Strategies of Strategic Management - Essay Example

STRATEGIC MANAGEMENT (Student Name) (Course No.) (Lecturer) (University) (Date) Strategic management Considered an important factor in ensuring the organization meets all its outlined objectives, strategic management determines the profitability and general output of the employers. Therefore, any organization aiming at improving productivity must ensure there is proper implementation of strategic management components. Moreover, this management technique does not only ensure efficient and effective workforce but also proper and reliable product identity. Organizations should systematically integrate the practices that involve evaluation of the factors influencing the customers’ attachment towards a given product, as well as factors contributing to the growing rates of completion. Strategies of strategic management There are several frameworks and methodologies for ensuring strategic planning and management of an organization. Even though there are no international rules guiding the formulation, some organizations tend to follow similar patterns and attributes, thus creating a highly competitive market since they employ almost similar strategies (Harrington and Ottenbacher, 2011, 125). Henry Mintzberg formulated different strategies of maneuvering while defining on organizational strategy. According to his theory, strategic management must portray what he defined as the 5Ps. They include the plan, ploy, pattern, position, and perspective. Since strategic management relates to what an organization intends to achieve, there has to be some planning aspects that guides the entire process because organizations formulate them in advance and through a systematic guidelines, organizations develops them concisely. Besides planning, strategies can as well ploy through adjustment in order to outdo the competitors. Therefore, strategic is not a process involving a single step but a continuous and rigorous adjustment of strategies with time. Definition of a strategic plan is not sufficient to warrant suitable competitive advantage; there is need to define also the strategic patterns. Patterns relates to continuous results achieved by the organization whenever implementing strategic management. It brings on board the degree of organizational consistencies while developing the actions. For example, Facebook began as low-cost operation with engagement in online directory before becoming a global social networking site due to enthusiasm and noting patterns of the outcomes by the developers. It is crucial that while developing management strategy, the organization must identify its position with its industry of operation. The perspective component of strategic management according to Mintzberg defines how the organizational executive interprets the competitive landscape in their surroundings. While developing organizational strategies, the management is likely to note different types of strategies. They include intended and emergent strategies. For example, the intended purpose of developing Facebook was to offer directory services but later, another role critically played by Facebook emerged which gained more popularity than the intended purpose. Every planned strategy must begin with intentions. Strategic intentions outlines the reason for conducting a particular activity. In this regard, the organizations must clearly define what they intend to achieve in order to drive organizational activities positively. Emergent strategies often occurs whenever there is order in organizational activities in the absence of intentions. Theorist have been able to develop different types of strategy formulation process. These strategies include classical, evolutionary, processual, and systematic. According to classicists, strategy is a rational process that requires long-term planning which plays an imperative role in securing the future of the organization. Evolutionary strategy views the futures to be volatile and unpredictable for any planning activity (Dobbin and Baum, 2005, 157). In addition, evolutionists supports concentration on the current issues affecting the business for survival rather than concentrating on the future. Processualist also doubt the importance of long term planning. Processual strategy formulation process focuses on emerging issues within the organization and developing adaptive measures of confronting the challenge. On the other hand, systemic theorists focused on relativist position in which organizational goals and cultures rely on social context. Hence, the strategy involves undertaking sociological sensitivity. Through the analysis of the market forces and business environment, some organization use strategic management to create an enabling environment for their products. The created competitive environment should be sustainable. Some business organizations set lower prices in order to attract more customers, thus countering the competitions experienced. Such strategies are quite not sustainable since they affect the industry. Moreover, lowering the prices at the expense of profitability is not realistic. Value addition plays an important role in improving the brand image of a product, hence creating positive taste and preference among the customers. Corporate governance and sustainability Various organizations invest heavily in managerial activities to ensure there is a greater output among the employees. These mechanisms and processes of controlling and directing organizational resources for effective and reliable outcome is the corporate governance. The culture of an organization determines its governance structure and hierarchy of information distribution. Besides these factors, the governance structure determines criterion for responsibility allocation and channel of addressing issues. Every organization has its corporate governance structure, which should be sustainable (Porta et al., 2000, 107). Corporate sustainability determines the capacity of the organization to continue operating over a long span of time. Corporate strategy is important especially while selecting a business type the organization should invest in. in order to experience a prolonged survival in an environment considered volatile and uncertain, business organizations must begin by achieving organizational sustainability through contemporary satisfaction of the stakeholders. Stakeholders play an important role in cushioning the development of the organization or completely deter organizational growth especially if the business does not meet their demands. Even though they have the ability of influencing the desired outcome of organizational objectives, the managers should not make irrational decisions at the expense of pleasing the stakeholders. The stakeholders do not only refer to those in managerial positions but all the workers, customers, financiers, and any other pressure group contributing to the general output of the workers and products. Stakeholder management is, therefore, organizational strategies and activities put in place to satisfy the needs and expectations of the involved parties. Organizational management must integrate the stakeholders in decision-making process to ensure efficiency and quality of the result yield. In order to achieve this, organizations must conduct analysis both internally and externally to establish the exact business environmental factor affecting the business. Every organizations aims at producing products that meets the demands of the customers. Thus their views plays an important role in establishing tastes and preferences within the market structure. These are some of the external factors influencing business operations. Some of the external business environment factors influencing organizations are social, political, and ethical factors (Heikkinen, Casey, and Hecht, 2010, 96). All these issues relate to external stakeholders. On the other hand, internal business environment are factors affecting the business but originating from within the organization. These factors include organizational structures and managerial hierarchy. Stakeholders within the organization have the responsibility of making decisions that helps in improving the brand image. Moreover, there is also need to ensure proper relations between the workers themselves. Furthermore, if the organization is to ensure continuous sustainable growth, the organization must properly integrate issues relating to social responsibility. Organization’s corporate social responsibility (CSR) are the duties businesses have to the local communities. Most businesses often affect the environment negatively; therefore, it is the responsibility of the organization to find out how their business activities influence the environment (Duarte, Martins, and Alexandre, 2008, 100). Integrating ethics and organizational culture play an important role in establishing the brand image within the market. With positive brand health, businesses guarantee proper customer relations and improvement in the sales volume. Brand image relates to how the consumers view a particular. Their perception on the product determine the general amount of sale within a particular region. For example, The Grounded Kangaroo rebuilt its brand image through differentiation within the local and international market. In addition, the organization also builds positive image through provision of premium-based services and engaging the employees to consider their views. Value creating goals Every organization aims at creating some value within its business entity. All innovations often aims at value creation of a product in order to optimize sustainability. In business, consumer value preposition aims at increasing financial payback of product and services. According to Milton Friedman (1948, 78), most organization improve the quality of their products through value added technique after identifying the balance between return, price, and cost. Value creation is about return on investment and growth. Return on investment (ROI) relates to the profitability of the organization. It is important to strengthen business profitability while emphasizing on business growth. While identifying the value of the business, most organizations must understand the nature of product they intend to create and baseline information requirement to achieve these values. Moreover, it is important to understand the difference between values and goals. According to Handy et al., (1995, 92), that every popular idea has numerous origins. Moreover, some businesses pursuing goals instead of profits undermine the intellectual forces that ensure the freedom of a society. These business entities often act as government officials illegally imposing taxes on employers through some deductions and customers through price increment. In order to ensure sustainability of the business, the business must formulate policies and strategic management tools that enhances profitability. Profitability goals aims at ensuring that the business makes continuous profits to support the cost of production. Additionally, the stakeholders also plays an important in contributing to organizational profitability goals. However, the major problem experienced by organizations, which negatively affects the quality of decision made by management, is the conflict of interest among the stakeholders. Organizations must converge these interests and deliberate on them before making any irrational decision likely to affect the business negatively. On the other hand, some business entities do not realize profit margin due to complex managerial structures. Easy and simple organizational structure ensures faster and effective decision. Besides faster decision, simple structure increases the profitability of the organization through creating an enabling environment for the workers. Some businesses also insist on organizational culture as their strategic management technique (Dervitsiotis, 2005, 60). Organizational cultures involves focusing on the aims, visions, and organizational mission statement. These factors plays significant role in creating the brand image among the customers. Through effectively implementing these cultures, business entities are sure of improving their profit margin. Some organizations also have proper managerial structures and cultures although still experiences losses. These organizations do not focus on performance management of each employee. Performance management often relate to monitoring and evaluating of responsibilities conducted by the employees to ensure there is effective output of the workforce, therefore, it is significant in managing human resources within the organization. PESTEL analysis PESTEL is an abbreviation standing for political, economic, social, environment, and legal factors. In order to understand business external environment, it is important to analyze PESTEL and Porter’s five forces tools for effective marketing strategies. These two analytical, strategic tools assist with identification of business position, growth rate, and size. Furthermore, the retrieved information is significant for classification of market demand and deterioration. Political factors This involves government’s intervention in business activities operating within a given state. These involvements affect businesses in so many ways. They include laws and regulations relating employment, quality of the produced products, tax laws, and trade restrictions. Businesses have no control over these activities. As a result, there is need for the state involvement to control and stabilize them. Other factors influencing business operations politically are geographical uncertainties and terrorism. As a strategic management, organizations must comply with all the outlined regulations. For example, The Australian Supermarket Industry has been diversifying its scope of operation through diversifying its outlets. In order to achieve this, the supermarket complies with the outlined laws (Grant, 2014, 123). Economic factors This is the major factor of consumers’ purchasing power as it determines the amount of disposable income available for the customers. Economics factors influencing the level of sales include employment rates, interest charged on loans, exchange rates, and amounts of disposable income. Economic development determines the rate of employment of the people. With employment and proper salaries and wages, there is an increment for income available for disposal. Inflation rates causes increase in the prices of commodities, as a result leading to a decline in the purchasing power of the consumers. The Australian Supermarket has been able to consider economic factors while setting the prices of its commodities. Social factors Social and cultural beliefs of the consumers affect the tastes and preference for any product in the market. Populations’ trends, moral principles, and consumer spending habits are some of the factors requiring consideration while establishing organizational strategic management. The changing societal values have been changing as most people aspire to live healthily. These factors influences consumers’ purchasing behavior especially in relation to organic products. Population demography and age factors greatly influence the location of distribution of most business entities like the supermarkets. Technological factors The level of technological engagement within the organization plays an important role in determining the general sales of the products considering most consumers are embracing technological methods of purchasing products. For example, the supermarket tried operating the business virtually in order to make it easier for the customers and the management to interact freely. Moreover, some supermarkets are coining the technology that involves online shopping. Legal factors This element focuses on compliant with outlined laws and regulations controlling business operations. Legal factors, in this case, refer to all aspects of state laws and policies that influence or rather control business practices in a country. The primary aspects of government legislation are taxation and issuance of certificates of operation. The purpose of legal actions implemented by a government is to check and balance all business activities within the state. Environmental factors Globally, even the organizations are struggling to comply with environmental regulations. The organization encourages consumers to return faulty and outdated products in a bid to ensure reduction of pollution caused by their electronic wastes. Many consumers are also demanding the purchase of products, which are environmentally friendly. The supermarket offers products, which are eco-friendly thus contributing increased sales volume. Porter's five Forces of analysis Developed by Michael Porter in the 1980s, this model helps in understanding the position of the business through effectively analyzing this model’s elements. They include supplier power, buyer power, threat of new entrants, threats of substitutes, and competitive rivalry. Threat of entry The supermarket industry is offering businesses proper investment returns. As a result, encouraging more businesses to invest within the industry. With low barriers to new entrants, the industry continues to attract many businesses. Whenever more businesses comes into the industry, the supermarket loses customers and profitability. Some of the barriers limiting entry of new businesses are inadequate land, zoning, and planning regimes of the state. Power of buyers The buyers play important role in determining the sales volume within the supermarket industry at large. For example, the buyers might decide to purchase products from other business outlets dealing in similar product therefore forcing supermarkets to lower the prices. Moreover, supermarkets also have tendency of purchasing products in bulks, which threatens the survival of others. Power of suppliers Suppliers often influence the activities of the supermarkets when there is overdependence. They create their own prices, which the supermarkets must comply with in order to acquire the goods. For example, in Australia, the suppliers formed corporative that made them dictate the market trends in the 1970s. Through the changes in power and organizational structure, there was a shift in the trend, which favored the supermarkets. Threats of substitutes With increasing number of shops closer to the consumers, the supermarkets experiences greater threats. Every person wishing to begin a business often invest in business with higher returns like the supermarket industry. Stores like 7-Eleven are greatly substituting the supermarkets considering they offer similar products to the consumers. Rivalry between competitors In every healthy market structure, there must be a healthy competition. In Australia, supermarket industry has almost 3500 entities with Woolworths and Coles being the major competitors. Some supermarkets often reduce the price of commodities in a bid to have a competitive advantage, which in turn attract consumers. As a result, this activity influences other supermarkets who intern reduces their prices hence negatively affecting the industry. Value chain analysis plays an important role in establishing a possible value for the customers. Some organizations add value to the products in order to improve on the taste and preference in the market. With the rising competition in almost all the industrial sectors, value chain analysis plays an important role in identifying organizational resources, which can create a competitive advantage. These organizational factors contributing value addition of a product are competencies (Piskorski, 2011, 120). They encompass all skills, knowledge, and innovational techniques that an organization enjoys. In order to ensure reliable chain analysis, businesses must begin by evaluation of its products to identify the areas, which requires value addition. Upon identification, the management should analyze all businesses competencies to identify resources, which have the ability of improving the value of the product. It is the responsible of the management to ensure that the created value is sustainable. Business level strategies (BLS) It is the responsibility of every business to ensure that its products and services meets the need of the customers. Business level strategies are plans and methods that organizations put in place to ensure there is satisfaction of the customers. Larger organizations often employ more strategies since they have more departments than simple businesses. Some businesses use BLS in providing guidelines to those in managerial positions on how to regulate other business activities. There different types of BLS depending on the roles conducted. They include Coordinate Unit Activities (CUA), which ensures there is proper coordination of all taking place within the business, Utilize Human Resources (UHR) that ensures that the management utilize all human resources for improvement of product value. References Dervitsiotis, K. N. 2005. Creating conditions to nourish sustainable organizational excellence. Total Quality Management & Business Excellence, 16(4), 56-71. Dobbin, F., & Baum, J. A. 2005. Economics meets Sociology in Strategic Management Advances in Strategic Management, Volume 17 Introduction: Economics Meets Sociology in Strategic Management. Harvard Business Review, 124(56), 152-161. Duarte, A. P., Martins, P., & Alexandre, J. 2008. 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