Benefits of Strategic Operations - Research Paper Example

Introduction and Background

The modern business world has become very competitive and only organizations that adopt strategic thinking gain the much-needed competitive advantage. According to Athapaththu (2016, p. 124), business managers are forced to be ready for change as a result of the dynamic nature of the modern market. As a result, organizations must have a clear understanding of the meaning of strategy and align their strategies with their future plans. Managers have to know the most appropriate time to introduce new policies to guarantee stability and sustainability. However, this cannot be achieved without understanding the exact impact of environmental change and the company’s current strategic position. The external and internal environment of an organization should be monitored on a regular basis in order to come up with the best decisions or strategies (Durmaz & Dusun, 2016, p. 39). Strategic management is a very critical discipline in the field of management as it determines whether a company will fail or succeed.

The environment in which an organization operates should define or inform its strategies and goals. Modern management is very proactive to ensure that all produced changes are consistent with all the activities and functions of the company (Durmaz & Dusun, 2016, p. 39). This essay will discuss the major concepts of strategic management such as strategic planning and strategic thinking and their impact on organizational performance. Moreover, the paper will discuss in detail the meaning and advantages of strategic management in relation to environmental change. A critical review of various academic literature that includes books, journal articles, and other peer-reviewed sources will help in providing supporting evidence on the importance of strategic management in relation to environmental change. Finally, the paper will also provide real-world examples of organizations practicing strategic management.

Critical Review of Academic Literature

The Meaning of Strategic Management

Before exploring the entire concept of strategic management, it is important to understand the meaning of strategy. Athapaththu (2016, p. 125) defines strategy as “a plan of actions that one use to formulate goals and objectives and the means of achieving these goals and objectives”. Strategic planning involves coming up with multi-year projections without any specific targets. According to Van de Ven (2002, p. 171), managers can only come up with strategic plans through strategic thinking and this involves considering anticipated environmental changes when planning for the organization’s future direction. A good organizational strategy ensures that the aims of an organization become a reality through proper allocations of resources to the set long-term goals (Van de Ven, 2002, p. 172). The best way to achieve organizational aims is by ensuring there is an interaction between the existing competitive environment and plans. Durmaz and Duson (2016, p. 40) state that “Strategic management which is directly linked to the functionality of those plans is a management technique which enables the determination of prudential aims and goals and identifying a necessary process to achieve those proposed goals”.

The Advantages of Strategic Management

According to Durmaz and Duson (2016, p. 40), it is difficult for a business to have a sense of direction without a strategy. Identified strategies define the changes that take place in organizational structures. It is important to point out strategic management has both financial and non-financial benefits to an organization implemented according to existing environmental changes. To begin with, the concept helps an organization to proactively prevent some problems as employees are incorporated in the planning process. Durmaz and Dusun (2016, p. 42) observe that this provides employees with an opportunity to assist the manager in planning and monitoring hence minimizing problems that can occur in an organization due to changes in the business environment.

The fact that all hierarchical levels are involved in the planning process guarantees the unity of purpose and conception. Villalonga and McGahan (2005, p. 1184) observe that involving employees in planning processes enhances the interactions between employees and manager through improved communication. All operations within an organization are derived from the company strategy and that is why it is important to have unity in conception. Operational elements such as responsibilities, programs, plans, policies, and partial strategies should be based on a common theme. Moreover, strategic planning brings discipline and order in an organization as all activities are planned in advance and executed according to plan (Villalonga & McGahan, 2005, p. 1183). The other advantage of strategic planning is that it guarantees better coordination of functional and operational units. Durmaz and Duson (2016, p. 43) insist that proper coordination of units with an organization cannot happen when there is no consistency of strategic decision. Strategic management brings consistency in both tactical and current decisions as all decisions are made strategically.

According to Durmaz and Duson (2016, p. 43), strategic management promotes a culture of enterprise within an organization because it makes the staff understand the organization’s purpose and mission. Athapaththu (2016, p. 128) asserts that definition of strategies helps to reduce resistance to change and increases employee motivation. Managers that adopt strategic management are in a better position to understand the level of productivity of each employee as well as the threats to their business environment. Also, strategic planning makes it easy for managers to understand a competitor’s strategy in advance and come up with counter-strategies. As mentioned earlier, strategic management comes has a wide range of financial benefits that include improvements in productivity, profitability, and sales.

Strategic Management Case Studies

Apple Inc.

Apple is one of the most successful technology companies in this world and this is attributed to its adoption of strategic management in unit operations. O’Grady (2009, p. 123) observes that strategies management has enabled the company to expand its customer base in the global market, remain profitable, and at the same time maintain its competitive position. The company has a corporate strategy that revolves around consumer-delighting innovation that keeps customers interested in its products. Apple has been able to gain competitive position by innovating and providing technologically advanced products to its customers (Hoskisson, Hitt, & Ireland, 2008, p. 16). The company has a wide range of strategic growth objectives that make it to be ahead of competitors. Examples of the company’s strategic objectives include; increasing technological advancement, increasing brand identity and profitability, providing affordable products, providing the best experiences to users, and finally expanding its business at the global level (O’Grady, 2009, p. 130). In order to achieve its strategic objectives, the company has adopted a wide range of growth strategies such as market development, product development, diversification, acquisitions, and mergers.

The company has been able to differentiate its products in the market by forming strategic alliances with companies like Google, YouTube, and AT&T. In addition, diversification has been one of the major growth strategies for Apple as it supports creativity and innovation at the company (Hoskisson, Hitt, & Ireland, 2008, p. 39). The diversification strategy enables the company to introduce exciting products with new features hence expanding its global market share. However, it is important to point out that coming up with many new products can sometimes lead to failure as some customers may avoid new products. Apple is one of the leading companies around the world when it comes to innovation and this to a great extent helps to reduce its cost of production.

Nestle

Nestle is a Swiss-based food and beverage company and is known for its highly successful brands. The company has a strong culture of producing customized products and services as part of its corporate strategy (Bell & Shelman, 2009, p. 1). Nestle develops innovative products that meet the local tastes of its customers and that is why it has managed to establish strong brands throughout the year. The company’s leadership is always determined to avoid complacency, and that is why all its activities are aligned with the company’s strategic vision. Nestle is always concerned about the future as it believes that it is the only way to achieve competitiveness and sustainability. Nestle is guided by four strategic pillars in its efforts to remain competitive.

According to Bell and Shelman (2009, p. 3), the four strategic pillars adopted by Nestle include; improved communication and branding, universal availability, product renovation and innovation, as well as highly efficient and low-cost operations. The company has long-term objectives that are commonly referred to as the ‘Nestle model’. Some of the strategic plans that have already been implemented by Nestle include; development of a comprehensive information system known as GLOBE, the launch of a 60/40 preference rating system, support of organic growth, and reorganization of the R&D to ensure that it is more responsive to customer needs. Moreover, the company has also enhanced its strategic growth to expand its global market. This has been achieved through the strategic acquisition of products like ice-cream, coffee, pet food and water (Bell & Shelman, 2009, p. 4).

Conclusions and Recommendations

It is quite evident from this discussion that every organization has some sort of operational strategy regardless of whether the strategy is sporadic, unstructured, and informal. Strategic management is meant to ensure that an organization’s plans, aims, goals and strategies are well structured in a formal manner. Having a clear strategy gives an organization a sense of direction and the capacity to deal with expected and unexpected changes in its environment. Strategic management has unlimited benefits to organizations when its concepts and techniques are applied in the right way. Some of the most notable benefits include; increased productivity, empowerment of employees, consistency in decision-making, enhancement of the culture of creativity and enterprise, prediction of future problems, improved interaction between employees and managers, enhancement of problems solving capabilities, and less resistance to environmental change. Companies such as Apple and Nestle are perfect examples how strategic management can transform an organization into a global market leader. However, in order to enjoy the full benefits of strategic management, there are some things that organization needs to put into consideration. To begin, organizations have to make strategic management to be a non-routine and simple process for stakeholders to understand the company’s plans and strategies. Second, organizations should adopt a proactive approach responding to current and future environmental changes. Third, it is advisable for organizations to remain objective, systematic, and logical when coming up with strategies that will define a company’s future. Strategic management concepts and techniques may appear very attractive in theory but it takes a lot of commitment and effort to successfully implement the concepts in the real world.