Strategic Management Argumentative Essay

Table Of Contain Strategy The words 'strategy' and 'strategic' are well recognized and widely used in the modern business world. However, the term strategy is so widely used for different purposes that it has lost any clearly defined meaning “Despite the obvious importance of strategy, there is surprisingly little agreement on what a strategy really is. However, the fact is that behind every successful company, there is a superior strategy (Markides, 1999). ” ‘’Behind every successful company, there is superior strategy.

The company may have developed this strategy through formal analysis, trial and error, intuition, or even pure luck. No matter how it was developed, it is important to understand the logic of successful strategies (Markides, SMR,1999). ” Strategy is a highly ambiguous word that is usually associated with a long range planning, a hierarchically structured system of objectives and goals, and a selected way of creating a fit between external environment, internal resources and capabilities - this view is not wrong, yet it is too narrow . ontemporary thoughts in the field of strategic management imply that strategy should be understood as the creation of the company’s future which is the result of collective social activity, considered as an ongoing process (and not as a category) and idiosyncratic in its essence common practice shows that corporate identity and strategy are usually built around market and product focused entities not enough consideration is given to other essential entities of strategy - resources and competencies; the resource perspective is not a natural one for most companies product and market position can be changed relatively easily (if this new position relies on a portfolio of the same or similar capabilities that exist in the present) however, changes in the portfolio of resources, capabilities and competences require a longer-term evolutionary process strategy is built on assumptions about the future strategy has consider the uncertainty despite the existence of different definitions of strategy, we will avoid the temptation to offer a generic definition of it. A working definition of Strategy Inspired in the work of Henry Mintzberg on the field of strategic management, we propose the following working definition for strategy (See Mintzberg et al. , 1998): “The means by which an individual or an organization accomplishes its objectives” By means, we understand ways or actions. In this context, Mintzberg and collaborators identify five key means: (1) Plans (2) Patterns (3) Positions (4) Perspectives (5) Ploys

These five means or actions are what Mintzberg calls the ? five Ps of strategy (Mintzberg et al. , 1998) Strategy: the 5 P’s Prof. Henry Mintzberg of McGill University says, “Just as Marketing has its 4 P’s, so also Strategy may be looked upon as comprising the 5 P’s, or 5 formal definitions, i. e, Plan, Ploy, Pattern, Position, and Perspective. ” STRATEGY AS PLAN: Some sort of consciously intended course of action, a guideline or a set of guidelines to deal with a situation. They have two essential characteristics: they are made in advance of the actions to which they apply, and they are developed consciously and purposefully. As plans, strategies may be general or specific.

Order custom essay Strategic Management Argumentative Essay with free plagiarism report

450+ experts on 30 subjects Starting from 3 hours delivery

Get Essay Help

You can read also Portfolio Management Quizzes

STRATEGY AS PLOY:

Really just a specific ‘maneuver’ intended to outwit an opponent or competitor, eg. a corporation may threaten to expand plant capacity to stop a competitor from building a new plant. Here the real strategy (as plan, that is the real intention) is the threat, not the expansion itself, and is therefore a ploy. STRATEGY AS PATTERN: Consistency in behavior, specifically a pattern in a stream of actions, whether or not intended, eg. Henry Ford offering the Model T only in black color, ultimately resulting in loss of market share to General Motors. STRATEGY AS POSITION: The position where an organization chooses to locate itself in the external environment, usually a market, eg, niche players. STRATEGY AS PERSPECTIVE:

Culture, ideology and paradigms shared by the members of an organization/group through their intentions and/or actions so that action comes to be exercised on a collective yet consistent basis. Some organizations, for example, are aggressive pacesetters, creating new technologies and exploiting new markets (eg, 3M Corp. ); others are laid-back and complacent in long established markets, relying more on political influence than economic efficiency. There are organizations that favour marketing, and build a whole ideology around it (a HUL); others treat engineering in this way (a L&T); while still others concentrate on their sheer productive efficiency (a McDonalds). Another example: the value systems shared by Tata group in India.

In practice, all these different definitions of Strategy are inter-related and complementary, and may ultimately contribute to the formulation of the firm’s overall strategy. Strategic Management Strategic management consists of the analysis, decisions, and actions anorganization undertakes in order to create and sustain competitive advantages. This definition captures two main elements that go to the heart of the field of strategic management. Strategic Management Processes: The strategic management process is shown in Figure 1. The first three components, in combination, give direction to the enterprise, establish the directional map for strategic action, and, in effect, define what we shall call an organization’s strategic plan.

The fourth component is easily the most complicated and challenging one because it involves not only deciding on but also undertaking the administrative actions needed to convert the strategic plan into results; indeed, orchestrating the execution of strategy is probably 5 to 10 times more time-consuming than is formulating the strategic plan. The fifth component, evaluating strategic performance and making corrective adjustments, is both the end and the beginning of the strategic management cycle. The march of external and internal events guarantees that the time will come for making revisions in the four previous components. Most of the time, revisions will be of the fine-tuning variety, but occasions for major overhaul in one or more components arise-sometimes because of significant external developments and sometimes because of sharply sliding financial performance. Figure 1 Figure 1 The Characteristics of the Process.

While defining the business, establishing strategic objectives, formulating a strategy, implementing and executing the strategic plan, and evaluating performance accurately portray the conceptual elements in managing an enterprise's strategy, the process is not quite so cleanly divided and neatly performed in actual practice. First, managers do not necessarily, or even usually, go through the sequence in rigorous lockstep fashion. Often there is interplay back and forth between the elements; for example, consideration of what strategic actions to take can provoke discussions of whether and how the strategy can be implemented with real effectiveness.

Moreover, the boundaries between the components are some- times hard to distinguish in practice: establishing a strategic mission shades into setting objectives for the organization to achieve (both involve direction-setting); objective-setting shades into considering whether and how strategies can be formulated to achieve them; and deciding on a strategy is nearly always entangled in discussions about the direction the organization needs to take and the position it should try to assume. Second, the tasks involved in strategic management are never isolated from everything else that falls within a manager's purview. Strategy has to be formulated and implemented in the midst of a managerial schedule that is fragmented with appointments, meetings, paperwork deadlines, unexpected problems, and momentary crises.

It is incorrect to construe the job of managing strategy as the exclusive task of managers, even though it may well be the most important function they perform where organizational success or failure is concerned. Third, the demands that strategy management puts on the manager's time are irregular. Strategic issues, new opportunities, and bright ideas about strategy or its implementation do not appear according to some ordered timetable; they have to be dealt with whenever they arise. Strategic issues soak up big chunks of management time during some weeks and take a backseat in other weeks. Finally, formulating and implementing strategy must be regarded as something that is ongoing and that evolves.

What qualifies as a surefire high-performance strategy today is sooner or later rendered stale by events unfolding both inside and outside the enterprise. The task of "strategizing" can never therefore be a one-time exercise. While the "what’s" of an organization's strategic mission and long-term strategic objectives, once established, usually present fairly stable targets to shoot for, the "how’s strategy evolve regularly in response to changes in an organization's internal situation and external environment. As a consequence, fine-tuning-type changes in strategic plans, and an occasional major change in strategic thrust, are normal and expected (big strategy changes, however, cannot be made often).

The need to keep strategy in tune with an organization's changing situation makes the strategic management process dynamic and means that the prevailing strategy is rarely the result of a single comprehensive analysis. Strategic decisions are made over a period of time, not all at once; moreover, previous decisions are modified and decisions to initiate new strategic moves are forthcoming from time to time. Much of the time strategy evolves in a fairly orderly manner, but sometimes the strategy is crisis-driven, forcing a number of big strategic decisions to be made rapidly. General approaches of Strategic management In general terms, there are two main approaches, which are opposite but complement each other in some ways, to strategic management: * The Industrial Organizational Approach based on economic theory — deals with issues like competitive rivalry, resource allocation, economies of scale * assumptions — rationality, self-discipline behavior, profit maximization * The Sociological Approach * deals primarily with human interactions * Assumptions — bounded rationality, satisfying behavior, profit sub-optimality. An example of a company that currently operates this way is Google Strategic management techniques can be viewed as bottom-up, top-down or collaborative processes. In the bottom-up approach, employees submit proposals to their managers who, in turn, funnel the best ideas further up the organization. This is often accomplished by a capital budgeting process.

Proposals are assessed using financial criteria such as return on investment or cost-benefit analysis. Cost underestimation and benefit overestimation are major sources of error. The proposals that are approved form the substance of a new strategy, all of which is done without a grand strategic design or a strategic architect. The top-down approach is the most common by far. In it, the CEO, possibly with the assistance of a strategic planning team, decides on the overall direction the company should take. Some organizations are starting to experiment with collaborative strategic planning techniques that recognize the emergent nature of strategic decisions.

Features of Strategy 1. Strategy relates the firm to its environment, particularly the external environ-ment in all actions whether objective setting, or actions and resources required for its achievement. This definition emphasizes on the systems approach of management and treats an organization as part of the society consequently affected by it. 2. Strategy is the right combination of factors both external and internal. In relating an organization to its environment, the management must also consider the internal factors too, particularly its strengths and weaknesses, to take various courses of action. 3. Strategy is relative combination of actions.

The combination is to meet a particular condition, to solve certain problems, or to attain a desirable objective. It may take any form; for every situation varies and, therefore, requires a somewhat different approach. 4. Strategy may even involve contradictory action. Since strategic action depends on environmental variables, a manager may take an action today and revise or reverse his steps tomorrow depending on the situations. 5. Strategy is forward looking. It has orientation towards the future. Strategic ac-tion is required in a new situation. Nothing-new requiring solutions can exist in the past, and so strategy is relevant only to the future.

The Five Factors OF Strategic Management A good strategy enables a company build a strong market position in the face of unforeseeable external developments, potent competition and internal problems. But it is not enough to have a good strategy; it is necessary to implement it as well. It is said that we strategize beautifully but implement it pathetically. The 5 tasks of strategic management are: * Setting a vision and a business mission * Convert the mission into objectives * Craft a strategy to achieve results * Implement and execute the chosen strategy * Evaluate performance and take corrective measure if necessary 1. SETTING A VISION and MISSION

Vision is a chart of company’s journey into the future from what it is to where it wants to go. It must pervade the entire organization from the chief executive to the workers at the operational level. By developing and communicating a strategic vision management infuses the workforce with a sense of purpose and a persuasive rational for the company’s future direction. A business is not defined by a name articles of incorporation but by a mission. A clear definition of the mission and purpose of the organization is necessary to develop realistic business objectives. To quote Drucker “The management that does not ask what is our mission, when the company is uccessful is, in effect smug, lazy and arrogant. It will not be long before success will turn into failure. ” Four key questions in formulating business mission and purpose are What is our business? Who is our customer? Where is our customer? What is our value to our customer? The words vision and mission have interchangeable use in management vocabulary. If there is a difference it is in the notion of time: * Vision is futuristic (what do we plan to do, where are we heading) * Mission relates to the present (what are we trying to do, what is our business). The mission statement includes the following components: Customer - Who

Products - What Market - Where Philosophy- Beliefs, Values, Aspirations, Ethical Priorities Self-Concept - Distinctive Competence Public Image- Responsiveness to society, community Employees- Concern, employees are valuable assets Growth, Survival- Commitment to growth & financial soundness 2. SETTING OBJECTIVES Objectives convert a vision into measurable outcomes of performance. They are quantitative and have deadlines. Must also be specific and not words like “increase sales” or “maximize profit”. What gets measured gets done. Two broad categories of objectives are; Financial Higher dividends/ rising stock prices

Higher returns on invested capital Company X: Increase sales from Tk 100 million to Tk 200 Million Non-Financial Mainly competitor focused, usually aimed at unseating a competitor considered to be industry’s best in a particular product. To offer the best possible PC technology, and to put the technology in the hands of as many people as possible Comparison of the two types of objectives: Financial Non-Financial Growth in revenueBigger market share Higher return on invested capitalHigher product quality than rivals Rising stock pricesMore attractive product line than rivals Stable earning during recession Wider geographic coverage than rivals 3. CRAFTING A STRATEGY

Strategy is the means to achieve an objective. This needs entrepreneurial activity – risk-taking, venturesome ness, business creativity, and an eye for spotting emerging market opportunities. Managers must be able to respond to environmental changes else the company will face performance crisis. Entrepreneurship can surface at any level of managing such as a sales manager deciding to provide every sales a lap top. Or a plant manager deciding to outsource an item because it is more cost effective and releases resources to more vital areas of operation. Strategy can evolve through both purposeful actions (Intended ) or through reactions to anticipated developments (Emergent).

It is unlikely that a strategy will remain unchanged in time, but the changes may vary from fine-tuning to quantum changes depending on external developments. Changes, if a strategy is well crafted, should develop in bits and pieces except in crisis situations such as a breakthrough in technology or social innovations. Some elements of strategy are; * How to grow the business * How to satisfy the customers * How to out compete rivals * How to respond to changing market conditions * How to manage each functional piece of business * How to meet strategic and financial objectives Obviously Strategies have a pyramid structure from Corporate to Business to Functional to Operational level.

The lower elements have to feed into the higher elements towards a common goal. For example, in a single business company the functional channels or the units within such as plants, sales districts will all have their own goals and tasks to fit into the objective of the higher unit. Corporate Strategy relates to a diversified company where each business will perform in a similar fashion. However the individual businesses will again have their own goals to fit within the corporate framework. Diversification requires synergy between the business units. Strategy can also be a function of the style of leadership such as a high-performing enterprises that initiates and leads, not just react and defend.

Aggressive pursuit of a creative, opportunistic strategy can propel a firm into a leadership position, paving the way for its products/services to become the industry standard. 4. Implementation Implementation is the process of seeing what it takes to make the strategy work. Strategy cannot exist in vacuum. It will need support from all levels. Factors affecting the implementation of a strategy are: Industry Environment Competitive conditions determine how the company should position itself. * Must respond to opportunities and threats of the market with regard to its own strength, weakness and competitive capabilities. * Core strengths of a company are important constituents of a strategy. A strategic plan cannot be executed if a firm lacks of skills and resources necessary for its implementation. Society, Politics and Regulations Government policies and regulatory requirement Practices acceptable to society and community Culture A Mission has a close sync with company culture on how it performs business – * externally (against competitors) * internally (within) All organizations develop their own cultures and to work in them you have to join them, psychologically and physically… the power culture, the role culture, the task culture and the person culture. An organizations way of doing things: * Policies * Practices * Traditions * Beliefs

Core values and beliefs modulate companies’ culture - “We believe that honesty, integrity, and fairness should be the cornerstone of our relationships with consumers, customers, suppliers, stockholders, and employees”. Organizational Culture evolves as an organization learns to cope with its problem of external adaptation and internal integration, that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think and feel. Ethics Ethics is the process whereby we choose between competing moral and/or economic values. Ethics is a system of moral principles governing the appropriate conduct for an individual or group, based on what somebody’s conscience suggest is right or wrong, rather than on what the law says should be done.

Ethics is obedience to the unenforceable, not covered by the terms of law such as “thou shalt not”. Ethics concerns human duty and principles on which duty rests. Duties of a business extend to * Owners * Shareholders * Employees * Customers * Suppliers * Community at large Leadership What attributes make a leader? No general agreement on the attributes such as decisiveness, ability to motivate, intellect, skill in communication, foresight, leadership etc. The style of leadership can vary such as from a very authoritarian style to a totally democratic style. Contingency theory relates leadership style to the type of the organization such as an informal style in a small one to the very formal approach in a larger organization.

Hence, building an organization that can support the strategy will require the following; * Develop budget to steer resources into critical areas * Establishing policies to support strategy * Motivate people * Tie up the reward structure * Create conducive company culture and work climate * Install support systems * Institute programs and practices of continuous improvement * Leadership to drive the implementation The different components of organization must worker together in support of strategy. Hence, there must be a close fit between the way things are done, between strategy and reward structure, between strategy and internal support system and so on.

Implementation is a lengthy process, can take from several months to several years. 5. Evaluation Evaluation and review are necessary not only to find out how the different components are working together but also because strategy making is not a one time exercise. It is a continuous process of monitoring, controlling and adjustments as necessary. Measure of strategy evaluation consist of financial and non-financial indicators such as, Customer Satisfaction Market Share Quality Employee Turnover Profitability Inventory Levels Stock Price ROI Financial indicators are lag indicators of historical nature. These do not necessarily reflect the long-term health of an organization.

For example, by cutting down on expenses such as R&D, Quality and Customer Relationship the financial performance of a company can be made to improve. But this will affect the long-term health of the company. The non-financial indicators such as customer loyalty or employee satisfaction are not easy to measure unlike the financial indicators. Yet, there is a need for a balancing the two types of measures. Balanced Scorecard Method is one such approach. The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success.

These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology and innovation. Like a pilot needs more than one dial to monitor the safety of an aircraft an organization needs more than one performance indicator? The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives. These are finance (increased sales), customer (increased customer satisfaction), internal business processes (reduce delivery time) and learning and growth (empower workforce).

The Five Generic Competitive Strategies 1. A low-cost provider strategy - striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers, usually by underpricing rivals. 2. A broad differentiation strategy - seeking to differentiate the company's product offering from rivals' in ways that will appeal to a broad spectrum of buyers. 3. A best-cost provider strategy - giving customers more value for their money by incorporating good-to-excellent product attributes at a lower cost than rivals; the target is to have the lowest (best) costs and prices compared to rivals offering products with comparable attributes. 4.

A focused (or market niche) strategy based on low costs - concentrating on a narrow buyer segment and out competing rivals by having lower costs than rivals and thus being able to serve niche members at a lower price. 5. A focused (or market niche) strategy based on differentiation - concentrating on a narrow buyer segment and out competing rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals' products. Each of these five generic competitive approaches stakes out a different market position. The decision on which generic strategy to employ is conceivably the most vital strategic commitment for company. This commitment will drive the rest of the strategic actions that exact company agrees to and it sets the entire tone for quest of a competitive advantage over competitors.

Don't let plagiarism ruin your grade

Run a free check or have your essay done for you

Check my essay Hire Writer