The Contribution of Strategic Management and Strategic Thinking Processes to Organisational Performance Strategic management and strategic thinking processes make a significant contribution to organisational performance. A strategy, according to Robbins and Barnwell (2002, p. 139) is “the adoption of courses of action and the allocation of resources necessary to achieve the organisation’s goals”. It is important for organisations to achieve their goals, as this can assist them to reach a competitive advantage, which is a highly attractive position for a firm to be in. This essay will look at strategic management processes and how they can be used to improve organisational performance; it will also describe how strategic management processes have the ability to lower organisational performance. Strategic thinking processes will then be assessed, with a comparison of strategic thinking and strategic planning, looking at the similarities and differences between the two. The positive and negative effects that strategic thinking can have on organisational performance will also be described. Organisational Performance is the overall performance of an organisation in conjunction with its goals and objectives. An organisations performance can either be high or low, depending on its ability to meet these objectives. The success of an organisation’s performance can be impacted upon by a number of factors, including Strategic Management and Strategic thinking processes. The strategic management process works to achieve a strategic competitiveness over other organisations within the same industry. This is done by successfully producing a value-creating strategy. (Hanson, Dowling, Hitt, Ireland & Hokisson et al, 2008) Value can mean different things to different people; it is measured by a product’s performance and by the elements it is made up of which customers are prepared to pay for. (Hanson et al, 2008) If a firm is able to successfully construct a value-creating strategy, then they will have a better chance of gaining a competitive advantage. According to Barney p. 102, “a firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors.” Porter argues that no firm can provide value in all the ways that people wish value to be delivered, so they should select one strategy; cost leadership, differentiation or focus. (Robbins & Barnwell, 2002) This indicates the importance of strategic management for organisations in making appropriate decisions and selecting strategies which will assist them to gain strategic competitiveness and as a result earn above-average returns. A strategy which is adopted by an organisation indicates what area the firm intends to do well in.
... process essentially entails functions such as planning, organising, leading or directing and controlling the resources of an organisation. Strategic management is the application of this management process at the top level of the organisation. At this level the focus is on the resources, capabilities and core competencies or the company as a whole and on the ways to achieve success over the long term within the context of changing and ever-competitive environments. According to Johnson et al, strategies do no happen by themselves. Strategies involve people, especially the managers who decide and implement. Strategic management consists of 3 elements, understanding the strategic position of an organisation, making strategic choices for the future and managing strategy in action. Strategic management thus entails two tasks, strategy making and making strategy work.
Defining strategy is a difficult process because it is a complex concept that has many forms and is constantly changing. Andrews (1987) attempt is a comprehensive definition...
Strategic management is the ongoing process of ensuring a competitively superior fit between the organization and its ever-changing environment (Kreitner, G13). Strategic management serves as the competitive edge for the entire management process. It effectively blends strategic planning, implementation, and control. Organizations that are guided by a coherent strategic framework tend to execute even the smallest details of their mission in a coordinated fashion. The strategic management process includes the formulation of a strategy/strategic plans, implementation of the strategy, and strategic control. A clear statement of the organizational mission serves as the focal point for the entire planning process. People inside and outside the organization are given a general idea of why the organization exists and where it is headed. Working from the mission statement, management formulates the organization's strategy, a general explanation of how the organization's mission is to be accomplished. Then general intentions are translated into more concrete and measurable plans, policies, and budget allocations. Implementation is the most important part of the strategy. Strategic plans must be filtered down to lower levels to be success. Strategic plans can go astray, but a formal control system helps keep strategic plans on track. In the strategic management process general managers who adopt a strategic management perspective appreciate that strategic plans require updating and fine-tuning as conditions change. Given today's competitive pressures, management cannot afford to let strategic plans sit as is. A strategic orientation encourages farsightedness. Sun Microsystems Inc. is one company that developed a strategy to become the competitive leader and become the most reliable in the net business. I will explain how Sun's strategy integrates their marketing, management, technology, and service functions into one effective strategy. First I'll discuss who Sun is and what encouraged them to develop their strategy.
Throughout the global economic environment the desire to out-perform the competition is always present. In every situation, the companies who do better are the ones with superior strategy (Rothaermel, 2013). Strategic management is therefore important in every company, no matter what industry or market they operate in; and as stated by M. Carpenter and G. Sanders, 2013, is described as "The process by which a firm manages the formulation and implementation of its strategy". Strategic management is a constant topic under discussion with different schools of theorists with different beliefs and attitudes which is described as "A tense array of disagreement" (Rees, 2012).
Hitt, M., Ireland, R. & Hoskisson, R. (2010).Strategic Management: Competitive and Globalization, Concept and Cases. Mason, Ohio: Cengage Learning
Generally, strategic management is a set of managerial decisions and actions that determines the long-term performance of a company, involving both internal and external environmental scanning, strategy formulation, strategy implementation, and evaluation and control. According to the study of strategic management, the corporation should concentrate on monitoring and appraising outside opportunities and threats based on an organization’s strengths and weaknesses (Thomas Wheelen and David Hunger, 2012).
According to Wheelen & Hunger, strategic management “is that set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic or long-range planning), strategy implementation, and evaluation and control” (2004, p2). All eleven good to great companies are benefit from strategic management and gain long term strategic advantage then lead to outperforming compared companies.
Some groups of people, or inspired leaders, have a natural ability to respond quickly and effectively to new challenges and opportunities, making strategic planning superfluous. However, for most organizations and most organization members, strategic planning provides a powerful framework. Developing a strategic plan can be expensive, especially in terms of personnel time and energy. This cost must be considered in relation to the expected benefits. For some organizations or units within an organization, strategic planning is a burden imposed by a higher authority - a funding source or an umbrella organization. If there is no internal commitment to the plan, and no intent to implement it, strategic planning is a waste of time and energy. In sum, strategic planning is for those who are willing to be honest, who want to focus on revitalization, and who are committed to influencing and creating their future.
The current business environment is very competitive. Only those companies that will employee efficient strategies will achieve success. Strategic management helps an entity to utilize its resources effectively achieve a cost advantage. A cost advantage plays a key role in ensuring that a company offers competitive product prices in the market. Basis of management comes from earlier thinking and books on strategy that date back to thousands of years ago (Ambrosini and Bowman, 2009). Strategic management refers to a continuous process of analysis, creation and monitoring strategic progress of an entity to ensure sustainability (Helmstetter, Cleveland, Evans and Galloway, 2002). Organizations formulate strategies in order to focus their energy to one direction to achieve superior performance. Ambrosini and Bowman (2009) indicate that strategic management and strategic planning mean the same thing except that the term strategic management is used in academic while strategic planning is used in the industry. According Hopkins, Mallette and Hopkins (2013, strategic management is essential in sustaining competitive advantage. Organizations need to sustain their competitive advantage in order to be ahead of their competitors. According to Ambrosini and Bowman (2009), companies which have competitive advantages, perform better financially than other companies in the industry, and they also perform better than the industry average. Strategic management is also important in viewing the organization as a whole.
Strategic Management is vital to corporate level strategy because with strategy according to Charles Darwin’s Quote; “He speaks about the core concept of Strategic Management – which is responsive to change. For an organisation within the world as we know it today where there is no change strategic management is not necessary; however, for an organisation in an ever changing controversial world strategic management is essential. In retrospect to the healthcare industry, these organisations can adapt to the demands of its environment prospers and those organisations that are not capable of adapting become decreasingly irrelevant. By staying relevant is the key to success.
Strategic management is the way of implementing different business strategies and plans to attain certain specific aims and objectives. It involves collection of decisions and different rules and policies that tend to define the results that are generated in the form of better business performance. For undertaking these activities, management should possess an in depth understanding and be able to assess the general and competitive external and internal business environment to take proper business decisions (Cornelis, 2010). McDonalds is an organization that offers a range of products and services in a very effective manner that makes it a market leader in providing fast food services all over the world. By enforcing suitable strategies, McDonalds can increase its level of sales and will also help in upgrading as well as sustaining the market by acquiring competitive advantage (Schoenberg, Collier and Bowman, 2013).
Strategic management is the “identification of one or more sustainable competitive advantages a firm has in the markets it serves (or intends to serve), and allocation of resources to exploit them” (Business Dictionary, 2016). In order for industries and organizations to thrive, they must have strategies in place and strategic management processes to stay competitive, profitable, attractive to stakeholders, and to sustain advantages that set them apart from other competitors (Barney & Hesterly, 2015). The strategic management process involves a set of procedures that lead to choosing a strategy that will eventually lead to competitive advantage (Barney & Hesterly, 2015). The six steps of the strategic management process involves defining
Strategic management has shown to enhance the company’s profits and market shares. Companies need to utilize strategic management in order to improve that their performance and organizations are set. Some of the benefits of strategic management are it brings new opportunities and development, the manager is more involved in their job role, the quality of the company is enhanced, implementing models that will bring the company growth and profits, it helps the manager to be organized in order for them to be successful, it brings certainty to the company, and provides management with a guide to what the company is needing to accomplish with their goals for the future. According to Nmadu (2007) he stated “strategic management has become more important to managers in recent years and defining the mission of their organization in specific terms have made it easier for managers to give their organization a sense of purpose” (Dauda, Akingbade, and Akinlabi, 2010, p.100). Strategic management can also have its disadvantages. A few disadvantages are time and effort that is put into the company, and discussing what is important for the company’s long-term goals. Another disadvantage is managers stay on the planning stage but forget to implement and take control of the plan. If strategic management is not enforced than this can cause effects on the companies market shares, and profitability. Enforcing a strategic plan will play a major role in the companies
Strategic management is the process where organization managers reach the goals and aspirations of the organization on behalf of its owners. This is done through formulation and implementation of ways and methods to fulfill the organizational goals and objectives (Brian, 2011). This is done with in-depth consideration of both the internal and external environments that the organization operates in, in order to allow the organization make the right decisions. Strategic management is an important element that firms must put together through strategic thinking as well as strategic planning (Nag, R., Hambrick & Chen, 2007).
Strategic management involves identification and description of the strategies that managers or top ranks in institutions can carry so as to achieve better performance and a competitive advantage for their organization. An organization is said to have competitive advantage if its profitability is higher than the average profitability for all companies in its industry.