Managing Strategy And Strategic Management ✓ Solved
Managing Strategy Strategic Management Strategic 9 - 2 management
What are an organization’s strategies? They’re the plans for how the organization will do whatever it’s in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goals. One term often used in strategic management is business model, which simply is how a company is going to make money. It focuses on two things: (1) whether customers will value what the company is providing, and (2) whether the company can make any money doing that.
Why is strategic management important? It results in higher organizational performance. It requires that managers examine and adapt to business environment changes. It coordinates diverse organizational units, helping them focus on organizational goals. The most significant reason is that it can make a difference in how well an organization performs. Organizations that use strategic management often have higher levels of performance. Another reason is that managers face continually changing situations, coping with uncertainty by using the strategic management process to examine relevant factors and decide what actions to take.
Strategic management is important because organizations are complex and diverse. Each part needs to work together toward achieving the organization’s goals; strategic management helps do this.
In the strategic management process, there are six steps. Step 1 involves identifying the organization’s current mission, goals, and strategies. A mission statement outlines the organization’s purpose, while goals should be measurable performance targets based on facts, not emotions. Step 2 consists of conducting an external analysis (Opportunities & Threats) through environmental scanning. This focuses on identifying opportunities and threats that affect the organization.
Step 3 is doing an internal analysis (Strengths & Weaknesses) to assess the organization’s resources, capabilities, and activities. Strengths create value while weaknesses can place a firm at a competitive disadvantage. Combined, Steps 2 and 3 form a SWOT analysis. Step 4 involves formulating strategies that exploit strengths and opportunities while correcting weaknesses and guarding against threats.
Step 5 requires implementing strategies by effectively fitting organizational structure and activities to the external environment. Finally, Step 6 is evaluating results by measuring the effectiveness of strategies and determining necessary adjustments. Managers must implement strategies appropriately to ensure organizational performance meets expectations.
Corporate Strategy refers to what businesses a company is in and what it wants to do with those businesses. Functional strategies are those used by various departments to support the competitive strategy. There are three main types of corporate strategies: growth, stability, and renewal. Growth strategies involve expansion into new products and markets, while stability maintains the status quo. Renewal examines weaknesses leading to performance declines, with retrenchment useful for minor problems and turnaround for serious issues.
Competitive strategies outline how the organization will compete in its markets. Competitive advantage distinguishes a company from its competitors. Strategies include cost leadership, where an organization competes on having the lowest costs; differentiation, where it offers unique products; and focus, which involves targeting a niche market either through cost advantage or differentiation.
Current strategic management issues involve strategic leadership, the ability to anticipate and enact changes for the organization’s future. Key dimensions of effective strategic leadership include vision determination, capital development, and ethical organizational practices. Additionally, managers can utilize e-business strategies to cultivate a sustainable competitive advantage through cost leadership, differentiation, and focused market strategies.
Paper For Above Instructions
Strategic management plays a crucial role in today’s business landscape by enabling organizations to define their direction, optimize internal processes, and capitalize on external opportunities. As globalization, technological advancements, and competitive pressures continue to escalate, the importance of well-structured strategic management cannot be overemphasized. This paper will discuss the significance of strategic management, delve into its core processes, and explore the strategies organizations may employ to gain competitive advantages.
Understanding Strategic Management
At its essence, strategic management involves the development and execution of long-term goals and objectives based on a thorough analysis of both internal competencies and external environments. According to David & David (2016), an effective strategic management process lays the foundation for organizational success by aligning the company’s vision with its operational capabilities.
1. Identifying Mission, Goals, and Strategies: A successful strategic management process starts with defining an organization’s mission, which articulates its purpose and strategic intent. For instance, Microsoft's mission to "empower every person and every organization on the planet to achieve more" clearly outlines its objectives which serve as a guiding principle for strategic planning (Microsoft, 2021).
Environmental Analysis
2. External and Internal Analysis: The SWOT analysis—strengths, weaknesses, opportunities, and threats—provides a comprehensive examination of an organization's position. The external analysis focuses on opportunities and threats in the business environment. Factors considered include economic conditions, market trends, and competitive landscape, while internal analysis involves assessing resources and capabilities. Utilizing frameworks like PESTEL can facilitate the understanding of political, economic, sociocultural, technological, environmental, and legal factors impacting business operations (Yukl, 2010).
Formulating Strategies
3. Formulating Strategies: Utilizing insights gained from prior analyses, organizations can develop strategic alternatives. For example, Apple employs a differentiation strategy, making it stand out through innovative product design and marketing, fostering customer loyalty while commanding premium prices (The Economist, 2022).
Implementing and Evaluating Strategies
4. Strategy Implementation: Efficient implementation of strategies requires alignment between organizational structure and strategic objectives. Leadership plays a pivotal role in this phase, ensuring that all teams understand and align their efforts toward achieving the common goals (Kirkpatrick, 2020).
5. Evaluating Performance: Ultimately, the effectiveness of strategies should be evaluated based on pre-defined performance metrics. Continuous feedback and adaptability allow organizations to pivot as necessary in response to market demands and emerging challenges.
Corporate Strategy
6. Understanding Corporate Strategies: Dividing strategies into corporate, competitive, and functional levels helps organizations manage their various business units effectively. For example, Amazon operates under a growth strategy by continuously expanding its product offerings and entering new markets (Smith & Johnson, 2021).
Competitive Strategies
7. Competitive Strategies: In a competitive landscape, aligning with a competitive strategy allows organizations to leverage their distinctive advantages effectively. For instance, Southwest Airlines employs a cost leadership strategy by maintaining low operational costs and offering no-frills services (Miller, 2019).
Current Strategic Management Issues
In today’s rapidly evolving landscape, strategic leadership and flexibility are critical. Leaders must possess the capability to navigate uncertainties and craft innovative responses to dynamic market conditions (Bryson et al., 2018).
Conclusion
In conclusion, strategic management is an integral component of any successful organization. By fostering alignment between operational capabilities and external market opportunities, organizations can cultivate a proactive approach to overcoming challenges and achieving sustainable growth. The continuous reassessment of strategies, accompanied by effective implementation and leadership, is paramount to maneuver through the complexities of modern business environments.
References
- David, F. R., & David, F. R. (2016). Strategic Management: A Competitive Advantage Approach, Concepts and Cases. Prentice Hall.
- Microsoft. (2021). Mission Statement. Retrieved from Microsoft.
- The Economist. (2022). The Economics of Apple Inc. Retrieved from The Economist.
- Yukl, G. A. (2010). Leadership in Organizations. Pearson.
- Kirkpatrick, S. (2020). The Role of Leadership in Strategy Implementation. Journal of Business Strategy.
- Smith, J., & Johnson, L. (2021). Corporate Strategy in the Age of Digital Transformation. Business Horizons.
- Miller, R. (2019). Cost Leadership Strategies in Airlines: Case Study of Southwest Airlines. International Journal of Aviation Management.
- Bryson, J. M., Edwards, L. H., & Van Slyke, D. M. (2018). Strategic Planning for Public and Nonprofit Organizations. Jossey-Bass.
- Porter, M. E. (2008). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
- Barney, J. B. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management.