriptive The process of strategy making is chaotic and unpredictable Power Political Science Promote Hard Descriptive Clash of stakeholder’s interests during the formulation of strategy Culture Anthropology Coalesce Perpetuate Descriptive Not suited for changing environment Environment Biology React Capitulate Descriptive There are limits to the choices Configuration History Integrate Lump Descriptive It either favors radical or incremental change References 1. Introduction: what is strategic managemnent. (n.d.). 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