Analysis Of The Alternative Approach To Strategic Management

Introduction

The main purpose of this report is to analyses the alternative approaches to strategic management and identify their viability, suggested benefits, implementation issues, and limita¬tions of each approaches. The three approaches that will be discussed is Stakeholder ap¬proach, Dynamic Capabilities approach, and Sustainable approach.

Strategic management helps organizations to complete the major goal or task with providing the suitable formulation and implementation for all organizations, and also considers the internal and external environments where the organizations compete. However, alternative ap¬proaches have been introduced to strategic management because the existing linear model does not work successfully (Dunning,2015).

This approach is important as it identifies the pressure on managers and stake¬holders based on the consistency and intensity of the changes impacting on the environ¬ment. Other existing strategy development did not give any range for development of innovative prospects or strategic instructions in response to change situations (Cantrell, Kyriazia, and Noble 2015). As the sources of the economical factors have changed in strategic management, the general ideas of strategic management have been redefined. Stakeholders are characterised as individuals or groups that can be affected or have an impact on the performance of an organisation. This approach has a close link to forming the relationships between customers, employees, shareholders, and other important groups that can ensure growth of an organisation in the long-term. The stakeholder approach is more concerned with management than planning. Having the impact on the company, same as its impact on the environment is an important indicator of the stakeholder approach

The agency problem occurs when the behaviour of director does not controlled in decision making, and it is hard to be evaluate without proper measurement (Eden, and Ackermann, 2011). Conflict of interest is mainly causing agency problem between the directors and stakeholders. The investment can be effected because stakeholder approach can diminish the role of the shareholders and this discourages shareholders and investors to invest into the organization. The efficiency and multiple objects are related to each other, since the organization focuses on many strategies to apply or too many factors to consider such as work on interest of different shareholders, the efficiency of the performance can be decreased. Obviously, it is hard to satisfy all the stakeholders especially when they have different interest and it is hard for managers or directors to satisfy the large number of different stakeholders. By creating value to stakeholder might allocate or distribute too much power to stakeholders and not having equal power among stakeholder so the powerful stakeholder can get more profit than others (Head & Alford,