Strategic Management and Environmental Analysis - Essay Example

Strategic management al Affiliation) Key factors in strategic management Engagement is a factor that should be considered in management, as there is no planning that can be strategic when there is no engorgement of all levels of an organization. Engagement of staff during planning leads to generation of additional input and helps in building commitment to make sure that all the objectives are met. Engagement leads to provision of insight into issues, concerns, challenges, and opportunity that may have not been identified or known. Communication is an essential element in strategic management. When there is planning in management, there should be consideration of both bottom and top approach of communication (Gerry et al. 2014). Management with consideration of communication will provide feedback in surveys, giving ideas in the organization. Sharing of information in an organization also ensures that the objectives of the organization are met, as communication will lead to coordination of activities. Strategic management involves innovation in activities that an organization carries out. Management strategies may involve development of a new product or rendering a new service. Innovation will involve putting groups together to work in development of major initiatives and giving out resources to ensure that the innovative objectives are met. Strategic management should involve trying out something that is new even with the risks that are involved. Management of projects is also a critical element through which management should be able to identify projects that ensures success in achieving all strategies. The other aspect of project management is development of priorities of all the elements to ensure that there is success in achieving objectives of management (Gerry et al. 2014). Project management will also ensure that employees understand strategies of the organization. Organization structure is an essential factor in strategic management. Organization cultures are the attitudes that are held by an organization and behavior that employees in the organization portray. Organization cultures are always unique and diverse due to personality. Managers are to understand the culture to ensure that planning that is put in place is in line with culture of the organization (Gerry et al. 2014). Cultures that are considered are those on belief in change by employees and values that employees hold. Strategic management in an organization requires consideration of these aspects. Engagement of employees at all levels, communication to employees, innovation in an organization, creation of projects and re-structuring cultures of an organization ensures success in managers. Environmental analysis Managers perform environmental analysis to enable their understanding on all the activities that happen both in the organization and outside the organization. This is always aimed at increasing probability that strategies that they develop in the organization reflect the environment. Several weaknesses are associated with effectively understanding and analyzing the organization environment. The main problem that comes with analysis of organization environments are the complex structures of the environments. Organization environments are divided into general environment, operating environment and internal environment. Managers are required to understand all the levels and how all levels perform and then formulate strategies in response to the understanding that the organization (Gerry, Richard, Duncan and Scholes, 2014). The general environment is broad containing the economic, political, social, legal, and technological factor. The main problem encountered in this environment is changes that always occur in general environment. Managers are expected to keep up with the changes that occur in these sectors. There is difficulty in keeping up with technology that occurs daily. Operating environment managers are to consider include customer needs, competition from other businesses, labor supply, suppliers of the business and international issues. Customer needs are fluctuating and this makes management to have problems in ensuring that consumers are always satisfied. International issues and factors also continuously change making environmental analysis (Gerry et al. 2014). Internal environment involves the level that exists in the organization and has specific implications for management. Factors that are considered in this aspect include planning, organizing, influence, and control of workers in the organization. Managers face challenges in business environment as it entails allot that needs to be analyzed. Stakeholder mapping in the strategic management Stakeholder mapping is important in identification of stockholders. Identification of stakeholders in an organization enables consulting and communication to all the stakeholders so that there is no emergence of a loop at later stages of management may lead to resettlement due to their omission. This always occurs in organizations when not intended. Stakeholders mapping enables proper estimation so that there is no under or overestimation. The identification is essential, as stakeholders with high influence in the organization should be identified for success of a project. Stakeholder mapping also enables giving higher priorities to stakeholders who have high influence in an organization (Gerry et al. 2014). Stakeholder mapping enables identification of priorities of stakeholders in an organization so that important communication is given to stakeholders with high priorities. Stakeholder mapping enable ability to build a relationship that is full of trust. Trust in stakeholders come after the potential of each stakeholder has been identified and priorities given. Mapping also brings about awareness of stakeholder influence in an organization. This increases success in a project as it allow for changing engagement and communication level. Identification of stakeholders is important as it allows for choosing the right stakeholder for a given project. Projects can be delayed when stakeholders are not well-identified (Gerry et al. 2014). Stakeholders’ mapping enables analysis of stakeholders stating the expectations that are in the stakeholders and the impact that they are able to generate. Type of priority to be given to each stakeholder can also be identified through mapping. Limiting the role of stakeholders in an organization can be carried out through stakeholder analysis. In the analysis, a six-step process is carried out. The first step involves developing purpose and procedure of analysis and initial understanding of the system. The step involves consideration of the objectives that an organization has for involving a stakeholder. The second step that managers can use in restricting stakeholders is identifying main stakeholders in the projects of the organization. The third step involves investigating interest that stakeholders have their characteristics and the situations that they are needed. The interest and characteristics that stakeholders possess should be those that are desirable to achieving the project they are to be involved. The fourth step involves identification of patterns and context of interaction between stakeholders. After identification of patterns, the next step involves assessing the power that stakeholders have and potential roles. The last step managers carry out is identification of options and using the findings to make progress. Managers through the six steps will be able to limit roles of stakeholders, as they will be aware of the potentials of the stakeholders. Power and politics in strategic management Power and politics in organization is used to resolve conflicts that come about due to desires and interest that different departments may have in an organization. Organization politics in strategic management involves that process in which these rivals are played. Members of an organization also use power to enable cooperation so that there is achievement of a common goal and compete for rewards. It is through the political system of an organization that there is possibility in resolving rival interests. Understanding political set up of an organization also enable strong influence on the political climate of an organization through their decisions, their way of handling conflict and providing recognition, support and inspiration to their teams. Negative organizational politics may be very destructive for an organization. This has been identified as one of the major sources of stress within modern businesses. Negative politics includes the use of subversive methods to promote a personal agenda, which may undermine organizational objectives, distract energy away from organizational goals, and compromise the interests, cooperation, and fulfillment of other employees. Such strategies may include sifting or distortion of statistics, non-cooperation, assigning blame, retaliations, dishonesty, obstructionism, and fears. Impression management is another aspect of organizational politics that it is important to maintain awareness. The term refers to techniques of self-presentation where a person may purposefully control the information they put forward about themselves or their ideas to create a favorable impression. For the leader this implies that everything may not always be as it appears. Studies have indicated that their supervisors may more favorably rate people using impression management than others. On the other hand, being aware of the impression you are creating should be considered in building support for your own goals. The extent to which impression management is applied is an ethical question that relates to a leaders credibility and integrity. Impact of technology on globalization of industries There are several impacts that technology has about in globalization of industries. Technology has facilitated opportunities for economic development in companies. The technology has enabled gaining of information about services that are provided in the whole world. This has enabled developing countries to develop infrastructure to facilitate trade as in other countries. Technology has also raised per capita income for several countries, which indicates the importance of technology. Information technology was necessary to enable globalization and this technology emerged from developed countries. It changed the economic relationship between countries because it made knowledge an increasingly important component in the production of goods and services. Knowledge and high tech industries are the fastest growing in the world today and for countries to compete in the sectors they need to invest substantially in education and training. This is easier for some countries than others are. Large multi-national companies doing business in developing countries have typically introduced technology there and so the technology used has originated in developed countries, where most of these companies’ research and development takes place. Many argue that this is increasing the power of the MNCs in international markets and weakening the bargaining power of developing countries. Most industrialized countries were the founders of technological revolution that lead to globalization. Revolution has also affected other sectors of the economy. International comparative advantage of industries has increased due to technology enhancing competition of the industry worldwide. Industries with high knowledge and technology incentive have been the fastest growing in the global sector. This shows the important role technology has played in industries that operate in international basis. Through technology, businesses are able to increase the quality and quantity of goods that they produce. In this aspect, the industries are able to compete effectively in international basis. Technology has enabled growth in economies as it has opened economies for growth. There has also been maintenance of close economies that expands industries. Faster economic growth through technology has increased demand of goods resulting to expansion of industries. The factor has increased foreign direct investments in other countries. There has been an impact of converging forces due to advancement of technology. In 1980s, manufacturing industries were in a decline but the sector has made a comeback due to technology that has been used in manufacturing. The comeback has also increased goods that are exported from the country resulting to globalization of industries. Integration has been made on new technologies, national markets, and improvement of supply chain management. This has enabled production to increase to another level (Gerry et al. 2014). Increase in production has been due to reduction in manual labor. Growth in economies has been facilitated by technology in the economies. Growth in technology that tends to outpace economies has made the industries to increase their operations in other countries. This leads to increase in global trade and operations. Technology has also caused an impact on wages and employment (Gerry et al. 2014). Wages and employment has increased as personnel that uses technology can be hired in a global basis and the wages that they are paid has also increased. Merger and acquisition for strategic management An acquisition is the buying of company that is completely engrossed as an operating minor or division of the obtaining corporation. Acquisitions usually occur between firms of dissimilar sizes and can be at times responsive or unfriendly. Unfriendly acquisitions are often referred to as takeovers. Integration of employees is one of the most critical issues for smooth organizational transition towards a new firm. Employees are made to understand each other in the new organization. It is particularly crucial in knowledge-intensive firms, including technology based as well as accounting firms. In a study of large firms acquisitions of small technology-based firms, for instance, reported that in 60 % of cases where key R&D personnel (Such as the general manager) left the firm, the acquisition resulted in subsequent divestment or other manifestations of failure. The possibility of successful integration depends on the pair’s structural and cultural similarities, since the integration of like cultures faces lower resistance from organizational members. Organizational structure delineates how the organizations members should coordinate and divide their responsibilities. When precursors have the same structure, organizational members may not have trouble in working under the "new" structure since the new structure is likely to be similar with precursor’s structure. A new firm created by a mergers and acquisitions of firms with differing structures must establish a coherent structure for efficient functioning. The structure approved will be new to some of organizations members. Therefore, they will have to correct or adjust their activities and this alteration and learning may not be easy to some members. Therefore, mergers and acquisitions of firms with similar structures will outperform others. Familiarity through organizational members network ties can facilitate the post-merger integration process for various reasons. A pair of firms of which members are densely tied to each other will have similar cultures and routines before the M&A. First, they will have like setting of orientation and cultures. Many theorists agree that people are subjective in forming their insight or approach by those with whom they cooperate. People with network ties may have similar views on how the organization should be structured and managed. Two firms, of which members are densely tied, therefore, will have similar cultures and routines. Importance of changes in strategic management . Currently the talk is a lot mainly on change management because firms are set in a much more active environment than in the earlier times. The economy is changing and is mainly focusing on the global level. There are shifts that have been done to cultures. Organizations are moving from a western business approach to a culture of countries in accelerated development. Managers can consider several factors in changes that occur in an organization. The approaches that they can use are those including having well defined goals and objectives. In management of changes, managers will ensure that the changes are made according to the goals that the business have. Another approach that can be used is the management having commitment to change. Establishing and communicating ownership and accountability to changes is a factor that is also considered in an organization. Management should also consider standardized project management practices. Having each of these practices, though important and used frequently by Change Enablers, is not enough. It is also critical to communicate effectively the outcomes of these practices throughout the organization. For example, while defining milestones and metrics is a key first step, company-wide communication of their effect to the initiative is crucial. Notion of strategic management Several factors are involved in strategic management. Strategic management considered decisions on what is important for the long-range success in an organization. When the decisions have been made, it is important that the organization will focus on them to ensure that they are achieved. Strategic management also involves the question on how positioning of a business should be done to achieve the management goals that a business have. Business management involves the big picture of a business with involvement of planning, analysis, and implementation of a business strategy. A notion and a factor that is considered in management is that there is ability of carrying out all things. This will involve the belief that all things are possible. Strategic management should also consider matching business resources to market opportunities that are involved. Strategic management involves seeking and identifying opportunities and threats in the market and industry and the outside world in general. Strategic management also is based in the fact that there is no equality in organization and this is brings about the issue of competition in a business environment. For competition to be effective there is need to consider weakness and strengths of the business foe effective control and planning of activities and projects that are carried and stakeholders that are involved. When evaluating strengths and weaknesses, individual skills and abilities are possible to be more significant than assets that a business has. Strategic management involves focusing into the future rather than taking time on the actions of the past. Strategic management should also be considered to be proactive than being reactive. This will enable achieving all the objects that an organization has. As a notion, strategic management involves anticipation of chances and taking advantage of the chances that come out in the operation environment. Taking advantage in the environment is through identification of strengths. Strategic thinking contains evaluating how decisions made currently will affect the business in the future. Strategic management involves a state of mind application than a rigid process. A military connotation of strategic management is “it hasn’t won every war, but it has avoided a lot of ambushes.” Strategic management is most useful for businesses with unique or differentiated products for niche, specialty, or differentiated product markets. Strategic planning comes before business planning. Strategic planning is used to identify and assess alternative business strategies. Business planning is used to implement a business strategy. Strategic planning is more words and less numbers than business planning. A strategic plan is a “living” document that changes as your goals and resources evolve. Relevance of resource analysis The differences in performance are due to several factors. First, the firms may have different competitive edge (i.e., belong to different strategic clusters in the industry) and some positions may be more attractive than others may. However, the more important difference is the disparity in competitive advantages between the various firms. Competitive advantages are abilities, assets, skills, capabilities, etc., that enable a company to compete more effectively in its industry. A basic tool for analyzing a firm’s competitive position and advantages is SWOT analysis, as was indicated in before. However, before we examine the various methods for measuring competitive advantage, an organization make sure to understand the notion and the different kinds of competitive advantages that are available to the organization. An organization’s competitive advantages change from the capitals available to the firm. Resources are physical assets (this involves land, equipment, buildings and cash), intangible resources such as, brand name, market share, product patents, technological know-how, or capabilities for example learning skills, product expansion processes, fast delivery periods and abilities of a manager. Investigating a firm’s capitals is an essential step for a manager when outlining and applying strategy of the organization. Strong resources are to support an effective strategy, and when there are changes in strategies, accompanying changes in competitive advantages and, therefore, resources are usually necessary. The hierarchy of development illustrates how managers select and develop specific resources available to them, then slowly shape them into competitive advantages, and sometimes-competitive capabilities and sustainable competitive advantages and capabilities. aOne of the key strategic decision-making judgments managers face is deciding what resources to develop or acquire. Top managers spend an inordinate amount of time analyzing, selecting, acquiring, or developing the necessary resources to enable their firm to be competitive. These resources and competitive advantages must be constantly upgraded or altered to enable a firm to maintain its competitive advantage relative to other firms in the market. An important approach to identifying competitive advantages and capabilities in a firm is through value-chain analysis. A value chain is defined as the path upon which products or services progress along as value is added, prior to reaching the end consumer. A generic value chain is brought out as an important aspect in strategic management. A value chain is made up of primary activities including inbound logistics, processes, and outbound logistics, promotion and sales and also services that are rendered by the business ) and support activities (firm organization of activities, management of available human resources, technology development, and procurement). Firms try to gain competitive advantage by increasing the value to customers in one or more activities relative to competitors. Value is defined as improving the worth of the product or service to the customer through either lowering the price or increasing the product or service characteristics. Managers must focus on increasing the value to the customer while attempting to minimize the costs to the firm—this maximizes total profits to the firm. These two issues are called strategic value and cost analysis. The analytical approach must combine an analysis of the firm’s total industry value chain and the firm’s competitive position. The manager must appreciate the relationship between the firm’s competitive position (this is through its customers that are served by that competitive position) and the value provided to these customers by the various activities in the firm’s value chain. The analysis must include value provided by assets possibly not owned and controlled by the firm, including such things as the quality of service provided by their chosen retail distribution channels, and the quality of raw materials provided by suppliers. All of these factors may influence customer value. Roles of managers in process analysis Managers are always having the role of carrying out processes in strategic management. Management scans both the external environment for opportunities, threats, and the internal environmental for strengths and weakness. There are considerations that are made by the managers when making process analysis. The elements that are considered include environmental scanning, strategy formulation, and strategy implementation and evaluation control. Strategy formulation is the development of long-range plans, which are used for the effective management of opportunities, and threats, which take into consideration of corporate strengths and weakness. The process includes definition of corporate mission, specification of achievable objectives and development of strategies and setting guidelines for policy. An organization’s mission is its purpose, or the reason for its existence. It states what it is providing to society. A well-conceived mission statement defines the fundamental , unique purpose that sets a company apart from other firms of its types and identifies the scope of the company‘s operation in terms of products offered and markets served. Objectives of an organization are considered in the process of analysis (Gerry et al. 2014). Objectives are the results that are due to planned activities. The objectives are fundamental in stating the accomplishments that are to be achieved after a given period and which should be quantified. The analytical approach must combine an analysis of the firm’s total industry value chain and the firm’s competitive position. The management should ensure it achieves this role. Strategies in formulation are the comprehensive master plan, which states how there are to be achievement of missions and objectives. It maximizes the competitive advantage and minimizes what brings about competitive disadvantage. The typical business firm usually considers three types of strategies: policies, corporate governance, and social responsibility, strategy decision making and making better strategic decisions. Environmental scanning involves scanning and monitoring, dissemination, evaluation and dissemination of information from external and internal environments to keep people within the organization. This is a tool and method that can be used by corporations to avoid strategic surprise and to ensure that there is long-term health. Scanning of external environmental variables is a factor that is considered under environmental scanning. This always focuses on economic forces, technological forces, political legal forces and socio-cultural forces. The social environment contains many possible strategic factors. The number of factors becomes enormous when one realize that each country in the world can be represented by its own unique set of societal forces, some of which are very similar to neighboring countries and some of which are very different. Strategy formulation Corporate strategy is primarily about the choice of direction for the firm as a whole. This is true whether the firm is a small, one-product Company, or a large multinational corporation. In a large multi-business company, however, corporate strategy is also about managing various product lines and business units for maximum value. In this instance, corporate headquarters must play the role of organizational “parent” in that it must deal with various product and business unit “children”. Directional strategy is also a formulation factor that is considered. This is because every business follows a business strategy to improve growth and competition position. In this aspect, every corporation is to decide its orientation towards their growth by considering expansion, concentration of activities and internal development through external acquisition. Growth strategies By far the most widely pursued corporate strategies of business firms are those designed to achieve growth in sales, assets, profit, or some combination of these. There are two basic corporate growth strategies: concentration within one product line or industry and diversification into other product and industries. These factors can be acquired either internally by participating in new product improvement or externally by the use of mergers acquisitions or strategic associations. A merger is a contract involving two or more organizations in which stock is substituted, but from which only one organization survives. Mergers in many occur between firms of slightly similar size and are usually responsible. The resulting firm is likely to have a name derived from its composite firms. Conclusion There are factors that ensure that strategic management is achieved and all objectives are met. Engagement is a factor that should be considered in management, as there is no planning that can be strategic when there is no engorgement of all levels of an organization. Engagement of staff during planning leads to generation of additional input and helps in building commitment to make sure that all the objectives are met. Strategic management involves innovation in activities that an organization carries out. Management strategies may involve development of a new product or rendering a new service. Innovation will involve putting groups together to work in development of major initiatives and giving out resources to ensure that the innovative objectives are met. Strategic management should involve trying out something that is new even with the risks that are involved. Most industrialized countries were the founders of technological revolution that lead to globalization. Revolution has also affected other sectors of the economy. International comparative advantage of industries has increased due to technology enhancing competition of the industry worldwide. Reference Gerry Johnson, Richard Whittington, Duncan Angwin, Kevan Scholes 2014, Exploring strategy: text & cases Read More