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1. Introduction
The assignment is written to provide argument over the statement mentioned above. To
understand this statement fully it is crucial to understand the meaning of strategic
management. Therefore, this assignment, first of all presented the definition of strategic
management and its elaboration. Later, different perspectives of strategic management
are discussed in the assignment. Final section elaborates on the importance of ‘Context’
for strategic management.
2. Strategic Management
Johnson and Scholes (2005) stated that strategic management is the set of decisions and
actions resulting in formulation and implementation of strategies designed to achieve the
objective of an organization. It involves attention to no less than nine critical areas:
1. Determining the mission of the company, including broad statements about its
purpose, philosophy, and goals.
4. Analysis of possible options uncovered in the matching of the company profile with
the external environment.
5. Identifying the desired options uncovered when possibilities are considered in light
of the company mission.
6. Strategic choice of a particular set of long-term objectives and grand strategic needed
to achieve the desired options.
Review and evaluation of the success of the strategic process to serve as a basis for
control and as input for future decision making.
As these nine areas indicate, strategic management involves the planning, directing,
organizing, and controlling of the strategy-related decisions and actions of the business.
According to Pearce & Robinson (1988) strategic management also means their large-
scale, future-oriented plans for interacting with the competitive environment to optimize
achievement of organization objectives. Thus, a strategy represents a firm’s “game plan.”
Although it does not precisely detail all future deployments (people, financial, and
material), it does provide a framework for managerial decisions. A strategy reflects a
company’s awareness of how to compete, against whom, when, where, and for what.
d. Make out action plans to execute each strategy - These are the necessary
activities to be performed by each major function (section, department) so as
to execute each strategy successfully. The objective should be clearly defined
to enable the people whether they have achieved it or not. The Top
Management should form specific committees having a separate work plan
and objectives. (O'Regan and Ghobadian, 2002).
It may be noted that organizations following this planning method may like to conduct
step three above again to identify the additional goals for further developing and
strengthening financial management of the organization.
For example, if a company wants to expand its business in other country, the first aim
will be to decide on the entry mode and after successfully entering the market this
objective will be of no use. Then the company has to set another objective and work for
the same. Another example of this approach could be understood by taking an look of the
vision statement of Ford i.e. “To become the world’s leading Consumer Company for
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automotive products and services”. To achieve this Ford has acquired Aston Martin,
Jaguar, Volvo Cars and Land Rover, as well as a controlling share of Mazda, with which
it operates an American joint venture plant called Auto Alliance. It has spun off its parts
division under the name Visteon. Its prestige brands, with the exception of Lincoln, are
managed through its Premier Automotive Group (www.answers.com, 2005).
As per Dobson et. al. (2004), those organizations that start with this “basic” planning
approach generally adapt to more thorough and more effective type of planning. The
planning process is as under:
e. Formulate action plans to achieve objectives. What resources are needed and
roles and responsibilities for implementation)
f. Account for issues, targets, strategies and programs, updated task and vision,
and plans of actions in a Strategic Plan document attaching SWOT, etc.
g. Make the yearly Operating Plan document (from year one of the multi-year
strategic plan)
h. Make and plan the Budget for year one (allocation of funds needed to fund
year one)
For example, Nirula’s, a fast food chain of India, has high levels of international focus in
their current activities. Nirula’s wants to expand to other countries, for this purpose the
company has to conduct a more detailed study that will contain detailed analysis of the
target countries. This means that Nirula’s has to collect information related to the target
country’s economic conditions, the governments, the political conditions, state of foreign
trade, benefits given to the foreign investments and many more relevant issues. The
Nirula’s has to consider political stability, access to raw materials, and low production
costs as other major reasons for investing in the country
(www.nirula.com/hotels/index.html). This means if the stake is lager, the company has to
plan in a more organised manner. This model emphasizes on the external aspects.
The aim of the model is to have maximum coordination between the organization’s
mission and for successful functioning of the organization. According to Mintzberg and
Lampel (1999), Alignment Model is helpful for the organizations that require to modify
their strategies or to know the reasons for not performing well. Sometimes an
organization that is having a large number of problems concerning its internal issues may
also choose this model. The steps needed include:
a. The committee constituted for planning sketches the objectives & goals of the
organization and its various resources.
b. Finds those areas performing well and those that need some fine-tuning.
For example, in case some conflict appears in an organisation it has to be resolved so that
the organisation could achieve its aim. The example of Cocoa Research Institute of
Savana (CRIS) helps in understanding this. In this case there was trouble between the
biochemistry and plant pathology departments, or rather between two senior scientists of
these departments. There had been several instances of conflicts between the scientists
and their divisions, but the conflicts had never reached boiling point. They were usually
resolved amicably, even before the executive director took note of them. Mostly the
conflicts arose over allocation of plots for experiments, budgetary allocations and
participation in international conferences. The case of Dr Agadir provides an opportunity
to understand causes of conflict situations in research organizations, and ways and means
of managing such situations. The conflict discussed in the case is not uncommon in a
research organization. Often such conflicts remain unresolved, creating adverse
organizational effects. They influence team-work and affect research outputs. While
management would like to resolve such conflicts, they are often difficult to resolve
(http://www.fao.org/docrep/W7504E/w7504e08.htm).
This methodology might be used in combination with other models to ensure that the
planners rightly start strategic thinking. The strategic issues and goals are specially
identified with the help of this model.
a. Choose various external forces and think of the similar changes that might influence
the organization, e.g., change in rules & regulations, demographic changes, etc. It is
possible to find certain changes by minutely searching the headlines of the
newspaper changes that might effect the organization.
b. From the possible changes stress upon each change that may affect the organization
considering all the three situations (the best, the worst and not bad). Considering the
worst situation brings motivation for the change.
c. Choose that the organization should do, or potential strategies, in each of the three
scenarios to respond to each change.
d. Planners then find that there are common solutions or strategies that should be
followed for external changes.
e. Choose those external changes that are expected to effect the organization in the next
five years and also look for the most realistic strategies the organization can have for
such changes.
For example, a top U.S. petroleum company is changing to a new SAP computerized
information system, which requires a completely new computer interface and new
standard operating procedures for every employee. This change demands that the
company simultaneously address the logistics of effective systems implementation and
the issues of staff demoralization and impaired productivity during the transition. The
company hired an external consultant to sort-out this. The solution suggested by them
are, involved a wide variety of representative stakeholders to develop a map of issues
related to the SAP implementation that would affect performance; Conducted a broad-
based internal web survey of stakeholders' importance ratings of all issues; Analyzed the
survey to identify consensus and disconnects in importance among subgroups of
stakeholders; and, Linked the importance ratings to specific phases of the implementation
to identify where change interventions might be introduced for best impact. This resulted
into the rapid surfacing of concerns and issues at all employee levels, the buy-in created
throughout the process within the organization, the comprehensive roadmap created for
planning interventions to support change and the ability to monitor change on an ongoing
basis (http://www.conceptsystems.com/Consult/CaseStudies/ChangeManagement.cfm)
Kotler (2003) stated that each strategic management model has its limitations and it is
very necessary to know how the model can be properly used. This knowledge will help in
effective strategic management. Thus, the main stress should be on three points: the
model is holistic, analytical, and non-political. Out of these the author focused on
analytical issue and it is more related to this assignment.
According to Johnson and Scholes (2005) a major issue of concern in using the strategic
management models is that it is analytical rather than prescriptive or procedural. The
models generally describe the logical or analytical steps many businesses actually use in
their strategic activities. However, it does not describe the procedures or routines
necessary to carry out each step. As a result, no model should be seen as providing a
prescription for the way strategic planning should be done. Therefore, when the strategic
management model is used it should be remembered that the model builders are
recommending the general approach they believe will provide a sound basis for strategic
planning, not a model they are certain will lead to the best results (Johnson and Scholes,
2005). The strategic management process undergoes continual assessment and subtle
updating. While elements in the basic model rarely change, the relative emphasis each
element receives varies with decision-makers and the environments of their companies.
5. Conclusion
only the tools in the hands of the business executives to determine mission, vision, goals,
objectives and the ways to achieve these. No single model is completely suitable for a
particular business entity. To deal effectively with all decision making problems and to
affect the ability of a company to increase profitability, the executives design strategic
management processes that will facilitate the optimal positioning of the firm in its
competitive environment. Such positioning is possible because these strategic processes
allow more accurate anticipation of environmental changes. Different strategic
approaches are to be mixed to gain maximum.
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