Changes in the business environment have long been identified as critical factors in managing business organizations. Companies structure themselves internally with regard to environmental conditions. Researches have also identified that organizational forms are linked considerably to their environmental characteristics. In the last 15 to 20 years, there has been enhanced concern among managers and businessmen regarding the increasingly dynamic business and organizational environment and how organizations should identify and react toward changes in their environments.
Concerns regarding how organizations should design themselves internally in response to their business environments generated the concept known as strategic management. It is the art of managing organizations to succeed within their environments in the short and long term. However, the science of strategic management has also undergone significant transformation in the last 20 years due to the increasingly dynamic business and organizational environment.
Strategic management is viewed from various angles and perspectives that it generated doubts that the traditional view of strategic management is sill relevant. This paper is discussing on the development of the strategic management concept and particularly addressing the differences between a traditional view of strategic management and a dynamic view of strategic management. The paper will also argue on the urgency of the dynamic perspective of strategic management in order to survive the present challenges in business environments.
Haven’t found the relevant content? Hire a subject expert to help you with Strategic Management And Organizational Dynamics
Traditional Strategic Management and the Logic of Dynamic Strategic Management Researches have long revealed that strategic management is necessary in managing business organizations because of the various factors that affected the course of business developments. Studies have identified that there are many factors that determines whether and organization is to fail or succeed in its environment. Traditional strategic management employs these factors along with the knowledge of the organization’s internal structure, and bring all of them into considerations of a process called strategic thinking.
The results of this traditional strategic thinking process are predetermined methods of managing activities within the organization. There are several important occurrences and thoughts in the modern business world that gave boost to the birth of the firsts strategic thinking, they are: • Globalization of the business world which mean that companies must work harder and more efficiently to be the best in its environments • The increasingly educated and hard to satisfy customers, while satisfying customers is a constant obsession of any business
• The increasingly competitive environment gave birth to new business concepts like continuous learning and continuous improvement Researches stated that the importance and necessity of strategic thinking and strategic management first come into mind when these occurrences and thoughts come to the surface of managerial discussions. Various factors influencing business activities, along with these thoughts and occurrences justified the change from functional thinking in business organizations to strategic thinking.
In this chapter, I would like to argue that similar conditions have occurred today. Business organizations encountered conditions where the traditional linear strategic thinking perspective is no longer adequate to face the challenges of the environment. Just like when the globalization and customer satisfaction issues rose, other issues have rose today that generates new perspectives on strategic management. Some of those issues are:
• The knowledge-based competition and the flow information Information and knowledge have turned into the most valuable trade commodity today.
Knowledge workers like IT experts and IS designers gained increasing role in the present business environments. This reflects how environmental changes happen much faster than before. The increasing speed and quantity of information flow and the necessity to react accordingly to them generate much more complexity in managing business organizations. The traditional view of strategic management will not be sufficient to face these conditions.
• Mergers, Acquisitions and Cooperation Previously, the common managerial view is to succeed by performing better than any other management or any other group of people.
Today however, that trend has changed. Companies prefer to work together to reach their goals while they are also competing against each other in the global business environment. The lines of ownership are blurred by the increasing amount of strategic cooperation and short or long tern partnership. It is easier to see a business environment as a large and connected network rather than define them as separate entities.
• Technology and the Dynamic Community The rapid development of technology has brought a new era of business competition.
It has been the general; tendency that companies who have access to the latest generation of technology gain significant competitive advantage in their markets. Other companies would be compelled to quickly adopt the new technological development. In previous times, these changes might have occurred once every several financial periods, in the last decade however, new breed of technological innovation might occur each quarter of a financial period. In the midst of such a rapid rate of technological innovation, the communities have also changed toward a more dynamic state.
Trends and preference shifted everyday with little restraints and undefined directions. Just like globalization and all the previous issues frustrate managers out of their functional thinking concepts and gave birth to the firsts thoughts of strategic management, all the issues mentioned above are factors that can frustrate managers as they are implementing their traditional strategic management concepts. Therefore, a new and more dynamic view of strategic management is required rather than the insufficient view of traditional strategic management.
A strategic management perspective that accounts for the dynamic factors of the business environment is different to the traditional perspective of strategic management. As mentioned above, the differences are caused by arising new issues that alters how managers perceived or should perceived their business environments. In this chapters I will argue on how dynamic perspective of strategic management is more suitable than the traditional perspective.
Networking The traditional view of strategic management perceived organization as singular actors competing against others in impersonal marketplaces.
The reasoning behind this view is rooted in the microeconomic model of the industry. In microeconomic discussions, all firms are perceived as singular actors taking advantage of personal resources to face challenges within their environments and competing with other firms. This has been an accepted view of how firms exist in their business environments for decades. Nevertheless, the competitive environments have changed. The traditional structure and the hierarchical organizations are being replaced by inter and extra-organizational relationship.
Firms are forming various arrangements to increase their competitiveness, like strategic alliances, joint ventures and various other network agreements among business entities. These organizational networks are flexible and able to cope with dynamic conditions generated by globalization, technological developments, unbalanced competitive structures and political uncertainties. This shift toward a more networked business arrangement raises a question regarding the validity of the traditional view of strategic management.
Within the increasingly networked structures, the perspective of organizations being a singular entity competing within impersonal markets is no longer suitable. Furthermore, traditional ways of managing the business have also become increasingly out of date. All organizations have limited internal resources, but in the present trends, most of them prefer to develop various types of external connection to gain access to additional resources. In the traditional view of strategic management, companies accumulate and control resources within their own boundaries.
This perspective provides minimum insights into the contemporary business environments where players are engaging in extended network of cooperation. In the present structure of firms, organizational boundaries are blurred which generate the need for a different approach of strategic management. In the new approach of strategic management, which account for existing dynamic factors, corporate performance are not seen only from the way organizations manage their internal resources, but also from they way they establish relationship with others.
Instead of considering only the internal factors in decision making, the dynamic approach to strategic management implies that firms should consider the cumulative effect of their relationship with other entities. Strategic plans and strategic activities must all relate to networking conditions of firms (Andersson, 1994).
III. 2. Leadership and Involvement of Broader Factors The change from a traditional to dynamic strategic thinking is also necessary because it represent the change of leadership styles to a better and more effective way of addressing the challenges within the present business environments.
The traditional view of strategic management demands only for a leader who understands the five stages of managing a business, which are: planning, organizing, commanding, coordinating and controlling. Planning means analyzing the future and determining corporate needs and goals. Organization means managing the use of material and human resources to reach corporate goals. Commanding means managing activities of corporate personnel and designing for optimum return. Coordinating means unifying or harmonizing corporate efforts toward achieving the determined goals.
Control means ensuring that all activities are executed according to plans and corporate values (Chakravarty, 1991). Through these stages of corporate management, it is clearly elaborated that the classical perspective of leadership concern mostly of planning and managing inside the organization and hope to gain the best results from it. In a strategic leadership concept which took account of the dynamic nature of the external environment, there are different perspectives of what is expected from a leader. First, dynamic leadership concepts introduce a perspective where leaders must be divided to fulfill different functions.
These functions are set to deal with both internal and external challenges. Examples of such leadership function are: ‘the figurehead’, ‘the leaders’, ‘the disseminator’, ‘the spokesman’, ‘the disturbance handler’, ‘the negotiator’, etc. Second, the dynamic leadership concepts urge leaders to understand that there are much larger powers influencing the business environment besides internal capabilities of firms. A good leader is the one always in-tune with these larger powers and uses this connection to the advantage of the company.
This type of leadership is known as the political contingency responder. It is a leadership concept which took into consideration, much larger factors than the classical leadership concept (Alvesson, 1996). Third, the dynamic perspective of strategic management calls for leaders with abilities to examine its surrounding environment and decide which position will provide the company with the highest level of competitive advantages. This competitive positioner function requires the ability to be sensitive toward influential market forces and their affect to the company and its specific internal condition.
Dynamic strategic management concept also calls for a visionary leader, one that able to spot opportunities in the environment both in short or long term and lead the company toward the goals. An office manager, which is the common character of the classical leadership styles is not the one referred as a visionary manager. Visionary qualities include high motivation, determination, tremendous capacity for hard work and great communication skills. Fourth, using the dynamic strategic management perspective rather than the traditional strategic management concept to search for leaders will lead us to turnaround strategist and crisis avoider.
Both are highly capable leaders intone with the heartbeat of their business environment. Turnaround strategist are leaders that have the ability to observe the environment, get rid of all the negative factors that dragged the company onto its knees and invite in new and positive aspects of the environment to the advantage of the organization. A crisis avoider leader has an even more extensive experience regarding the external environment and its dynamics. This type of leader can spot signs of problems and fight the problems before they lead the company into a crisis (Richardson, 1994).
IV. Conclusion Changes in our business environment have call for a new perspective to see strategic management activities. We can no longer see strategic management as a linear process which include managing internal factors and gain success from it. This argument is supported by the fact that the level of changes which has lead us to the traditional strategic management concept in the first place has took place again and render the old concepts of strategic management obsolete. Today, managers are starting to see strategic management from various new and more sophisticated perspectives.
Some of these perspectives have been elaborated above along with the reasons of why those perspectives are better than the classical view of strategic management. Using the dynamic perspective of strategic management, managers will be able to accept these new ways of thinking better and they will be able to address their contemporary problems and enhance the performance of their companies a lot faster.
Haven’t found the relevant content? Hire a subject expert to help you with Strategic Management And Organizational Dynamics