The Impact of Strategic Management on the Resources of a Business - Term Paper Example

Strategic Management of Resources Introduction: Every organisation is faced with a number of different decisions that it is required to make to enhance their business. It is a known fact that behind every successful business there is a strong and well planned strategy (Mintzberg, et.al, 2002). Strategy plays a very essential role in every business and is the in some terms the backbone for the businesses. There have been a number of different views and explanations of strategies by different authors. As said by Markides (1999), “There is surprisingly little agreement on what strategy really is”. This paper aims at understanding the impact of strategic management on the resources of a business and how the business can be impacted by the strategy. Also a brief explanation of change management will also be included to provide a clear understanding of the need of strategy in a business. What is Strategy? Strategy includes a number of different aspects that it is associated with. Firstly, a strategy is normally long planned. This is in a hierarchical system of goals and objectives. A strategy is a combined effort to create a blend between the external environment, internal resources and the capabilities of the resources within the business (Bernus, et.al, 2003). “Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.” (Johnson, Scholes & Whittington, 2006, p. 9) According to Johnson et.al, (2006), there are six major elements that strategic decisions are made out off. It is essential to understand that strategic decisions are normally long term directions of organisations, which include the scope of the organisation. Also this includes to a great extent gaining advantage over the competitors and addresses the changes that happen within the business environment. Strategies that are developed, try to develop the resources and try to improve the capabilities of the people within the organisation. These strategies are also expected to be based on the values and expectations of the stakeholder. There are a few different schools of the thoughts for the views of strategy. Each of the views of thought has been over the years from 1960s until now. The 1960s and the early 1970s, saw the school of thought where the strategies were expected to be systematic and with analytical approach. Following which the change in the need for strategy, this period aimed at having strategies which are more focused on assessing the competitive forces and the strategic positioning (Mintzberg, et.al, 2002). This was mainly a period where the companies tried harder to ensure that the businesses are well positioned and was competitive in nature (Nickols, 2004). Following which a period during the 1980s was more focused on complexities and uncertainties. These generally included a study of the external factors that affect the working of the company as well. The later 80s saw a school where resources were given more importance and the strategies were more based on the unique resources and core competences. Post the 1990s the strategies moved in to the configuration school of thought (Mintzberg, et.al, 2002). Importance and Relevance of Strategy: According to George Steiner, strategy has become a part of the management literature as a mode to compare and counter the competitor’s actual or possible moves. He also highlights in his works that there is very little people who agree to the meaning of strategy in the real business world. He uses a few different definitions to explain strategy: “Strategy is that which top management does that is of great importance to the organization. Strategy refers to basic directional decisions, that is, to purposes and missions. Strategy consists of the important actions necessary to realize these directions. Strategy answers the question: What should the organization be doing? Strategy answers the question: What are the ends we seek and how should we achieve them?” (Nickols, 2004). It was around 1979, that strategic planning saw a rise and this was when a number of different authors provided different explanations for strategy. This caused the decline of strategic planning in 1980s. However this again saw a rise once Mintzberg expressed his views on the subject. According to Henry Mintzberg, strategy can be used by people in a number of different ways of which he has discussed the essential ones to be, a) strategy is a plan of how to get from a here to there, b) it can be considered to be the actions over time, c) it refers to the position, i.e. how products and services can move to particular markets, and d) it is a perspective, i.e. it refers to a vision, mission or direction that the company undertakes. He has developed a number of different arguments which imply that strategy is something that would grow over time and normally accommodates reality. Mintzberg has used a realistic approach towards defining strategy. He has supported earlier literature that has been developed by others in relation to strategy. One of the authors he has majorly supported is Kenneth Andrews. In short, Mintzberg’s definition of strategy is more realized and is an emergent strategy. Understanding the competition is one of the most important aspects of strategic planning. Effective plans can only be designed if the business is aware of its environment and the current participants in the market. This is the first step of understanding the business environment and is the most immediate layer of environment. The strategic plans require understanding the direct as well as indirect competitors (Johnson et al, 2006). Competitive advantage is a very important to be correctly understood. Since the business is one with very less competition, it is essential to understand how the business has an edge over its competitors. This will allow the owners to get a clearer view of the positives of the company and utilise these strengths to work against the competitors (Johnson et al, 2006). Analysing the strategic position of the company it is easier to develop a plan for the company’s future and build the business towards success. All these steps are essential for every company to succeed. In the case of the any business as well strategic planning plays a very important role as it provides the company with a clearer image of the business and the strategic position of the business hence allowing it to effectively utilise its strengths and opportunities and change its treats and weaknesses to strengths. Strategic Management of Resources: There are a number of different thoughts that have been laid down this clearly shows why there is a question of what a strategy really is. There is uncertainty if strategy is a plan, or whether it’s a route to obtain ends, or positions. Strategy is a combination of four major things, i.e. perspective, position, plan and pattern (Mintzberg, et.al, 2002). The strategy normally in simple terms can be described as the as a web of thoughts, insights, and ideas, experiences, and goals. It also includes to a great extent the memories, perceptions, expectations and also provides for specific actions of particular ends. It can also be described as the course that has been imagined for the company (Nickols, 2004). Every strategy has a purpose and the end is always taken into consideration and the outcome is also required to be well decided well before hand. Strategy is more like a framework that which provides for the actions that need to be taken and also shaped based on the actions that are taken. A clear end result that is required allows for formulating better and clearer strategies and helps reach unto the ends that are being aimed at. Without a clear view of the end results, strategies tend to be less effective and will not serve the purpose for the organisation as a whole (Mintzberg, et.al, 2002). Based on the various definitions that have been developed over the past, it is clear that the need for a clear plan and a clear set of ideas is very essential for the companies and for the authorities responsible. A comment from Lionel Urwick's classic Harvard Business Review article regarding the span of control is applicable here: "There is nothing which rots morale more quickly and more completely than . . . the feeling that those in authority do not know their own minds" (Urwick, 1956). Without a clear and widespread understanding of the ends, no levels of strategic planning will help the company. However, irrespective of any of the definitions that are considered, the end decision for all the companies is the same. The decision and strategies of a company mainly pertain to the products, services, customers, markets, distribution channels, technologies, pricing, etc. Thus the most essential elements that are required for a strategy are structure, discipline, and a systematic way of making decisions (Nickols, 2004). The strategic planning of an organization depends on the Human Resources Management to a great extent, as HRM plays an important role throughout the life span of an employee in the organization, including recruitment, training, development and retention. A company having a strategic vision will require a continuous supply of resources (personnel). These needs are then communicated to the HR management as and when the requirements arise. A thorough job analysis is then conducted by the HR. (Bach, 2005). According to Barber (1998), effective recruitment is essential for an organization’s success, thus after the job analysis phase, the job specification or behavioural competencies are understood, and people with the appropriate skills who would meet the requirements are acquired. It is the role of the HR management to ensure that the resources recruited strategically fit into the organization and contribute positively towards achieving the strategic vision. Every organization, irrespective of the existence of a retention problem, should have a retention plan. In many cases the retention plan is developed by the Human Resources Management by collecting data from attitude surveys, salary surveys, training needs analyses and exit interviews (Heery and Noon, 2001). This way, the HR management ensures that the company does not lose any useful resources due to the oversight of the needs of the employees. As said earlier, it is essential that the employees recruited must strategically fit into the organization. The HR management devise the training methodologies and strategies, after careful consideration of the job specifications and the way in which the new employee will contribute towards the strategic goal of the organization. (Reid and Barrington, 2001). It is the Hr management’s responsibility to “ensure the integration of personal and organizational development for employees” (Bach, 2005, p224). Keeping the employees motivated is a crucial element to ensure the success of the organization. The HR management acts as the medium giving many opportunities for the employees to develop themselves by acquiring new skills and engage themselves in the continuous learning process. The role of HR does not stop with recruitment and training. The performance of the employee has to be continuously monitored in order to ensure that the hard working employees who have contributed to the company’s success are rewarded and are motivated to continue the good work. Looking at the process in a broader perspective, the main objective is to link the business strategy to job performance (Bach, 2005). The HR ensures that any employee is not affected by discrimination of any kind and is given all what he/she rightfully deserves. The employers are obliged not to discriminate and promote equality which is enforced by the HR management. This plays an important role in maintaining the corporate social responsibility of the employer (Heery and Noon, 2001). This will create a best employer image for the organization which is strategically important. Within the organizations, the management of reward involves two elements – reward decisions and reward processes. HR management has to make the key strategic decisions which concern the level and distribution of pay and also the extent and form of employee participation, training, monitoring and review (Heery and Noon, 2001). The modern HR department manages the reward practise in accordance with the competitive strategy and also supports the adoption of high performance work systems. Apart from the human resources strategy, it is also essential that the company uses its other resources in an effective and strategic manner. Other resources include, the funds, natural resources, patents, advertising, and many more. Effective and strategic use of all of these resources can lead to a more effective and efficient company. For instance, using the IT resources in an effective manner can lead companies to be very well recognised. If a company uses the resources effectively and develops a website for itself, in today’s market the company would receive a higher recognition. This recommended plan will prove to be very beneficial for the company as it will assist the company increase its sales and will also form a major form of marketing for the company as well. The benefit of the website is more of the non monetary along with the monetary benefits. Companies will be provided with a greater amount of marketing as well as a strong goodwill for the company will also be created. The amount of money spent will return at much faster pace as the amount needed to be spent on advertisements and the other transaction costs will be relatively much lower. There is presently a boom in the e – Commerce and internet and this is meeting up to the needs and requirements of the ‘younger generation’. In terms of the resistance it is only possible if the employees will need to put in any extra efforts to complete and send out the ordered goods to the customers. This resistance however can be avoided if the company ensures that the work is well spread out and the employees are not burdened with the work. Also if every employee takes on a part of the work the resistance will be relatively much lower. In brief, the website will allow the company to check on how many users are from which areas of the world and use this information to develop and build newer stores from these statistics. The above mentioned is one of the other examples of how strategic use of the resources can lead to more profits for the company and a better chance of making higher levels of profits. Also the effect of strategically planning and designing every process within an organisation allows the company to build better relationships with all of its stakeholders. Another very important resource that requires to be well planned is the finances. Strategic planning of the finances not only allows the company to use the finances of the company in a more effective manner but also lead to increasing the level of profits that the company is able to retain. Product strategy also plays a very important role in the success of a company. Strategically choosing the products and services that a company chooses to sell is essential as it is important to keep track of the needs of the customers and the trends in the markets. Companies that use this as a strategy for the products and services tend to be more successful than the others which try to force their products into a market. An excellent example for this is that of McDonalds. The company uses different strategies in different countries of operations. For instance, the company is able to sell a Big Mac in the U. S or the UK, where the general public eat beef as a part of their regular diet. However if the company had to use the same technique in India, the company would not be successful. This clearly indicates the strategic study that has been conducted and this aspect keeps the company successful even in India. Conclusion: Strategy can be considered to be a means of attaining the end results. The specifications of the end are more likely to be stated based on the conditions and the circumstances and this however can be known only once the ends are obtained. Strategies are more of a route that is required to be attained rather than what the final aims are, nor for how to obtain the ends (Mintzberg, et.al, 2002). The strategies are only the way that is chosen and the ways how the resources will be utilized. It is also important to understand that the determination of the enterprise is a matter of governance however the achievement is a matter of management. It is to a great extent up to the people who govern the organization to ensure that the ends are legal, ethical and also those which will benefit the members of the company as well as the company itself. Strategy is a joint effort of both people who govern as well as people who manage and the tactics that are normally used are all by people who manage (Nickols, 2004). The means and the resources are generally jointly controlled and the persons who are responsible for the management generally form the people responsible for the employment of resources and this is normally in the context of the ends that are sought. This paper has dealt with some essential aspects like the meaning of strategy and the importance of strategy in businesses. It is clear from the paper that the strategy used within a company has a major impact on all aspects of the company and can lead to the success or down fall of the company alike. Hence as explained in the book by John Thompson, it is clear that every resource in the business requires to be strategically managed to enable the company grow and develop and be successful in the markets. References Bach, S., 2005, Managing Human Resources, 4th edn, Blackwell Publishing, Oxford Barber, A., 1998, Recruiting Employees: Individual and Organizational Perspectives, Thousand Oaks, CA Bernus, P., Nemes, L., & Schmidt, G., 2003, ‘Handbook on enterprise architecture’, Springer Publishers, New York Heery, E. and Noon, M., 2001, A Dictionary of Human Resource Management, 1st edn, Oxford University Press, New York Johnson, G., Scholes, K. and Whittington, R., 2006, ‘Exploring Corporate Strategy’, 7th edn, Prentice Hall, Essex Mintzberg, H., Lampel, J., Quinn, J.B., & Ghoshal, S., 2002, ‘The Strategy Process: Concepts, Contexts and Cases’, 4th Edition, Financial Times Management, Prentice Hall Nickols, F., 2004, ‘Strategy: Definition and Meaning’, 6th October 2004, Accessed on 9th November 2009, Retrieved from http://home.att.net/~nickols/strategy_definition.htm Reid, M.A. and Barrington, H.A., 2001, Training Interventions: Promoting Learning Opportunities, Chartered Institute of Personnel and Development, London Urwick, L., 1956, ‘The Span of Control’, May – June 1956, Harvard Business Review Read More