Social Science Disciplines and Strategic Management - Coursework Example

Strategic Management Table of Contents Strategic management 3 Social science disciplines and strategic management 3 Good and bad strategies 4 Elements of good strategy according to Rumelt 5 Principles of strategic positioning 6 Competitive advantages 6 Leverage 6 Proximate objectives 7 Design 7 Focus 8 Rationale of prescriptive model 8 Rationale of descriptive models 9 Benefits of the prescriptive models 9 Reference List 12 Strategic management Organizational strategies are a collection of ongoing processes that help to coordinate and align different resources, in a manner such that a firm’s objectives can be met. Strategic management process involves making plans, implementation of plans, obtaining feedback and critically analyzing the results for further decision making. The main objectives of strategic management processes are to ensure that organizational efficiency and productivity can be improved. Organizational strategies ensure that all of the stakeholders of the organization are working towards the achievement of the common goals. Allocating resources efficiently is one of the common objectives that managers try to achieve through strategic management and planning. Managers are required to consider both external and internal environmental conditions while taking strategic decisions. The external conditions taken into perspective are the level of competition, political, economical and technological conditions existing in the external environment. Internal conditions refer to the level of skills and abilities of employees and managers, technological and innovative capabilities, resource pool and the efficiency in managing the business suitably (Pearce and Robinson, 2000). Social science disciplines and strategic management The information obtained from social science plays an important role in the strategic management process. Social science refers to the study of the society as a whole. In social science, the conditions prevailing in the society are examined to form adequate understandings for taking important decisions. Organizations require information’s such as tastes and preferences of consumers and changing attitude of the consumers alongside of modernization. Such information can be obtained from social science. The changing tastes and preferences of the consumers play an important role in determining the type of products which requires to be produced. One of the basic functional objectives of a firm is to provide satisfaction to the various needs of consumers. Hence measuring the needs of the consumers becomes an important aspect for developing the right products and services. Social science also provides adequate scope for forecasting the requirements of the society in the future. Based upon such information, organizations can innovate and develop new products which not only help in gaining competitive advantage but also induce modernity and advancement into the society (McWilliam and Siegel, 2000). Social science studies also provide information relating to the changing pattern of population which directly impacts the availability of labour for the organization. Social studies also help managers to understand the level of knowledge and skills existing amongst different segments of the population. Human resource plays a significant role in organization growth and development. Decisions related to the human resource management are dependent on the information that is obtained from the study of the social conditions. In order to survive in the long run, it is essential for the management to forecast the requirement relating to different products in the future. Social science is therefore an effective tool for obtaining such information. It provides information such as the level of changes in population which may cause a rise or fall in the market demand of a particular product. Social science also provides information such the demographic features of the society. If the society is characterized with a large segment of aging population, then organizations may find it difficult to acquire fresh talent. Moreover the payment of pensions and medical facilities also increase considerably (Freeman, 2010). Good and bad strategies Organizational strategies play a pivotal role in its success and long run term sustainment. Therefore developing strong and effective strategies is an important responsibility which mangers are required to undertake. Good management strategies are those which are aligned with the needs and the characteristics of the business. Good strategies promote ethical management and ensures that a healthy and growth oriented environment exists within the organization (Thompson, 2001). Such strategies encourage easy and regular communication between superiors and subordinates. Accurate and timely information dissemination depends upon the development of a strong communication network. It therefore becomes essential for the management to implement a suitable mechanism relating to the flow of information from one level to the other in the organizational hierarchy (Johnson, Scholes and Whittington, 2008). Good strategies also focus upon increasing the motivation levels of employees so that they work more dedicatedly. It therefore becomes necessary to motivate employees by proving awards and recognitions. Organizations must also encourage team work and team spirit within the organization. Effective time and resource management are also considered under good strategic management. The strategies developed by the organization must ensure that the management can reduce costs and wastage of resources. It can be stated that good management strategies solely depend upon the leadership and strong managerial capabilities of the superiors (Priem and Butler 2001). Bad or poor management strategies arise when the management lacks in adequate knowledge and skills required for managing the organization suitably. Strategies become bad or ineffective when decisions are taken prior to the establishment of goals. Bad strategies cause organizations to lose revenues and they also result in the wastage of precious resources. Organizations are seen to take decisions without giving proper consideration to the objectives and the vision of the business. As a result activities are undertaken which are misleading and the firm fails to achieve its goals. Bad strategic policies also cause conflicts between employee and superiors. This disrupts the internal environment of the organization. Lack of communication and misinterpretation of information may also cause the management to take faulty decisions. Managers must also realize that strategic decisions are not the goals of the organization. Goals represent the ultimate achievements that the firm wishes to achieve through different types of strategic policies. Therefore strategies are the pathways which are identified to obtain a desired objective and are not the goals themselves (Barney, 2001). Elements of good strategy according to Rumelt In the book “Good strategy bad strategy: The difference and why it matters”, Rumelt (2011) has described about the different types of strategies that firms undertake and how they are termed to be good or bad. The author is of the opinion that good strategies are straightforward and simple. Good strategies are developed based upon the strengths of a firm and the opportunities which are available for it in the external environment. Developing strategies is a process whereby organizations identify different issues existing in the market and in the surrounding environment and take decisions accordingly. Good strategies are result oriented and deliver the business with success and growth. Managers must realize that good strategies have very less connection with the vision, mission and the ultimate goals of the organizations. If strategies are based on the ultimate objective solely, they become unrealistic. Strategies must be related to the day to day work of the organization and how different operations are conducted. Business goals on the other hand are the net results achieved by an organization over a period of time. The author has also stated in his book that good strategies are focused upon the development of an action plan that helps in overcoming specific challenges. They are well analyzed by experts and then implemented. Good strategies are focused upon solving the problems and move the organization ahead in a profitable manner. Good strategies also provide the scope of developing intelligent ideas and solutions for improving the manner in which the business is being conducted (Rumelt, 2011). Principles of strategic positioning According to M. Porter (2008), in order to establish a distinctive position of strategic management, certain principles are required to be followed. These principles are; to establish accurate goals, delivering value and benefits, effective value chain development, tradeoffs between unique features, unity amongst elements of business and direction continuity. A firm must develop goals which lead to the generation of economic gains and sustainable value gets generated. The set of benefits which an organization offers must be distinctively different from those which competitors have to offer. The value chain established must reflect the company’s policies and objectives. A firm is also required to trade off between a numbers of unique features in order to select those which are different from competitors. The management of a firm is envisaged with the task of collaborating and organizing all the elements of production in a manner such that the objectives of the organization can be met. The values and objectives which are set by an organization must ensure that there is unity and continuity of direction (Bedrossian, 2010; Porter, 2008). Competitive advantages Leverage Leverage can be described as a technique which is used by organizations for increasing their revenues. However leverage strategies induce a certain amount of risks within the firm. One of the most common leverage strategies adopted by a firm is to finance assets through borrowed funds. Firms expect that the revenue generated from the assets would be higher than the borrowed capital. However the strategy might not be successful if the asset does not produce the desired amount of revenues. A business may also leverage its operations by using fixed costs as inputs. Such a strategy provides positive results if the revenues are variable and are higher than the costs incurred by the firm. Hedging is also a strategy undertaken by organizations for reducing the risks of the firm. Such strategies help organizations to earn greater profits and achieve competitive advantages over other firms (Hitt, Ireland and Hoskisson, 2012). Proximate objectives Proximate objectives are the tools used by organizations for solving complex business issues. The process of developing proximate objectives includes identifying the core issue and collecting relevant data pertaining to the problem. Proximate objectives are the solutions which are identified for solving a problem. They are basically the options which are available to the managers for analyzing a given situation. For instance if the managers perceive that the rates of interests are expected to rise in the future, then the situation can be analyzed in the following manner: Proximate objective 1: Impact upon revenues if the interest increases by more than 5%. Proximate objectives 2: Impact upon revenues if the interests increase by less than 5%. It can be stated that proximate objectives help managers to view a problem from different perspectives. Organizations operate in a highly complex and changing environment. As result it becomes necessary to develop different plans in advance. This helps organizations to achieve competitive advantages over other firms (Hill and Jones, 2007). Design The manner in which an organization designs its products plays an important role in developing competitive advantages. Design sets the products of a firm different from those of its competitors. This leads to the development of competitive advantages. Designing a product is also deeply related to the needs of the consumers. Organizations are required to design products considering the specific needs of the consumers. This helps in generating greater competitive advantages in the market. Firms must analyze the ultimate needs of an organization before they design a specific product. Firms are seen to design products attractively neglecting its productivity and functionality. If a product is not capable of meeting the needs of consumers, then it is not capable of generating adequate demand even though it looks attractive (Kaplan and Norton 2001). Focus Focus refers to the process of identifying suitable opportunities for the growth of the organization. The strategy is to match the objectives of the organization with the needs of the organization. Focus strategies mainly involve reducing the costs of operation and developing the quality of the products. Focus strategies also concentrate upon developing the brand image of a product (Thompson and Martin, 2005). Rationale of prescriptive model The prescriptive model utilizes the rules of the business, the data related to the problem and the different solution available to the same. The prescriptive model also takes into account mathematical tools for strategically analyzing the data and choosing a suitable alternative. Before taking crucial decisions managers are required to analyze a given situation closely. Usually the strategic decisions are taken in a collective manner which includes a number of managers and subordinates. The first step towards strategic decision making is to provide all members involved in the process with the facts and figures of the issue. It is essential that members have adequate knowledge regarding the problem for which the solutions are required. The next step is to ensure that the perception developed by individuals regarding the problem is the same. This can be known by describing the important facts of the problem and having discussions regarding the same. Once the problems are known, the next step is to think about the prospective solutions which can solve the problems (Stacey, 2007). The prescriptive model of strategic management mainly involves combining different types of data so as to develop proper solutions. The data may come from internal sources such as the financial statements of the firm or the performance reports. External data mainly comprises of the reports relating to the performance of competitors, economic conditions and the market related reports. The perspectives from which the problem is analyzed also plays a significant role in developing suitable solutions. A given situation can be analyzed from different perspectives such as risks, innovation requirements, costs factors and quality matters. The prescriptive from which a situation requires to be analyzed depends upon the subject matter of the problem itself. In other words, the patterns in which an organization thinks, shapes its strategies and ultimately the manner in which problems are solved. In general, it is observed that organizations are required to consider the cost, risk and the resource requirements while taking strategic decisions. Decision must be taken in a manner such that there are no negative impacts upon the productivity and the quality of products and performance (Barney and Hesterly, 2009). Rationale of descriptive models The descriptive model of strategic decision making involves analyzing the past events so as to gain insight regarding the future course of action. Often an organization is seen to critically analyze its past performance and follow similar strategies for irradiating current problems. Hence it can be stated that the descriptive model takes into consideration historical data while taking decisions. Under this model mangers critically analyze the reasons behind past success and failures. Managers from different departments such as finance, marketing, sales and operations are seen to use the descriptive model of decision making. The descriptive model emphasizes upon providing solutions to the problems rather than outlining the problems itself (Cravens and Piercy, 2008). The descriptive model states what needs to be done for solving complex issues. The descriptive model also considers the relationships existing between different factors such consumer tastes and sales. The method tries to analyze the results when there are changes in a given variable. The process helps to analyze the impacts of changing circumstances on the net revenues earned. Under the descriptive model managers conduct through research upon the past performances of the organization and accordingly plan their future course of actions. Many at times managers are required to take immediate decisions. Under such circumstances, managers are required to rely upon the data which can be collected fast. Hence they collect relevant data from the past decision making processes. Since such information is available from within the organization itself, organizations are not required to rely upon external sources. In case of exhaustive decision making processes, managers may consider procuring information from external environment as well (Wheelen and Hunger, 2011). Benefits of the prescriptive models The prescriptive model of strategic decision making analyses the internal resources of the organization and compares the same with the environmental conditions. Therefore the process incorporates analyzing the resources which are available to the firm. Resources play an important role in performing different activities. Resource mapping also facilitates analyzing the strengths of a firm and accordingly undertake different types of activities. The system also facilitates understanding the additional resource requirements for performing certain types of jibs a=or undertaking specific projects. Managers are therefore also required to examine the resources which are required for performing certain tasks. The competencies required for performing different tasks are then compared with the existing skills and abilities of the firm. The additional resource requirements are fulfilled by investing in the same (Swayne, Duncan and Ginter, 2012). The prescriptive model also takes into account the objective and the purpose of the strategy. Every strategic decision has a specific set of goals which requires to be fulfilled. These goals are usually related to the short term requirements of the organization. The goals are the ultimate results which the organization aims to achieve. Actions are required to be planned in a manner such that they help in the achievement of the desired goals. It can therefore be stated that the descriptive model is largely a result oriented approach for solving complex managerial issues. Every option which is available to the management is studied from the perspective of the results that they generate. The option which yields the most profitable results is undertaken by the management (Klein, 2009). The prescriptive approach of decision making recognizes the fact that external condition are subject to changes. The decisions and plans made by the management regarding the future course of action must be flexible. This facilitates making easy changes to the plans. Organizations are required to respond to changes which occur in the external environment. A business is part of the society and the economy as a whole. Hence changes in the social or economic conditions may affect the manner in which an organization functions (Shook, et al., 2004). The development of a new type of technology may lead to the development of new products. This may render loosing the market for many existing products. Therefore many organization may get negatively impacted due to c=such changes in the external environment. Organizations are therefore required to forecast such aspects which may arise in the future and accordingly develop different types of strategies for meeting them. Analyzing external environmental condition also encourages firms to invest in research and development related activities. In order to maintain an adequate market, firms are required to continuously study the needs of the society and accordingly develop different types of products and services. The innovative abilities of a firm play a crucial role in its long term success (Zajac, Kraatz and Bresser 2000). The prescriptive strategies of decision making also ensures that the decision taken by management are logical and suitably matches the needs of the organization. The choices made by the managers must be realistic and achievable. Managers are seen to undertake simulation studies in order to understand the impact of particular decisions before implementing them across the organization. Such experimenting techniques facilitate the management to obtain a picture regarding the ultimate impacts of their decision. Many results are not perceived during the initial stage of formulation of plans. These get revealed through such simulation processes (Kloot and Martin 2000). The prescriptive strategies are long term oriented. Managers are required to analyze the impacts of their decisions over a long period of time. Short term benefits cannot often be sustained by an organization in the long run. Therefore when decisions are taken focusing upon the short term needs, they are not productive. The short term situations of the environment do not last for long. As a result decisions which are taken considering the current conditions become obsolete as the scenarios changes. In the prescriptive approach, the main objectives are formulated in advanced. Based on the objectives the managers are required to formulate plans of action. The prescriptive approach also emphasizes upon the aspect that the task of the managers does not get over once the plans are implemented. It also becomes essential to check and monitor whether the activities being conducted in the organization are in line with the pre-established plans of action. Wherever there are deviations, managers must take immediate corrective measures (Choo and Bontis, 2002). Reference List Barney, J. B. and Hesterly, W. S. (2009). Strategic management and competitive advantage. New Jersey: Pearson Education. Barney, Jay. "Is the resource-based “view” a useful perspective for strategic management research? Yes." Academy of management review 26, 2001, pp. 41-56. Bedrossian, H. (2010). Six Principles of Strategic Positioning (M.Porter). Availavble at: [Accessed 19 August 2014]. Choo, C. W. and Bontis, N. (2002). The strategic management of intellectual capital and organizational knowledge. Oxford: Oxford University Press. Cravens, D. and Piercy, N. F. (2008). Strategic marketing. New York: McGraw-Hill Irwin. Freeman, R. E. (2010). Strategic management: A stakeholder approach. England: Cambridge University Press. Hill, C. and Jones, G. (2007). Strategic management: An integrated approach. Connecticut: Cengage Learning. Hitt, M., Ireland, R. D. and Hoskisson, R., 2012. Strategic management cases: competitiveness and globalization. Connecticut: Cengage Learning. Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring corporate strategy: text & cases. New Jersey: Pearson Education. Kaplan, Robert and David Norton. "Transforming the balanced scorecard from performance measurement to strategic management: Part I." Accounting horizons 15, 2001, pp. 87-104. Klein, D. A. (2009). The strategic management of intellectual capital. London: Routledge. Kloot, Louise and John Martin. "Strategic performance management: A balanced approach to performance management issues in local government."Management Accounting Research 11, 2000, pp. 231-251. McWilliams, Abagail and Donald Siegel. "Corporate social responsibility and financial performance: correlation or misspecification?" Strategic management journal 21, 2000, pp. 603-609. Pearce, J. A. and Robinson, R. B. (2000). Strategic management: Formulation, implementation, and control. New York: McGraw-Hill. Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster. Priem, Richard and John Butler. "Is the resource-based “view” a useful perspective for strategic management research?" Academy of management review 26, 2001, pp. 22-40. Rumelt, R. (2011). Good strategy bad strategy: The difference and why it matters. New York: Random House LLC. Shook, Christopher, David Ketchen, Tomas M. Hult and Michele Kacmar. "An assessment of the use of structural equation modeling in strategic management research." Strategic Management Journal 25, 2004, pp. 397-404. Stacey, R. D. (2007). Strategic management and organisational dynamics: The challenge of complexity to ways of thinking about organisations. New Jersey: Pearson Education. Swayne, L. E., Duncan, W. J. and Ginter, P. M. (2012). Strategic management of health care organizations. New Jersey: John Wiley & Sons. Thompson, J. L. (2001). Strategic management. Connecticut: Thompson Learning. Thompson, J. L. and Martin, F. (2005). Strategic Management: Awareness, Analysis and Change. Connecticut: Cengage Learning. Wheelen, T. L. and Hunger, J. D. (2011). Concepts in strategic management and business policy. New Jersey: Pearson Education. Zajac, Edward, Matthew Kraatz and Rudi Bresser. "Modeling the dynamics of strategic fit: A normative approach to strategic change." Strategic management journal 21, 2000, pp. 429-453. Read More