strategic management read online

strategic management read online

The Importance of Strategic Management in Modern Organizations

1. Introduction to Strategic Management

Strategic management as a discipline originated in the 1950s and 60s. Although there were numerous earlier contributors to the literature, the pioneering work is generally recognized to be that of the Harvard Business School. This marked the ten-year period – from 1960 to 1970 – as the decade in which strategic management was born, albeit at an earlier School of General Management. The development of a state-of-the-art restatement of the classical theory around which earlier general management was based. Bayer, a German corporation, promoted by the year 2020 edition of Strategic Management Journal. This effort included some attempts to identify especially influential contributions and refute at least some criticisms. Our entry for the journal’s 60th birthday derives also from an earlier designation of the same career, by Bushnell and Thompson, who concluded with their year 20 predictions about the future, 40 years in the future.

2. Key Concepts and Theories in Strategic Management

Competitive strategy begins with the development of a competitive advantage. So, strategic management of an organization is essentially a business logic which is particularly associated with the display of an organization’s values, micro norm supported, specifically with the operations management, marketing, and finance domains. In essence, it is centered prior to a significant action being taken, an event that occurs long after the strategic management process of envisioning target settings, determining what they should be, and then bringing them closer actually starts. Competitive strategy focuses, however, not only on the micro value, operations domain, but on global organizations – suggesting that an optimizer, in the case of economic value, should strive to possess the most elevated level of efficiency and flexibility in the quest to be ahead of the pack.

Strategic management deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments. It entails specifying the organization’s mission, vision, and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects, and programs. Strategic management activities have a direct impact on the organization’s financial performance as demonstrated by numerous studies. The key theories in strategic management are derived from economic theory and industrial organization (IO) economics, rather than relying on other bases such as sociology, political science, or psychology.

3. The Process of Strategic Management

The society needs to evolve, always seeking a better level of quality of life, and the organizations have to provide opportunities to the society through employment, payment of taxes to the government, and the offering of good and generally low-priced products with excellent quality and service. The difference between organizations with and without success is that the successful organizations know what to do, how to do it, and really do it. They are well administered, establishing goals, strategies, and implementing these strategies through good administrative practices. This paper aims to indicate how the strategy can be much more effectively and efficiently determined, planned, and implemented within the organizations, in general, in modern times.

The organizations must focus their resources on the satisfaction of customer needs and wants, using these resources efficiently and effectively, if they are expected to survive the intense competitive pressure and achieve a competitive advantage. In this context, the strategy is defined as the set of directions that should lead to the organization’s objectives. The strategy decision represents the choice of a unique direction and a unique approach for the overall organization. But how can the organization reach these unique directions and approaches effectively and efficiently? Firstly, by understanding the strategy process, how it happens, and how the strategy can be well elaborated, planned, and implemented.

4. The Role of Strategic Management in Organizational Success

Non-formal stakeholders can act as a powerful force in defeating your design for change or penetrating markets, and managers today need to be continuously vigilant about these stakeholders. The environment will remain mercurial, and the savvy manager would be one who would keep his eyes and ears open to these changes in the external market and accordingly change his strategic charts. Remember the proactive approach when we design all strategies, be it finance, marketing, production, research, human resource management, etc. Hence, strategic management acknowledges that organizations (which thrive in the competitive marketplace) and organizations (that survive) have people in them. They have employees, managers, and even shareholders such as institutional investors, and sets the corporation on the path of sustainable development by seeking win-win solutions for its success.

Traditionally, managers have been concerned with the efficient and cost-effective utilization of competitive resources. But increasingly, industry and political leaders are recognizing that human factors have played a significant role in determining the susceptibility and nature of organizational problems. Failures in this regard could have significant consequences for organizational success. These could include strikes and constant conflict between management and labor. It is also possible that with each successive round of negotiations, labor may return with increased demands that reflect the increased productivity of the factor, a demand that may be legitimate but would also cause a significant dent in the competitive fitness of the company. Such demands can cause the company to lose price competitiveness, which would lead to reduced demand and stifled growth. Firms like Steel Authority of India, Bharat Heavy Electricals, National Thermal Power Corporation, Monsanto, etc. have been witness to some of these aspects, and the end result is reflective of the toil and trouble these companies had to face. It is for this reason that during times of liberalization, most companies have appeared to find top-line growth easier, and stocks of companies that have adopted a proactive and healthy climate of industrial relationships have surged not merely because of market expectations of extraordinary growth in the bottom line, which is normal in the wake of economic reforms (1991). It is crucial for the success of firms today to have social stability. Players today can no longer afford instability, and hence, it is important for the social fabric of the company or its extended enterprises to be stable and healthy.

5. Challenges and Future Trends in Strategic Management

Third, lowering or removing trade barriers has allowed a good deal of businesses to become accustomed to a place that is free from time chords or borders across the world. Not only have trade barriers become less of an impediment, new trading possibilities are emerging. However, as a result of the opening trade borders, the organization must now manage with a horde of competitive elements that are not hindered by any national borders. These competitive elements can appear anywhere from Tokyo to Timbuktu. However, the firm’s course for the future can only be reaffirmed if introspective knowledge can be combined with imaginative and creative projections of future potential opportunities. As the forces of globalization carry on pushing more countries to interact and facilitate freer trade and capital control, the strategic management of the firm will be done in a more complicated competitive and capable environment.

Second, human capital, knowledge management, leadership, and expertise are becoming more prevalent. Competition is playing out at the level of who can obtain actionable wisdom from the terabyte knowledge that organizations house. As conventional modes of rigid hierarchical communication are being flattened because of the advancements in technology, new decentralized organizational structures are emerging. This piece of work discusses the inadequacies in employing traditional forms of strategy that were mainly designed for hierarchical organizations.

Several global challenges or forces are facing the strategic management of organizations. First, the 21st century has brought about rapid and helpful technological changes. However, another side effect of this change is the “information overload problem” in which managers are mainly occupied keeping up with copious amounts of data and not having the required time to think, contemplate, strategize, and plan for the future. Although strategic planning and thinking are stated or often referred to as the cornerstones of organizational success, operational and shorter-term responsibilities often seduce. Both strategy content and process seem to struggle with underrepresentation, especially when compared with the continuous improvement drive of operational performance.