Strategic Management Theories and a New Taxonomy

Introduction

This has been best described as “a process through which organizations analyze and learn from their internal and external environments, establish strategic direction, create strategies that are intended to move the organization in that direction, and implement those strategies, all in an effort to satisfy key stakeholders” (Chapter 1 Strategic management, n.d, p.4).

Perhaps, one of the major aspects of strategic management is that it is considered against the competing environment and taking account of both internal and external factors that impinge upon corporates. There are a lot of competing and rival forces in the conduct of businesses, big and small, and all these combine to devise strategic thinking, planning, organizing and decision making in this context. Moreover, it is also necessary that strategic management practices need to be an evolving and dynamic one, enjoining factors like activities of rival businesses, environmental landscaping under which the unit progresses, work force and union related issues, morale and motivation of the unit and many other existing and new factors that come into play in corporate governance. All these actions, whether individually and/or collectively could encourage, or impinge business results. Thus a dynamic, forward moving and progressive-minded strategic thinking could result in better business since it is performance centric and attuned to seek and gain competitive advantages in business.

Moreso, character and scope of strategic management also changes with shifting economic landscapes and paradigm shifts in strategic thinking and execution of corporate plans and policies. However, there are certain aspects to consider including the fact that “Strategists seek to apply essential command and management approaches in order to prevent the allocation of critical resources to activities that may result in a deviation from expected loss, or total failure” (Bratton, n.d).

Components in Strategic Management

The components of strategic management involve the following processes:

1. It is necessary to consider long term visions and goals that are sought to be gained through use of strategic management practices. It is therefore necessary to transform ideals and principles into short and long term goal setting which could, in effect, lead to time and quantum goal settings.
2. Giving form to the vision is the next aspect which takes into account the needed for clear cut strategic goals and objectives and how to reach them The tertiary aspect of SM is in terms of developing clear cut stratagems on how Strategic objective testing could be put into practice
3. It is not enough that strategic management practices are evolved and laid out. It is also necessary that its implementation be constantly monitored and remedial actions taken wherever necessary.
4. Besides entrepreneurship is closely linked with strategic management. While the former is all about creation of wealth for enterprises, the latter focuses on “building a competitive advantage (firm performance)” (Hitt, et al, n.d, p.3)

Also changes in strategic management strategies need to be effected if the present tools do not address key strategic issues and it would therefore become necessary to draw up new strategic management tools in order to address specific issues of the company. Strategic management precepts, by itself cannot guarantee that these could be implemented and enforced successfully and effectively in the corporate model.

The reigning scenario, impact of external and internal factors, socio-economic and political environment, and also degree of commitment and dedication of management in rigorously pursuing strategic management ambitions and goals are also required. In real simple terms, if the corporate environment and competitive landscape does not permit the productive and gainful employment of scientific management teachings and practices, it would be more appropriate to institutionalise changes in the corporate norms, to facilitate smooth and beneficial changeover to these beneficial systems. Moreover, corporate history has been witness to the fact that in many cases, unethical, or unexplained thrusting of strategic goals without a basic framework, or underlying premise for it, could create management issues.

Structure of Strategic Management

Strategic management is concerned with adopting and deploying strategic to suit the changing demands on business, due to internal and external factors impinging upon it. This could be in terms of new marketing plans, innovative designing and marketing, instilling greater degree of cost consciousness economy in scale of operations and could even entail acquisitions and strategic partnerships to widen the market base, gain synergistic advantages and topple competitors and rivals off their market perch. The redeeming and all pervading aspect of strategic management is in terms of the fact that it is dynamic, ever evolving to suit changing business times.

Just as there are several criteria for strategic management, the structure of SM could also entail business strategies, planning strategies and functional strategies. Functional strategies pertaining to several company disciplines like.

Marketing strategies, Human Resource development, (HRD), financial planning and resourcing, Research and Development, Inventory planning and vendor strategies, and so on. Coming to implementation part of strategies, it is necessary to draft operational strategies that take care of all aspects of business, especially with regard to cost effectiveness and profit planning. Business operations are described in the operational strategies, which includes plans for manufacturing, warehousing, ordering and marketing.

History and theoretical underpinnings of strategy : Strategy building has been as old as business itself, and it also gained tremendous momentum during wars, during which time it became necessary to build up war strategies to effectively combat enemy operations and thwart their plans for gaining strategic battle advantages. Strategic management involves, “manoeuvre warfare is a military strategy employing surprise, speed and economy of both movement and effort against an opponent‘s weak points and vulnerable positions and or/ process” (Pech & Slade 2003).

The fundamental structure of strategic management depends on several factors, internal and external. Besides, it also depends upon style and genre of management, the size of business and its annual turnover. Companies whose turnover runs into billions of dollars perhaps have a greater level of strategic management than others, and this could mean a great deal for business. “Maneuver theory”, an offshoot of strategic management, would entail a greater scope for gaining objectives than those realized through other non strategic ways. This is because strategic management may take cognizance of both market and non market issues, present and future impacts of businesses and other. (Pech & Slade 2005).

History and theoretical underpinnings of strategy

The evolution of strategy is as old as corporate business itself. Through the history of this strategy, corporates have felt it necessary to build plans of actions, strategies and policies that could afford it to be in the most advantageous and commanding positions vis-à-vis market and human force challenges. Besides, the need for business to grow and prosper was also utmost, since slow growing or non growing ones, sooner or later, were no longer in business in competitive business environment. Besides, other factors that came into the forefront were in terms of gaining larger market share and newer markets through innovation. The innovative aspect, by far has been the sustaining part of business. There is truth in stating that the”True strategy for the enterprise and the entrepreneur, a strategy centered on innovation” (Tremblay 2004, p.4).

Again, many management gurus and practitioners have contributed to the writings of strategic management including Peter Drucker, whose works on Managing by Objectives (MBO) could be seen in the light of modern day strategic management ethos and techniques. Besides Druker, many other eminent research scholars and academicians have, over the years, published lengthy discourses and writings on strategic management and its many implications and impacts on businesses, big and small.

Again, coming to the organizational approach to strategic management, it considers two aspects, first, “a market approach bases (from outside to inside) and a resourced-based approach (from the inside out). The SHP model must acknowledge in principle a market based approach but the reverse is also possible. In that case you go out of the core competencies, internal developments and especially unique characteristics and abilities of the organization and its staff to translate into a strategy which will be made to the stakeholders and markets that poses a capital appreciation thing. In short, you answered the question: “What, what places and for whom, as we are, we can add value” (Logical levels: Six aspects of change, 2007).

Taxonomy of different strategic management approaches

As has been mentioned earlier in this paper, the taxonomy of SM cannot be straitjacketed, or pre determined with great deal of accuracy and perspicacity; to a very large extent, it is a dynamic and evolving art that needs to consider a plethora of factors in the market place and also the internal workings within the organization. However, it is not be possible to compare the strategic competitive aspects of, say, Mitzberg’s Theory with that of Porter’s or Igor Ansoff Model. This is because they all adopt different focus areas and competencies. Thus the configurational model cannot be applicable in the case of strategic management. Although the approaches to strategic management may be different, the ultimate goal and objective is the same- wealth creation for stockholders and business growth and development on a systematic and sustained method.

Perhaps the 21^st Century will gain the best advantages for strategic management and its usage in the context of business goals and objectives. Global competition, the internet age, outsourcing for products and services, increase quality consciousness and competitiveness- all these factors have raised the bar for SM and its implications all over the world, including developed and developing countries. Besides, markets have become buyer oriented and therefore, producers need to make amply sure that their goods, services and utilities meet global standards in all areas of public accountability, failing which it would be inexonerably exited from the marketplace.

Besides high quality standards, it is also important that strategic marketing plans deals with visibility of products and maximum service rendition. Strategically speaking, “The Internet marketing company can provide keyword rich content, high quality graphics, use of Meta tags and descriptors, as well as relevant keywords” (How internet marketing establishes global visibility for cutting edge product, 2010).

It is now proposed to take up two major theories in this paper. First is with regard to “design school theory” (Fredrickson n.d, p.114) It is necessary for enterprises to consider their relative strengths and assets and use this for turning weaknesses into strengths and risks into opportunities.

In this context it is also necessary to consider the design school, planning school and political school in the domain of Strategic management – the design school views sm as a conceptual process, or rather certain intangible factors that translate theories into action and established practices. But not all aspects of SM are conceptual- sometimes they need to innovative and dynamic, moving with the times.

The planning school views SM as a formal process, which seems more plausible and rational but often informal processes need to be taken for gaining SM advantages. The political school views SM as power process since SM cannot be administered with out authority and power and this is also necessary to sustain and implement SM in any organization. It would be indeed injudicious to brand SM as just one type of process since a variety of factors, internal, external and/or both determine the kind of SM strategies to be enforced and maintained.

This is very necessary in a changing and evolving business environment, since manager’s need to know where they stand and where their organizations stand in the competitive environment. Besides, group brainstorming sessions and strength/opportunities recognition are first steps to gaining better competitive grounds for future success of business enterprises. Again coming to the manoeuvre theory, business is like a war game, and one needs to know the current and future strategies of the enemy to evolve one’s own. By knowing and nullifying their war strategies, business could improve through good use of corporate jungle warfare strategies..

Three significant theorists in the field, and provide a critically comparative view of the schools of strategic thought you consider most significant. The three works relating to strategic management that could be taken up for detailed discussions in the following sections are as follows:

Mitzberg Theory of Strategic Management

1. Mitzberg Theory of Strategic Management: Mintzberg proposed the five pronged attack in SM. They are in terms of “Plan, Ploy, Pattern, Position and Perspective” (Mintzberg’s 5 Ps for strategy, n.d).
2. In real terms, actually what Mitzberg wished to attain is the right structural pattern for SM. According to the Mitzberg Plan, there is need for a strong plan or strategy, robust and well defined. Then tricks or ploys need to be deployed to outmaneuver the opponent or competitor. This could be done through providing false leads which are picked up by rivals only to be proved wrong later. Strategy also entails providing false leads that could trap the opponents in changing their strategies that could result in losses to competing firms. There needs to be a patterned behavior, the mechanism of which may change, but its basic format remains the same. There is indeed need for implementing changes as devised by Mitberg that could upset calculations of opponents and lead them to their defeat.
3. Minzberg makes reference to emergent strategies which involves distribution of resources that may not have been really formulated such strategies but nevertheless needs to abide by it in best interests of groups.

Porter strategy

Next we have the Porter strategy, which is also called the Porter Generic strategy; According to this strategy, market strengths are divided into cost advantages and differentiations. Again, depending upon broad or narrow considerations, this could be further subdivided into cost leaderships, differentiations and focus groups.

This could be diagrammatically represented as follows:

(Porter’s generic strategies, 2010).

The main impacts of this model are to take cognizance and capitalise on business and market opportunities that would occur in future. However this may not be the be all and end all of products in that sometime average products do well in the marketplace but high end, value produce fail miserably and need to exit the market place unceremoniously. The final theorist model would be that of Igor Ansoff competitive strategic management model.

Ansoff’s Matrix business Model

It is often necessary for companies to develop business strategies to survive and thrive in competitive markets.

The competitive aspects of business underline the need for whether the business and strategic managers are willing to take risks and opportunities, along lines of growth and progression. These could take different straegies as is seen from the Quadrants shown above.

1. Some business strategic managers do not wish to seek out risk in their business. They are therefore content with dealing with same products in same markets which are well recognised and offer no stimulation in business growth opportunities.
2. Next, we have strategy managers who are willing to take limited risks through introduce of existing products in new markets, (diversification) or new products in exiting markets, (product development)
3. It is also possible for strategic managers to enter new markets with new products, entailing the highest amount of risk and uncertainty. This is termed as new market penetration.

Conclusions

Managers need to consider all aspects with regard to strategic management and consider the present scenario and market landscape before enforcing strategic management. While the likelihood of immediate success is indeed limited, it would be indeed possible to gain the benefits of strategic management in the long term and through its consistent and regular use. Thus, “Successful companies are those that focus their efforts strategically” for long term gains and benefits (Kotelnikov 2001).

References

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Fredrickson, J. W., n.d. Perspectives on strategic management. Harper Business, p.114. [Provided by customer].

Hitt, M.A. et al., n.d. Strategic entrepreneurship. Amazon. p.3. Web.

How internet marketing establishes global visibility for cutting edge product, 2010. Articles Base. Web.

Logical levels: Six aspects of change, 2007. Management Issues. Web.

Mintzberg’s 5 Ps for strategy, n.d. IFM. Web.

Pech, R. J. & Slade, B. W., 2003. Asymmetric competition: Decision processes shaping the future. Management Decision. [Provided by costumer].

Pech, R. J., & Slade, B. W., 2005. Business maneuver: Exploiting speed and surprise as key elements. Hand book of business strategy. [Provided by costumer].

Porter’s generic strategies, 2010. Quick MBA.

Tremblay, S. G., 2004. Innovation, strategic management and economics: How does economic theory explain innovation within enterprises? Tele-universite Universite du Quebec. Web.