Strategic Management Of Organisations - Assignment Example

Strategic Management of Contemporary Organisations Name Institution Course Tutor Date Strategic management deals with the entire functions of the organisation. In this case, the entire organisation pertains to the main functional areas; human resource management, marketing, finance, and operations management (Jiang 2009, p. 153). In each of the organisational functional area, strategic thinking is required for future survival. Organisations need to make strategic decisions to stay competitive and align their resources into the achievement of goals and objectives. In order to achieve this aim, an organisational strategy must be put into action. Managers need to think strategically as their decisions have a strategic impact as well as contributing to the organisational change (Emilia Papulova & Papulova 2006, p. 01). In essence, strategic management is a tool that is crucial in the success of the organisation. This essay discusses strategic management of contemporary organisations. It argues that human resource management and marketing are the two areas of strategic management that are critical to the strategic success of contemporary organisations. It considers various global strategies used by organisations to deal with various challenges that include strategic planning. It also includes approaches to stakeholder engagement and management by the organisations. Strategic management is a discipline that is relatively new to organisations. Its origin can be traced back to over five decades ago. It has since evolved and has become a consolidated field in the sphere of the modern management (Guerras-Martin, Madhok, & Montoro-Sanchez 2014, p. 69). The discipline has gradually progressed towards maturity over the years due to various developments in the organisation. For example, corporate social responsibility has become an important part of the organisational function. This has in turn led to the need for companies to institute strategies to deal with competitive pressures. Another reason indicating the growth of strategic management is the increased consensus in such notions as strategic management and strategy definitions (Ronda-Pupo & Guerras-Martin 2012, p. 165). However, diversity in the definition of strategic management is still a common feature. Despite this fact, several studies have identified some similar concepts that form strategic management. For example, Nag, Hambrick, & Chen 2007, p. 936) identified the internal organisation, firms, performance, resources, environment, strategic initiatives, and managers/owners as components of strategic management. Organisations are composed of many functional areas that interact for purposes of organisational success. Marketing, human resources management, finance and operational management are areas of strategic management that are critical to the strategic success of the modern organisations. Human resource management (HRM) is an area of strategic management that must be managed properly to achieve organisational success. HRM have been linked with many aspects of the organisation. For example, Welbourne and Andrews (1996) linked HRM with organisational survival. Furthermore, HRM have been linked with organisational turnover, firm value, productivity and financial returns. It is often said that an organisation that managed its human resources properly are in a better position to achieve its goals and objectives. HRM affects many organisational functions and without it, an organisation cannot function. It is therefore not surprising that HRM is one of the important areas of strategic management, which have been called strategic human resource management (SHRM). This is because the emphasis is on the strategic role that human resource management play in the accomplishment of business objectives (Delery 1998, p. 289). Establishment of sound HRM practices is the first step that managers have to carry out in putting their organisations in a strategic position towards the achievement of organisational success. The field of human resource management strategy has considerably developed in the last two decades in both literature and in practice. SHRM is the new area in HRM that is different from the traditional HRM. Traditional HRM focus is on the development of individual performance (Richard & Johnson 2001, p. 301). In contrast, SHRM emphasises the functions of HRM systems that acts as solutions to various challenges that the business faces. Furthermore, SHRM focuses on the performance of the entire organisation rather than what individuals contribute to the organisation (Becker & Huselid 2006, p. 899). Even though SHRM is a strategic concept that focuses on systems and financial performance among other things, the strategy entails more than these. Strategy concerns with the creation of sustainable competitive advantage that helps an organisation to register financial performance that is above average. In simple terms, SHRM model can be thought as relationship that exists between the structure of organisational human resource and its performance (Becker & Huselid 2006, p. 899). Human resource structure is comprised of practices, competencies as well as behaviours of employee that are needed to enhance their performance. In various strategic management texts, the emphasis is on each level of organisational strategy that forms a strategic environment for the business. Implementation of the strategy for human resource management is undertaken at a functional level in order to facilitate organisational strategic goals (Wright, Dunford, & Snell 2001, p. 702). In fact, HRM strategy is a tool that is closely associated with the strategy of the business. HRM function in order to complement corporate strategy that determines the organisational human resource management policies and practices. These policies and practices are subsequently implemented in supporting competitive strategy that has been chosen by the organisation. Strategic planning that has been developed by a company is used in creating these policies and practices. It is a technique used in the management of the important aspects of the organisational environment. It helps managers to improve their decision-making process which affect positively the financial performance of an organisation (Cesnovar 2006, p. 230). Strategic management sets the direction for the company by aligning human resources towards the achievement of organisational plans and objectives. Apart from HRM, strategic management is crucial in marketing strategies that the organisation undertakes. Marketing is an area of strategic management that heavily impact on the success of an organisation. It entails finding the needs and wants of organisational customers while at the same time attracting new customers (Jiang 2009, p. 156). A effective marketing strategy should be developed by every modern organisation in order to realise its potential. Marketing is a bit demanding task that needs creativity and innovation. This is especially important in the development of a new product that will satisfy the customers. This assists an organisation keep its competitive advantage if it already has or develop competitive advantage through the new product. For example, Qantas airways needed to be creative and innovative in developing a new product that would satisfy their clients after Virgin Australia started its operations in the country by providing competitive pressure. The airline needed to reinvent its brand in order to remain competitive in the market. Marketing is an organisational philosophy that creates an environment whereby innovation and entrepreneurship can be undertaken (Ferreira 2001, p. 63). It involves various strategic issues designed to target and position organisational products around the main market segments. It must appropriately respond to various issues raised by the customers and those that emanates from the external environment and organisation have no power of controlling them. Organisations are required to respond to environmental challenges for purposes of improving results of the business. In this case, organisational managers can use formal, controlled or conscious processes that have already been prescribed or use informal ways such as experiences, vision, and intuition of managers or even their emotions (Cesnovar 2006, p. 228). These informal ways are especially beneficial in small medium-sized companies as they are more convenient and flexible. This is because they are not so complex and comprehensive when compared with large organisations. Strategic management in marketing aims at increasing the rate of consumption of organisational product or service. Moreover, it also focuses on converting individuals who are non-customers into customers (Bang, Joshi, & Singh 2015, p. 07). In contemporary organisations, marketing strategy is needed to explain and understand organisational behaviour regarding the use of marketing resources so as to gain competitive advantage. Fortescue mining company uses its diverse resources in building a marketing strategy for its products in Australia and Asia-pacific region. In this way, the company is able to satisfy the interests of its stakeholders and demands of its customers. In the current period, organisations are facing intense pressure to satisfy the interests and demands of its stakeholders that are ever increasing. Stakeholders are groups or individuals that are having an interest in the organisation (Chinyio & Akintoye 2008, p. 591). They also have an influence on the organisation. In practice, organisations are dependent on its stakeholders to achieve their objectives. In fact, the reason why organisations exist is to serve its various stakeholders. In turn, stakeholders help an organisation to achieve its goals. In this case, organisations and stakeholders are dependent on each other and they have a mutually exclusive relationship. Engagement between organisations and stakeholders is thus needed in ensuring that this kind of relationship is fully developed and sustained. In the present context, organisational stakeholders are many and their interests have the highest potential of conflicting with each other (Chinyio & Akintoye 2008, p. 591). If an organisation chooses to focus on a single stakeholder, devaluation of interest of other stakeholders is realised which is not an ideal situation. Therefore, organisations should attempt to engage and satisfy interests of all its stakeholders. Organisations use various approaches for engaging its stakeholders. It can be grouped into two groups: overarching and operational approaches (Chinyio & Akintoye 2008, p. 594). Overarching approaches include being proactive, maintenance of existing relationships and provision of top-level management support. On the other hand, operational approaches to stakeholder engagement include the use of people’s skills in management and negotiations, effective communication and intuition of organisational members. In order to have an effective and successful stakeholder engagement, organisational top management must offer its support. To be proactive is an approach that encourages stakeholders to raise any issue that concerns them in order to resolve them within a short period. Effective communication is an effective strategy for building an existing relationship between organisations and its stakeholders. In this way, the organisation is capable of understanding stakeholder expectations. Furthermore, it keeps them informed on various happenings in the organisation that might affect them through communication. Contemporary organisations are carrying out these activities through a variety of organisational plans such as operational plans, human resource management plans and strategic plans. Of all these plans, strategic planning is most important and relevant to the modern organisation. Strategic planning has become an effective tool of strategic management where organisations used it to put their organisations in a strategic position. It starts with the development of mission and vision that captures the essence of the organisation and develops commitment among employees. Strategic planning is therefore a process that is forward looking and used by organisations in identifying vision, creation of mission statement and in development of values and principles that guides the plans of the organisation (Williams 2010, p. 218). It involves assessing financial, human and physical resources of the organisation in setting its future course. In the past, strategic planning consists of an evaluation of strengths and weaknesses, appraisal of the external environment in finding threats and opportunities, and examination of the past performance (Williams 2010, p. 218). The strategic planning process that is ideal and effective is the one that assists an organisation in assessing the marketplace. Furthermore, it is ideal if it determines what will be committed to each organisational processes and guide employees in their everyday activities and decisions. Strategic planning is a process of determining and establishing long-term directions for the organisation. It also entails formulation and implementation of strategies required in accomplishing long-term objectives while at the same time taking into account environmental dynamics (Ugboro, Obeng, & Spann 2011, p. 90). Today’s organisations need strategic plans to cope with competitive pressures and environmental dynamics. Currently, organisations are using strategic planning to enhance their organisational processes and increase morale, motivation and commitment of its employees. It is also used in improving the performance of the organisation. Accountability and transparency in organisations are highly demanded at the present period than at any other time especially in the public sector organisations (Williams 2010, p. 218). Managers’ roles and responsibilities have considerably increased and are expected to give more to the organisation than just providing strategic direction for the business. Strategic planning is of great importance in this case as it focuses on stakeholders and creative thinking in the achievement of the desired results. The current organisations are going global as the markets are getting smaller and smaller. Strategic plans are required to market products and services of the organisation on a global scale. Global strategic management is useful in this case as it views the world as a single entity. Globalisation has resulted in major shifts in the global markets and has changed the way business practices used to be conducted. In the past, big corporations have been using global coordination in gaining multi-nationality benefits such as standardisation, learning and transfer of innovation (Czinkota & Ronkainen 2005, p. 92). However, situations have changed, and currently, the emphasis is on adapting to local demands and at the same time thinking globally in order to achieve success. Multinational firms are increasingly recognising that they need to efficiently disseminate knowledge and processes across its branches all over the world. This will ensure that their products and services are standardised and customers can recognise them anywhere in the globe. This gives them competitive advantage hence setting itself apart from its competitors. Global organisations are facing major concerns in co-ordinating their strategic initiatives. Global economic integration has resulted in intense competition for products, labour, and financial resources. Organisations have responded to these challenges by initiating multiple technological innovations and are also implementing acceptable worldwide standards of the best practices in regard to their processes, products and services (Harvey & Novicevic 2011, p. 660). Organisations are hoping that these complex responses improve their global competitive positioning. Global strategies that are carried out by these companies include incorporation of global business environment aspects and effects that are composed of international capital markets, cultural differences and different levels of technological development. Organisations are forming global teams to address these issues and specifically, the undesirable effects of cultural differences. These teams coordinate and integrate strategies that are culturally sensitive in their advertisements for purposes of ensuring that their adverts are culturally acceptable in the society. Contemporary organisations are facing many challenges. Globalisation, increased competition, and the need to comply with many laws and regulation have made strategic management be extremely important in the organisation. This is true because of its essential roles. Strategic management sets the direction for the achievement of organisational development and helps to secure future organisational survival and growth. Indeed, strategic management is critical in helping organisations in times of difficult business environments. This is in line with extensive research that has been conducted confirming that when an effective strategy is conducted, organisational success is achieved. The strategy helps in ensuring that organisation possess the sufficient flexibility in responding to the rapid environmental changes. Strategic management is especially important to the contemporary organisations as it affects all the functional areas of the business. Human resource management and marketing are areas of strategic management that are of critical importance to the strategic success of the modern organisations. Strategic decisions are needed for organisations to stay competitive and productive in the market. Strategic human resource management is a concept that is important as it focus on the performance of the entire organisation. 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