What is Strategic Management - Essay Example

Topic 2: What are Strategies? What is Strategic Management? Critical summary of prescribed readings: Summary of first reading (Mintzberg, 1987) The notion of strategy plays a significant role in the theories of business management. While formulating the conception of strategic management, Mintzberg defines business strategy in terms of five aspects: strategy as a) plan, b) ploy, c) pattern, d) position and e) perspective. Explanation of strategic management with regard to these five Ps is the primary highlight of Mintzberg’s paper. The relevance of strategic management can be conceived in terms of its effectiveness to provide overall direction to enterprises. Mintzberg’s definition of strategy basically resolves around the following argumentations: Strategy is a plan, a specific set of guidelines to deal with a situation by the organization. Strategy is a ploy to involve the organization in direct competition. Strategy is a pattern in a stream of actions displaying consistency in behavior. Strategy is a position that locates the organization in an environment. It can also be termed as a mediating force between the organization and environment. Strategy is a perspective that emphasizes the management and operations of the organization. Mintzberg’s definition of strategy provides a comprehensive idea of organizational structures that are developed on various business strategies. He also provides a number of examples to verify his position on the inter-relation between these definitions of strategy. The organization is perceived as a collective mind whose behavior is regulated or described by the concept of strategy. Therefore, strategy formation focuses on understanding that collective mind. Summary of second reading (Rosenbluth, 1991) The issues of strategic management are dealt with more substantial account of first person experience in Rosenbluth. He elaborates management dilemmas with special reference to the hospitality industry, and gives a first hand detail of the management aspects of Rosenbluth Travel. Some of the common factors leading to slow growth of the company are: absence of teamwork, overvalued focus on customer, and so on. Rosenbluth offers a precise solution to undertake the management issues in airlines travel. Rosenbluth advocates the importance of technology in organizations. In the context of corporate travel, he suggests the requirement of computerized reservation system for comfortability and easy operability. Moreover, teamwork building is another important aspect that requires the attention of the management in an organization. Rosenbluth points out three most important components for the growth of an organization. The strategic management of the organization should focus on change, people and technology. In order to gain competitive advantage, the management should take care of the enthusiasm among its employees, the relevance of effective training as well as accessibility to more information. Among these factors, importance of employees should be more focused than that of the customers. Because the enthusiastic support of its staff directs the company to effective use of technology and consequential change(s) in the organization. Use of technology is relevant for integrating the units of the organization within and outside the country. The company’s flexibility and adaptability to welcome change in the business perspectives in accordance with economic and technological advancement is also equally important. At the same time, it requires certain responsibilities on the employer’s part. The employer is responsible for “giving people the right working environment, the right tools, and the right leadership.” (Rosenbluth, 1991) Critical summaries of related materials: Summary of first piece (Thompson and Martin, 2005) Thompson and Martin provide an empirical approach to describe the contemporary topics of interest (for example, entrepreneurship and leadership) in strategic management of organizations. While strategy plays a significant role in organizational advancement, its success is accompanied by the integration of other important aspects such as entrepreneurship and leadership. The book includes some real-life accounts of the successes as well as failures of strategy management of companies. As the authors mention in the beginning, the book provides an informative documentation on the issues of strategic awareness, strategic analysis and the management of strategic change in an organizational setup. Summary of second piece (Dess, Lumpkin and Taylor, 2004) A more detailed understanding of the traditional as well as contemporary topics in strategic management can be observed in Dess, Lumpkin and Taylor. The significance of information technology is remarkable in the strategic operations and decision making in present day organizations. Business strategies have been expanded to embrace digital and online market strategies. With the innovation and advancement in corporate entrepreneurship, organizational strategies are now more focused on making the most of information. Besides, the importance of knowledge management and intellectual assets are some of the current subjects addressed precisely in the book. What is remarkable is the growing horizon of strategic management in the formation of organizational culture and organizational behavior. Topic 3: Strategy Formation: Alternative Approaches to Creating Strategy Critical summary of prescribed readings: Summary of first reading (Mintzberg, 1994) One of the important components, and perhaps the most debatable, in strategic management studies is the notion of strategic planning. Experts differ in terms of the usability of strategic planning in organizational decision making. Mintzberg offers a critical account on this issue while arguing that “strategic planning cannot be synonymous with strategy formulation” (Mintzberg, 1994, p. 29). His argumentation is based on an empirical description of both classic normative models as well as several other descriptive strategic planning models. Mintzberg is critically against strategic planning as he refers the concept as an antithesis to creative management. In terms of explaining the limitations of strategic planning, Mintzberg identifies four fallacies of strategic planning: Fallacy of prediction - Strategic planning makes sense only if it can control the market as well as predict the future of the organization, which companies are unable to perform. Fallacy of detachment - Detachment of strategies from operations can lead to failure of the plan. Because plans are limited in scope and not flexible enough to correlate with environmental changes if any. Fallacy of formalization - A strategic plan is often mistaken for accommodating all variables to formalize. For instance, variables like creativity and innovation are not subject to formalization. Grand fallacy - The failures of planning are central to the very nature of planning. Mintzberg’s book gives a substantial account of the important issues in strategic planning. Particularly, the description of the fallacies of strategic planning is the most significant point in the argumentation. Summary of second reading (Wall and Wall, 1995) With regard to strategic formation, current organizational practices include the adoption of new approaches to strategy development. Wall and wall provide a relevant argumentation regarding the limitations of traditional approaches to strategy making processes. Recent transformation in the overall business world has made a tremendous impact on the processes of strategy development. The paper points out that the traditional approach to strategy planning has been working effectively for slow-moving companies with a stable external environment. However, the marketplace is rapidly and continuously changing today. The inflexibility of the traditional approach to respond to the changes efficiently further makes the discussing ground for the assessment of new approaches to strategy making processes in organizations. As Wall and Wall argue, it is time to move ahead of traditional approaches and look for newer dimensions to address strategy development processes in today’s dynamic organizational environment. Wall and Wall’s paper criticizes traditional approaches to strategy development for being ‘too rigid, inflexible, and authoritative’ (Wall and Wall, 1995). The main objective of new approaches is the overall integration of the individuals of the organization along with their ultimate goal of attaining competitive advantage. Wall and Wall’s paper is a qualitative documentation of “a new approach to the strategic planning process, one that involves managers at all levels…a dynamic process that increases competitive advantage.” Critical summaries of related materials: Summary of first piece (Pettigrew, Thomas and Whittington, 2002) The role of strategy formation is significant for an organization to achieve competitive advantage. Pettigrew et al give a descriptive introduction of strategic management along with its historical perspectives as well as its strengths and limitations influencing the overall organization structure. The book is a comprehensive investigation of the growing importance and effectiveness of strategic management that encourages new knowledge-based approaches for constructing competitive advantage. The role of information technology is fast evolving to become the essential change in strategy making. The book also exercises a brief outlook of corporate social responsibility while emphasizing the practice of knowledge economy that shapes strategy making processes in current organizational structure. Summary of second piece (Volberda and Elfring, 2001) The book by Volberda and Elfring provides a new perspective of strategic management as it encapsulates the latest directions and developments in strategic management theory. The editors emphasize a systematic approach to discuss different paradigms or schools of thought in strategy management. It highlights the issues of fragmentation and integration in strategy processes along with the exhaustive description of the following schools of thought: the Boundary school that treats strategy as a boundary decision, dynamic capabilities school that defines strategy as a collective learning process, and the configurationally school that promotes strategy as a transitional phenomenon. Volberda and Elfring support that the new perspective of strategic management is a synthesis of these three schools. Topic 4: Strategy Formation: External Influences on Strategic Choice Critical summary of prescribed readings: Summary of first reading (Morrison and Winston, 1995) Strategic management is a serious issue in industries, more crucial especially in the tourism and hospitality industry. Industry research for strategy making involves investigation into both internal and external environment of the organization, its position within the industry and that of outside in the marketplace. Morrison and Winston make a remarkable account of the scenario in the airline industry with a view to examining the impact of economic regulation in the industry. Strategic management of an organization should involve the strategists to conduct industry analysis that includes research on both internal and external factors of strategic choice. Morrison and Winston’s book provides a comprehensive profile of the evolution of airline industry along with its issues and policies. The issue of deregulation is treated with in-depth analysis in the book with the support of a wide number of well-researched facts. The benefits and effects of deregulation on travelers and carriers are discussed thoroughly while the role pf government policies is being examined in terms of the improvement in airline performance. Summary of second reading (Porter, 1980) In terms of explaining the global economy, the current scenario is evident with prominent industry changes across the world. Competition is the key component driving organizations to advocate flexibility, dynamic changes and an enthusiastic workforce for attaining competitive advantage. Industry analysis is relevant for achieving competitive analysis. Porter provides Five Forces model for industry analysis in order to create and develop effective and competitive strategy - the one most exercised in American business today. The model includes the following components for industry analysis: Threat of new entrants Bargaining power of suppliers Bargaining power of customers Threat of substitutes Rivalry among existing competitors As Porter argues, the responsibility of managers is crucial in terms of developing competitive strategy making processes. His book provides a comprehensive set of analytical techniques and tools for understanding an industry and the behavior of its competitors. The book has a specific detail as an analytical study to understand the tools and techniques for industry and competitor analysis. Critical summaries of related materials: Summary of first piece (Montgomery and Porter, 1995) Montgomery and Porter’s book provides important business insights particularly on the issues revolving around the notion and practice of competitive strategies in organizations. The book is an anthology of business articles focusing on the evolution of strategy with special reference to competitive strategy. Strategy is not just beating the competition, it principally aims to serve the fundamental needs of customers. Thanks to the globalization in world business, organizations are now more equipped with technology advancements to reach customers. The use of information technology is crucial in terms of defining the parameters of competitive strategy in present context. The book precisely highlights current issues of strategic management and organization structure including corporate governance and corporate social responsibility. Summary of second piece (Walker, 2003) The concept of competitive strategy is multi-dimensional that requires empirical and theoretical assessment. Walker discusses the issue reflecting the diversity of the discipline in his well-organized book. The reflection is primarily based on both single business and multi-business topics along with a wide range of illustrations and real life company examples. While strategic factors (such as competitive strategy, corporate strategy, corporate governance, etc.) are important for determining a company’s economic performance, the most important activity is the issue of strategic planning that helps managers develop a road map for “increasing the firm’s performance…and…future value” (Walker, 2003, p. 259). Topic 5: Strategy Formation: Internal Influences on Strategic Choice Critical summary of prescribed readings: Summary of first reading (Mintzberg, Quinn and Ghoshal, 1995) Competitive advantage is significant for organizations, but potential competitive advantages differ from organization to organization. Mintzberg develops a framework for organizational configurations that describes six valid organizational configurations: Entrepreneurial organization - Direct supervision is handled by top management. Machine organization - Standardization of work processes is handled by systems and process analysts. Professional organization - Standardization of skills is handled by different operational processes. Diversified organization - Standardization of outputs is handled by middle management. Innovative organization - Mutual adjustment is handled by support staff outside of operating workflow. Missionary organization - Standardization of norms is handled by ideological values, norms and culture. The organizational configurations model by Mintzberg is significant in terms of understanding the structure of an organization. This is important in the context of developing a competitive strategy for the organization. The book provides a comprehensive account of the factors needed to develop organizational strategies. As Mintzberg argues, the integration and coordination of internal and external elements are necessary ingredients of a successful organization. These combinations eventually direct towards attaining competitive advantage. Summary of second reading (Hubbard and Beamish, 2008) Competitive advantage as discussed by most experts in the field of organization and industry analysis, is the most common feature in the new strategic environment that organizations are practicing today. Hubbard and Beamish provide an integrated framework for business strategy analysis that features contemporary strategy concepts. The book produces a number of practical worksheets for learners while maintaining a balance with introducing a strong theoretical and conceptual background. In the course of elaborating the notion of strategy in organizational structure, Hubbard and Beamish also develop the key concepts such as the definition of business strategy, corporate strategy and the current methods of implementing strategy. While strategy formulation is related to developing plans and objectives to achieve competitive advantage, companies both emerging and existing, have their responsibilities towards society. Therefore, strategic decision making of an organization must focus on all the relevant issues integrating business, environmental and social factors. With regard to conducting industry and competitor analyses, organizations require to analyze external as well as internal environment in order to identify the ways to develop effective strategies. In this context, identification of organizational resources and capabilities is important. Hubbard and Beamish define organizational resources as tangible and intangible assets. Whereas organizational capabilities are the processes and systems through which organizational resources are coordinated for productive use. According to Hubbard and Beamish, organizational resources and organizational capabilities lead to competitive advantage that further results in creating superior customer value. Critical summaries of related materials: Summary of first piece (Pearce, Robinson and Mital, 2007) Emphasis on contemporary strategic practice is the main subject in Pearce et al. The book primarily discusses conceptual tools and skills used in strategic management research. It argues that investigation into strategic management issues must be conducted with a practical and systematic approach. While traditional strategic management cases are still considered for examining modern competitive strategies, requirement of new approaches to strategy development is essential in order to understand the issues of corporate management and corporate governance. Pearce et al bring all relevant concerns of strategy and organizational structure together to develop a unique pedagogical model of strategic management. Summary of second piece (Pfeffer, 1994) Competitive advantage is necessary for organizations to succeed, but little importance has been given on the workforce - people who are responsible for brining that success. Pfeffer gives a detailed account of the issue of people management in his book and states that this is a primary characteristic feature of strategic success. While providing with a number of convincible case studies and examples, he further makes an empirical argumentation that lots of successful organizations credit people management for their ability to produce sustainable competitive advantage. Managing workers requires developing certain strategic frameworks and implementing them to effectively deal with the environmental or corporate changes. As change and innovation are essential parts of organizational culture, it is important to create and develop a technologically efficient ‘workforce that delivers superior performance’ (Pfeffer, 1994, p. 7). References: 1. Dess, G. G., Lumpkin, G. T. and Taylor, M. L., 2004. Strategic Management: Creating Competitive Advantages. Columbus, OH: McGraw-Hill. 1. Hubbard, G., Rice, J. and Beamish, P., 2008. Strategic Management: Thinking, Analysis and Action. 3rd ed. London: Prentice Hall. 1. Mintzberg, H., 1987. The Strategy Concept I: Five Ps for Strategy. California Management Review, vol. 30, pp. 11-24. 1. Mintzberg, H., 1994. The Rise and Fall of Strategic Planning. Illinois: Free Press. 1. Mintzberg, H., Quinn, J. B. and Ghoshal, S., 1995. The Strategy Process. 2nd ed. London: Prentice Hall. 1. Montgomery, C. A. and Porter, M. E. (Eds.), 1995. Strategy: Seeking and Securing Competitive Advantage. Boston: Harvard Business Press. 1. Morrison, S. A. and Winston, C., 1995. The Evolution of the Airline Industry. Washington D. C.: Brookings Institution Press. 1. Pearce, J. A., Robinson, R. B. and Mital, A., 2007. Strategic Management. New York: Tata McGraw-Hill. 1. Pettigrew, A., Thomas, H. and Whittington, R., 2002. Handbook of Strategy and Management. London: Sage. 1. Pfeffer, J., 1994. Competitive Advantage through People: Unleashing the Power of the Work Force. Boston: Harvard Business Press. 1. Porter, M. E., 1980. Competitive Strategy: Techniques for Analyzing Industries and Competitors. Illinois: Free Press. 1. Rosenbluth, H., 1991. Tales from a Non-conformist Company. Harvard Business Review, vol. 69, no. 4, pp. 26-36. 1. Thompson, J. and Martin, F., 2005. Strategic Management: Awareness and Change. 5th ed. London: Cengage Learning. 1. Volberda, H. W. and Elfring, T. (Eds.), 2001. Rethinking Strategy. London: Sage. 1. Walker, G., 2003. Modern Competitive Strategy. New York: McGraw-Hill. 1. Wall, S. J. and Wall, S. R., 1995. The Evolution (not the Death) of Strategy. Organizational Dynamics, vol. 24, no. 2, pp. 7-19. Read More