Posted at 11.24.2018
Strategic management can be involved with formulation and execution of strategy within an organization. Strategy generally speaking identifies Business purpose, values or activities business is employed in and just how it bears out its activities, contend or operates.
It can be described as a systematic analysis of inner factors (organization itself) and exterior factors (like competition, suppliers, customers etc. ) to supply the basis of rethinking the current management practices. Like a discipline, tactical management developed in 1970s, but they have progressed in response to changes in company structure and corporate culture. With a larger empowerment, strategy has become a great concern not simply for the minds or higher superiors of the company but even for employees by any means level. It's one of the key objectives is to achieve greater alignment running a business guidelines and strategies. It can be used to look for the values, goals, targets, roles, responsibilities etc. of any business. It will involve the application of corporate technique to all aspects of firm, especially to decision making.
Major Areas: The three major areas of strategic management are strategic analysis, proper formulation and strategic implementation.
Strategic Analysis: This area includes formulation of business eyesight, in depth review of internal and exterior environment (PESTEL) and examination of firm's industry (job environment). The inner analysis can help in figuring out the firm's power and weakness and external analysis shows the opportunities and threats. An industry analysis can be performed by using Porters Five Causes which evaluate admittance obstacles, suppliers, customers, alternative product and industry rivalry.
Strategic Formulation: Provided the info from the environmental scan the firm should match its durability to opportunities that is identified in context to its weakness and threats prevailing in the surroundings. To get superior profitability organization tries to seek competitive benefits over its rivals.
Strategy execution: This is termed to be the final stage of strategy management where all the designed strategy is implied in real manner in the real corporate world. It really is implied by means of programs, budget and steps. How strategy is carried out can be of significant effect on whether it'll be successful or not. So care must be studied while utilizing and communicating strategy to others.
Prescriptive Approach/Planned Strategy: Prescriptive procedure views the formulation of proper management as a systematic process of logical thinking and logical decision making. After examining the business environment, strategists must establish well defined objectives and formulate, choose and implement strategies to achieve the described goals. It emphasis that proper management is a logical process analyzing where in fact the business is, where it needs to go and how it is going to get there. It really is formal planning method and it is most relevant in those organizations where conditions are stable and within sophisticated and diversified organizations where control and coordination is from top to bottom. It offers three stages and all work in a sequential manner. It offers strategy examination, strategy development and strategy execution.
Long term monitoring and control
Source: Lynch, 2009
Long term monitoring and control
The above diagram demonstrates to begin with examination of business environment and resources are done relating to defined organizational goals, then different strategies were created and best strategy is chosen among all and it is implemented.
Example: Prescriptive Technique to Create a World Air travel - Singapore Airlines
(Richard Lynch, Fourth Model, Page 42-43)
Widely regarded as one of the world's most significant leading airlines, Singapore Airlines started out as small regional airlines in 1972. After rest away from Malaysian Federation in 1995 Mr. Lee Kuan Yew (Perfect Minister at that time) realized that relatively small country like Malaysia requires a strong and distinctive strategy if it was to survive and grow. Pursuing prescriptive strategies were under taken:
The airline chose that it would build a reputation of superior service to its competitors. Thus, it presented free drinks, hot towels and headphones form outset in 1972- such amenities are relatively cheap and quick to introduce.
Substantial investment in staff training, worker welfare and related activities. Singapore Airlines needed the view that personnel were important both in-flight service deliver and to aircraft safe practices through skills in floor and related functions.
Development of a modern airport terminal at its main foundation in Singapore - Changhi Air-port - In conjunction with related strategy of guaranteeing for airlines.
The investment in new fleet plane like for example airline launched the new ultra long range Airbus A340-500 airplane in 2004.
Clear objectives provide concentrate for the business.
Makes it possible to arrange complex activities and information, set targets against which performance can be examined and generally raise the degree of control that may be exercised above the operation of the business enterprise.
It is often linked to Competitive Positioning approach in which analysis of the business and its environment is performed to obtain a competitive advantage leading to outperforming its competitors.
There tend to be discrepancies between prepared and noticed strategy.
Rigid planning in times of strong and turbulent business can be unproductive.
Rigid adherence to plans may suggest some overlooked opportunities and further more it can stifle imagination as well.
Does not consider fallibilities of the administrator, culture, politics or the experiential learning skills of firm.
Emergent Procedure / Incremental Strategy: Emergent methodology or incremental views that strategy must be developed incrementally over a period. This view is situated upon the premise that business is complicated social organization functioning in ever changing environment. Under such circumstances business will develop its strategy by interacting between its stakeholders and its own environment. With this the final aim is unclear and strategies are executed on an incremental and continuous basis, it has no long term strategies or process and there is unstructured in form. However, this process does not completely dismiss all the stages of strategy development. Strategy evaluation continues to be important but strategy development and execution is inseparable and is dependant on experience, learning from your errors adjustment.
Active experimenting, learning and adjusting
Active experimenting, learning and adjusting
Source: Lynch, 2009
As it can been observed in the diagram shown above that emergent strategy is relatively similar to hit and trail method. It consists of trail and experimentation of different approaches, no single strategy is chosen for implementation instead strategy is build over a time period. There is no clear variation between strategy development and its own implementation and strategy maintains on changing matching to prevailing circumstances.
Example: Emergent Strategy at Virgin Group (Richard Lynch, Fourth Edition, Page 47)
Richard Branson developed a small record email order business in 1969 and two years later opened up his first record shop and subsequently developed it in to the Virgin Megastore. Looking for further opportunities using Virgin brand, fortunately he fulfilled with an entrepreneur desperate to develop an airlines business. This eventually resulted in Virgin flight business and in later year's business transferred into various endeavors. Its business strategy is referred to as below:
Virgin group needs the view that we now have always some opportunities designed for a starving business. They look for opportunities where they can provide new and less expensive for money than others, where others lack complacent like trains, insurance, banking institutions and where new internet might deliver business opportunities. So the main thrust of the strategy has been to find new market opportunities where company believes its brand can create competitive gain. Contrary to what people may think, there constantly widening and adverse empire is neither reckless nor random. Each of these business demonstrates the right picking in right market with the right time.
Reflects actuality and corresponds with what actually happens within an company and their environment.
Flexibility of emergent strategy allows execution to be integrated and modified as happenings unfold for the business.
The downside of the approach is that no planning occurs and the organization muddles through with managers who are biased and pleased to seek only satisfactory implementation rather than maximizing the objectives of the organization.
It may result in lack of goal in strategy it makes it difficult of evaluate performance, because company has no set targets, performance against it can't be measured.
Introduction: Easy Jet was founded by Stelios Haji - Ioannou, the child of Greek shipping and delivery tycoon who reputedly used to 'hate the internet'.
Richard Lynch, Fourth Model, Fifth Edition
www. businessdictionary. com/classification/strategic-management
www. fieldoperative. com/Tools/Glossary/Glossary%20s. htm
Business Strategy: an release, By David Campbell, George Stonehouse, Expenses Houston
Strategic Management, By Chris Jeff.
Comparative Approach To Program Planning, By F. Ellen Netting, Marry Katherine O'Connor, David P. Fauri.
Understanding Strategic Management, By Claire Capon.
Strategic Management for Travel and Travel and leisure, By Nigel Evans, David Campbell, George Stonehouse.