What is Strategic Management - Assignment Example

Strategic Management Strategic management Strategic management is a term with deeper implications but let us consider it from an angle that would help us get a crux of the whole process that it involves. A person who is on the verge of setting up a small business would find this accessible. He has been passionate about it so long but then he wants his thoughts, imagination, and his dreams to take real shape. He has read a lot on small businesses and how they work. (Richard B, 1995) But now is the time when he would have to think over, what to offer and start working straight away on a business plan. This is where he receives a hindrance and he needs to go deep further into the basics of strategy management to learn better. In order to have his business up and going successfully, he must have a plan and with it, a strategy that helps the plan come to reality. He has to work his way through difficult steps but he must plan his steps ahead. Those steps are full of insight, to make his dreams happen. Furthermore, this can be accomplished by proper strategic management, driven by various tools as taxonomy tables, business plans and the like. Given below is an example towards taxonomy of approaches for measuring organizational knowledge. This concept can be used to many other variables too. (Raub, S. P. & Sthapit, B. 2001) What is Strategic Management? Strategic management is a process that specifies the objectives of an organization. It helps to develop the plans and policies for achievement of these objectives and also arrange resources to carry the plans out. This is at a very high level of managerial activity, in fact, at the highest level. This is not any work, rather, some managerial skills that must be exerted throughout amidst the wide array of work that goes on in an organization. The strategy of an organization must suit its core objectives, the circumstances and the resources. This is a process of matching the strategic advantages of the company with business environment. The objective of this strategic management is such that the organization is in a position to run its mission with efficiency and in an effective manner. How does strategic management work? An excellent corporate strategy is that which integrates the company’s tactics, policies and goals into an organized and harmonious whole depending on business realities. In today’s world, business enterprises fail, in spite of, excellent strategy because they had failed to understand the changes in their business environment. So, strategy is vision, it comes with a purpose towards future trends. Strategic management is thus not only a formulation of strategy but also an implementation of the strategy, aligned with the purpose. (Robert S. Kaplan, David P. Norton) The formulation of strategy would prompt you to have an analysis of the situation at the internal and the external levels – both at the macro environmental and the micro environmental levels. It aims at setting objectives, designing vision statements (the long-term view) and mission statements (the role of the organization in the society), the financial and the strategic units planning and also the planning of the tactical objectives. These are in gist, the foundation stones for strategic planning. Strategic management involves the recruitment and allocation of resources in terms of personnel, time, technological support and financial support. There are cross-functional terms that would assign tasks or processes to groups or individuals, manage the process and monitor the results, evaluate the process, and implement programs for the betterment of the process. While on implementation, the specific programs involve process testing, integration, documentation and training. The formulation of strategy is a never ending and ongoing process which requires continuous reformation and reassessment. It is dynamic. It is concerned with a set of reactions and actions. It is interactive and emergent. An organization must not stop short from following the strategic management plan. They must follow the objectives that they have set up, keeping in mind, prosperous business. They must understand customer requirements. The competence of resources should not be overestimated, neither time requirements should be under estimated. There should be an open and healthy level of conversation between the senior management and the employer. It is crucial for the management to envisage an environmental change. This change should be dealt with expert hands. (Collins, Brendan, and Ernest Huge.) Very simply put, the first steps in strategic management go this way: • First, it should be defined what the business heads for, the vision statement and mission statement are to be created. •Objectives that are not abstract and that which can be measured in concrete terms can be set up. •The strategies would be designed in such a way that the objectives are achieved. •Finally, strategies are to be evaluated and corrective measures looked at, if needed. It is important to understand the differences between strategic management and strategy. Strategy is defined as a series of goals that directs the actions and decisions to match the resources and skills of an organization with occasional threats and opportunities of the environment. Strategic management is defined by him as the actions and decisions of the members of an organization who make the strategies, put them in action, modify them, change them or evaluate them as and when needed. There is a subtle difference between the two definitions. Strategic management is a business function like all other business functions, advertising, marketing and accounting. It involves the management of all strategies in an organization. (Goldstein, Leonard D., Timothy M. Nolan, and J. William Pfeiffer) Strategies have to be formulated at any level in the organization. There are strategies at the higher level that give rise to lower level strategies and even lower level strategies. We are mainly concerned with strategic management in relation to its function in the business. Strategy as a business function would involve how strategies are implemented, measured, developed. So when you fully understand the implication of strategic management as a business function things appear to you in a brighter light. Where does the study of strategic management lead you? Students who study strategic management will not be restricted from becoming office executives, entrepreneurs or for that matter, a big boss or the owner of a big organization. On studying strategic management, you will acquire decision-making qualities that you can put to use at all levels in an organization while on your career path. Strategic management would involve industry analysis at all levels. (Mellum, Mara Minerva, and Casey Collett.) A case specific study would reveal that in a Philippine setting, getting into business would involve a lot of factors. Since the country had undergone two political uprisings the political factors are to be considered while planning strategic management for a business set up in Philippines. A careful planning of the business would ensure success even if the economy is most volatile. This is a good instance of the internal environmental factor affecting business management. The external factors, however, would include the global forces such as the socio cultural, economic, political and technological trends. The middle-east war would affect the organization with a good number of Filipino workers. Diversification as a part of strategic management Experts like Fred Buggie of Strategic Innovations International believe that diversification is important but breaking away fully from the main business is not the way to proper strategic management. The world renowned trouble-shooter Sir John Harvey-Jones demonstrated this on his visit to Venden Engineering, a company. This company was a sub contractor of small size who was making small spare parts for engineering firms. They started on a diversification on golf carts and adjustable beds. The company was however incompetent in delivering the products and there was an inefficiency in the production. Thus diversification proves a weak foundation for the basis of strategic management. (Frederick D. Buggie) Different schools formulating strategic management theories: There are different approaches to the formulating of strategy in different organizations. They could be different part of the process that is the same. There is some ambiguity regarding this, although. Out of the prescriptive schools of strategy formation, the most dominant view was presented by the Positioning School. In 1980, Michael Porte gave it a special impetus and this happened in consultation with the Boston Consulting Group and the project called PIMS. This dated back into history in 400 B.C. According to this theory, strategy is reduced to generic positions as per the situations in the industry. The planners were changed to analysts while the academics and the consultants would promote the truths of science in the journals. A discussion on the Entrepreneurial school is relevant in this context because like the design school, this school also had its basis in the intuitional mystery. The vision shifted from designs, plans, to vague visions as well as a powerful turnaround by a mighty leader. In this the leader is in control over his vision so that the areas of concentration of the other schools topple over. (Vadim Kotelnikov) Some of the schools that represent the different aspects of the formulation of strategy are as follows. The cognitive schools believe that the strategy resides in the mind of the strategist. The positioning school would look at the data already established and fed into the strategy making box. The planning school looks ahead to program the strategies ahead. The design school looks towards a strategic perspective. The entrepreneurial school would look towards a vision of the future. The power and learning schools look into the very grassroots for learning and power under the rocks, which the organizations usually don’t want to bring forth. The cultural school is always covered with beliefs. Above the cultural school, there is the environmental school that looks towards a future. The configuration school would look at the process while the cognitive school would look inside the process. In a nutshell, if we have to discuss any three schools, the same could be as below: The Design School is one of the Schools of thought on Strategic Management. The schools looks at the formation of strategy as it main concept. Clear and Unique strategies are formed in this process of strategic Management. According to this school of thought the internal conditions and environment of an organization is matched to suit the external environment. This school of thought would support strong leadership. There is simplicity in the whole process in an environment relatively stable. There are however a few limitations to this school’s principles. There could be distortions in the too much simple methods. Strategy has a lot of variables and there is a weakness of this process in the fast changing environment. The Planning school looks at strategy formation as a very formal procedure. In the application of this particular process, a number of steps are that starts from analyzing the situation to the carrying on of the strategy. This is based on urban planning and cybernetics. As per this theory, strategy should be like a machine. This gives clear direction that enables the collection of firm resources, the crafted strategies can be scrutinized by the analysts. There are certain limitations to this school of thought. The strategy could become static. Predicting in such cases is difficult. Creating a successful strategy is an art which top managers should aim at doing. The Entrepreneurial school looks at the strategy formation as a part of the visionary process. This process happens in the mind of the leader or the founder of the organization. This school concentrates on insight, experience, wisdom and judgment, intuition of the leader or the founder of an organization. The CEO or the Organizational Head is the architect for the whole Strategy. A CEO with a vision can help the organization come out of major crisis. The limitation to this process is that this course can blind a person in case of unexpected developments and in dangers. The visionary leaders have to look further and the CEO plays a totally demanding role in this regard. Strategy formulation is intuitive visioning and learning that is emergent. It must involve individual learning as well as social interaction and it involves analyzing as well as programming and all this in response to a demanding business environment. The whole process of Strategy management tilts towards one attribute belonging to a school to another. There could be an intelligent mix and match of the different attributes by the practitioners to suit the business environment and the requirements. Strategy Formulation in work environment The evolution of strategic management stems from different principles because it is driven by practices and ideas that originate from different sources. There are new types of strategies that evolve out of collaboration among different organizations. Firms tend to learn things from other organizations they work with. The evolution of strategy takes place by confrontation and competition. Many new practices and ideas evolve when managers tend to outwit their rivals. Hence such competition is healthy and productive. Old strategies never disappear but with the coming in of newer strategies there is the blending of old and new wines and malt whiskies that make the cocktail too much of an energizer for a running business. Strategy is also pushed forwards by the evolving creativity of the managers who are always into the exploration of newer pastures. Consultants and scholars continue to probe into the important elements of the different schools concerning strategic management. The narrowness of these principles is looked into and stretches the vision ahead so that there is a combination of all the elements that really work. The most important ones are taken in and the rest are left out. This is in a continuous state of evolution and therefore the wholesome aspect of the management is of major concern. Like in the poem, “The blind man and the elephant”, every blind man was pointing out to one aspect of the elephant and he was right in his own way. Strategic Management is the animal as a whole and so all theories and principles pertaining to it form the entire system that Strategic Management actually is. The wholesomeness of the entire principle of Strategic Management should be catered to and worked out according to the needs of the organization and the business environment. References: 1. Richard B, 1995, Principles of Strategic Management, MODULE 1: The Strategic Management Process: An Introduction, http://www.csuchico.edu/mgmt/strategy/module1/, Accessed February 01 2008 2. Raub, S. P. & Sthapit, B. (2001). Towards a Taxonomy of Approaches for Measuring Organizational Knowledge, Research and Practice in Human Resource Management, 9(1), 139-155. 3. Robert S. Kaplan, David P. Norton, Using the Balanced Scorecard as a Strategic Management. 2008 4. Collins, Brendan, and Ernest Huge. Management by Policy: How Companies Focus Their Total Quality Efforts to Achieve Competitive Advantage. Milwaukee: ASQC Quality Press, 1993. 5. Goldstein, Leonard D., Timothy M. Nolan, and J. William Pfeiffer. Applied Strategic Planning: How to Develop a Plan that Really Works. New York: McGraw-Hill, Inc., 1993. 6. Mellum, Mara Minerva, and Casey Collett. Breakthrough Leadership: Achieving Organizational Alignment through Hoshin Planning. Chicago: American Hospital Publishers, Inc., 1995. 7. Frederick D. Buggie, Strategic Innovations International, http://www.strategicinnovations.com/, Accessed February 01 2008 8. Vadim Kotelnikov, Ten Major Strategic Management Schools, A Comparative Analysis, http://www.1000ventures.com/business_guide/mgmt_inex_stategy_10schools.html, Accessed February 01 2008 Citing Sources Title: REFLECTING ON THE STRATEGY PROCESS, By: Mintzberg Henry, Lampel, Joseph, Sloan Management Review, 0019848X, Spring99, Vol. 40, Issue 3  Database: Business Source Corporate Title: Strategic Management [29.01.08][http://en.wikipedia.org/wiki/Strategic_management] K.E. Weick, The Social Psychology of Organizing (Reading, Massachusetts: Addison Wesley, 1979). 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