Strategic Management - Literature review Example

Strategic Management Management is considered the utilization of one’s possessions and resources effectively and efficiently by manipulation, supervision and coordination with an aim of getting the desired goals and results. In many organizations the management ought to use the resources availed to them to reach the greater good of the organization. In order for such results to be attained, the management should come up with a modus operandi that will secure their profitability. In order to achieve this, they are supposed to have a means of operations or strategy and a way to manage it. Strategic management can be viewed as a science or art that is capable of devising, execution and appraisal of integrated decisions that are supposed to assist the organization to achieve its objectives. Strategic management mainly involves the harmonization of all departments in an organization with an aim of achieving its goals. (Fred R, D. 2011, p.6.). This mode of management is aimed at doing analysis, making decisions and carrying out actions that help an organization in being profitable on basis of their strategy. According to Tyndall et al 1990, strategic management is broken down into various stages. These phases are, Definition, internal and external auditing, formulation, translation, formulation of strategies to achieve objectives, implementation and finally, evaluation. In this task, the focus will be an in depth analysis into strategic management taking into consideration both neo and old theories of the same. Like any other management field, we have different strategies that work for different people or organizations. The different strategies mean that we have different theories that have emerged that suit different organizational set ups (Senge 2006, pg 36). We are going to look at ten schools of thought given to us by three management theorists i.e. Henry Mintzberg, Bruce Ahlstrand and Joseph Lampel in their book, strategy safari. In this publication, we are made aware of the following schools of thought namely; design school, scheduling school, strategizing school, entrepreneurial school, cognitive school, learning school, power school, cultural school, environmental school and the configuration school. As mentioned earlier, strategic management has quite a number of schools of thoughts or theories. Despite this fact, strategic management is mainly supposed to do the following, analyzing, decision making and executing. This means that managers have the responsibility of analyzing their intended goals. These objectives should be able to take into consideration both external and internal factors that will have an effect to the organization. After examining their objectives and targets, the managers are supposed to make up their minds on which markets they find fit to venture and which to avoid. Execution of the decision they arrived on is the last thing to take place. This means that managers are left with the final determination on determining how they are going to ensure that their firms reach the desired profitability. In order to achieve this, it is mandatory for the leaders to distribute and avail the required resources and structures so as to make their strategies practical. The implementation process is not necessarily the last process since these processes are evolving and need to be intertwined at all times so that they can come up with a complete and successful strategic system. The other reason as to why strategic management is vital in the success of a company is to be able to comprehend why some firms are more profitable than others. This will make the managers come up with a plan that will help them beat their competition. This will assist in their longevity in the market. Therefore they should always be on their toes to know how they should compete in that market. Managers ought to know whether they will produce or give cheaply produced goods or services or if they should go for expensive production or a combination of both (Butler 2001 pg 77). The decision makers when coming up with their strategies should also keep in mind how long are their unique ideas going to stay in the market without being duplicated or copied by their competition. Many organizations fall victim to these. When one comes with a nom patented product which does well in the market it will only take a short time before other copies or substitutes emerge. Therefore, a successful strategy in one which is different and better than your competitors. According to (Selznick 1957, pp. 62, 67-68), the design school of thought implies that the management sets its standards and goals. These goals are set when factors like; the existing conditions, what it can do about them and to what limit it can do them. He says that, when setting the goals of an organization, the leaders must take into account various factors. The innate structure of the policy, the exterior factors that dictate what standards an institution must up hold in order to reach the desired goals. The leaders aim and role should not be limited to making policies but should also take into consideration how they are going to build it into the institution. (Mintzberg, et al 2009, p 23) The design school is the most vital stage in the formulation process. The design school model entails appraisal of both the internal and external factors. The internal factors majorly deal with the innate structure of the organization. This internal assessment mainly aimed at looking for strengths and weaknesses found within the organization. In the external features, the management has to appraise their institutions success in terms of environment, competition, political stability among other factors that may affect their operations. Factors deem to be very important when coming up with a strategy are, managerial values and social responsibilities. With this approach it analyses the threats and opportunities posed by the market and competition. Other schools that also play part in the formation of a management strategy according to Mintzberg, Alhstrand and Lampel are planning and positioning. These two stages mainly involve; the planning stage. Here the leaders ought to put monetary considerations since it also involves creating a budget that will oversee the company’s objectives in attaining the desired results. It is in this stage also that managers come to update or get rid of some earlier designs depending on their impact and relevance. If there are any adjustments to be done, they are to be included in the strategic plan. While still in the planning phase, the managers should take in to consideration factors like; government regulations, morale of the workers or any climatic changes that can affect their operations. Briefly planning process should entail bringing together all internal and external factors that affect the organization. After which analysis is down to narrow down the cause of the problem and coming up with viable solutions. After this, the plan is implemented in the position phase. This stage is usually very crucial since it tends to determine whether the company’s strategy will work (Dess 2005 pg236). This is where the whole strategy is put to test. After the plan has been put into action now it is up to the management to put it into test. This is where we have the entrepreneurship school. In this school of thought, vision of the leader is very important. The manager is usually given the responsibility of selling whatever idea was reached. The leader appointed the task should have sound judgment when introducing the commodity to the general public. In this school the firm is on the mercies of the leader given the. The key element that makes this school relevant is the visionary concept that it provides or the mental idea in general. Here, we do not have conclusive figures; rather, we have speculated figures that portray an outcome that is not tangible. This gives the manager of the portfolio a chance to amend it according to his experience (McNamara, C. 2006 pg.66). Cognitive school shows how people see patterns and judge situations. It deals mainly with the mental state of the leader in question. Different people think differently and that is why different strategists have varying strategies (Porter 1980 pg74). The school is not the best since it has limitations such as bias since only few and not all people in the organization participate here. The biased caused by this school is not healthy to an organization since one may opt to go for a non sagacious option. In the learning school, strategies are not pre meditated but are modified as new challenges occur. Here, the strategists get a feel of the market and learn from it what they are supposed to do. It is more of an objective approach as compared to the cognitive school. The power school is where people use their bargaining power and political influences to put their points across. Here people flex muscles both within the organization and externally in order to keep their agenda relevant. Cultural school on the other hand envisions strategy being based on cultural values both internally and externally. In the environmental school of thought, implies that for a strategy to be implied environmental factors should be taken into consideration. This is because they will have an effect to the organization (Pemberton, J. (2002). Lastly we have the configuration school. This school believes in the restructuring of strategies since there bound to be short comings in any organization hence leading to changes now and then. Majority of thriving businesses look at the market forces prior to venturing into their lines of operation (Day, G and Moorman C, 2011, p22). A good example is Liz Claiborne Inc; the management took to the streets to find out about their market group which was the working class women. With this research, Liz Claiborne came up with a strategy that worked for them and lead them to profitability. According to the outside in strategy by Michael Porter we see that he has five model systems which are; 1. Entry of competitors 2. Threat of substitutes 3. Bargaining power of buyers 4. Bargaining power of suppliers 5. Threats of substitutes 6. Government Considering all these factors we can witness that this mode of strategic market is concerned with the effects of external factors and undermining internal factors of the organization. Porter’s input in this subject of strategic management and planning mainly revolves around competition approaches and placement. Porter’s strategy was dominant in the 1980’s. This approach allows organization to know and evaluate their strengths and weaknesses in their line of operations (Porter, 1979.p.140). With his strategy, porter believes that profitability of an organization is limited by competition, availability of substitutes, and an increase in buyer or supplier bargaining power (Sonehouse, G and Snowdon, B. 2007 p257). Outside in strategic approach of management seem to have customer service experience and service as their main objective. The other theory in strategic management is the inside out strategy. This kind of strategy focuses on a person’s capabilities and comprehension of growth before giving back to the society. This approach relies mainly in improving an organization internally for example product improvement while paying little or no attention to the markets. It mainly deals with strengths and weaknesses of the organization since it appraises those two factors in favor of market threats and opportunities. In the inside out approach, the management considers that excellent results will be positively and well received by the society. Therefore, managers with this type of approach tend to concentrate more on institutional results. Positive results within the institution according to them mean improvement in the organization (Schaltegger, 2012.p. 10). Inside out theorists also believe that results are easily measured in such a set up since everyone is gauged according to their contribution in the organization. They believe that results cannot be exaggerated since they are based on objectivity other than subjectivity (Schaltegger, 2012.p. 10). As we can clearly see strategic management entails a lot of variables in order to come up with an almost perfect strategy. When we look at the ten approaches, we find that they cover so many aspects of life and human beings as a whole. We see schools of thought that deal with the mental part of leaders, their visionary capabilities, the transformation of organizations and many more factors. According to my thoughts, I find each and every ton of the schools of thought mandatory when it comes to make a company’s management strategy. When we look at the outward in approach, we see a situation where the company has gone out and marketed itself very well to its potential buyers. This is a good strategy since it will provide the company with the market they need. The wrong thing about the approach is the longevity of the strategy. For one to carry out the strategy they must specialize in the production of specific products. We find that such an institution will have difficulties when it reaches a point that they have to change their operations. The lack of concentration on the internal part of the organization also demeans stakeholders. This is because of the fact that the company has put too much emphasis on customer service. In such set ups we are also bound to see strikes and mass action among workers since their needs are not prioritized (Newbert, 2008, p757). In the inside out approach we see that management is result oriented. The managers believe in investing in their personnel and assets will sell them to the public. In such organizations we find that they offer very premium services. Such organizations maximize their analysis in checking the strengths and weaknesses of their organization and staff in general (Barney, J 1986 p. 1237). They do this at the expense of opportunities and threats presented by their competitors. This happens to be a very dangerous approach when it comes to strategizing. When we look at both the inside out and outside in approaches, we see them as very high risk setups. They tend to create a lot of competition among themselves. We can say that they pose a mutually exclusive type of competition framework. The type of competition they have among themselves is very dangerous such that it can lead to very hefty loses. For a strategy to work it must consider both external and internal factors since they mutually exist. The Strength, Weakness Opportunity and Threat analysis is the best analysis a strategy should have. REFERENCES Barney, J.B., 1986. Strategic Factor Markets: Expectations, Luck, and Business Strategy. Management, Science, 32 (10), pp.1231-41, Butler, J.E. & Priem, R.L., 2001. Is the Resource-Based "View" a Useful Perspective for Strategic Management Research, The Academy of Management Review, 26(1), pp.2240. Day, G and Moorman, C. 2011 An Outside/In perspective of strategy, Step outside to see what is important Dess, G., G.T. Lumpkin and Marilyn L. Taylor, 2005, Strategic Management, 2 ed NewYork: McGraw-Hill Irwin, Fred, R 2011, Strategic Management, Concepts and cases, 13th ed. Francis Marion University Florence, South Carolina McNmamara, C. 2006. Field Guide to Nonprofit Strategic Planning and Facilitation, Basic Overview of various strategic planning models Mintzberg, H., Lampel, L., Ghoshal, S. & Quinn, J., 2009. The Strategic Process, 4th ed. New: Jersey Prentice Hall Publishing Newbert, S.L., 2008. Value, rareness, competitive advantage, and performance: a conceptual- level empirical investigation of the resource-based view of the firm. Strategic Management Journal, 29(7), pp.745-68 Porter, M.E., 1979. How Competitive Forces Shape Strategy. Harvard Business Review, 57(2), pp. 137-45. Porter, M.E., 1980. Competitive Strategy: Techniques for Analysing Industries and Competitors New York. Schaltegger, S. 2012. Sustainability Reporting in light of business environment, Liking business Environment, strategy communication and accounting Senge, P. 2006. Building learning organizations, Sloan Management Review, 16(3), 48-56 Selznick, P. 1957 Leadership in Administration: A Sociological Interpretation, Harper & Row, New York, Sonehouse G & Snowdon, B (2007), Competitiveness in a globalized world: Michael Porter on the microeconomic foundations of the competitiveness of nations, regions, and firms. Journal of International Business Studies, 37(2), 163-175. TYNDALL, G. R., CAMERON, J., & TAGGART, R. C. (1990), trategic planning and management guidelines for transportation agencies, Washington, D.C., Transportation Research Board, National Research Council Pemberton, J, & Stonehouse, G. (2002). Strategic planning in SMEs—some empirical Findings, Management Decision, 40(9), 853-86 Read More