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.
It depends on the company, which strategy they would fellow- comparing their competitors’ strategy. It does not matter whether the follow cost leadership or differentiation strategy, they must manage their own value chain.
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).
Numerous definitions of strategy exist, in most circumstances strategy can loosely be explained as an overall plan of deployment of resources to ascertain a favourable position within a market (Zablah, Bellenger and Johnston 2004; Grant 1994, p 14). Further, imbedded in many successful organisations are strategies, the importance of which is to remain relevant in the market, and successful in the various attributes of business; profiteering, employee motivation, maintaining sustainable core competencies, effectiveness in operation, or efficiency in the conduction of operations. Therefore challenges involved in the formulation and implementation of a strategy can revolve around the overall external market, as well as internal
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.
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
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).
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 a disciplined effort or control to make necessary decisions that have an effect on a business or an organization; the aim of strategic management is mainly to develop new, innovative or diverse ideas and opportunities for potential or development, and facilitates or assists an organization to achieve its goals (SM, 2010). In reality, strategic management not only can be used or applied to determine mission, vision and values or objectives, but it also establishes roles and responsibilities or timelines in a business (David, 2009). In the following sections, this study will focus on and examine the nature of strategy formulation, implementation, and evaluation activities, and analyze the potential pitfalls or risks in using a strategic-management approach to decision making.
Strategic management is a process to enhance the goals of your business. This gives managers a strategic awareness and value of the company when strategic management is implemented. Having a strategic plan in a company makes the business successful. When a manager takes lead in the change of the environment it allows the company to improve on their short and long term goals. Managers
Organizations do not use finances, operations or marketing to create competitive advantage. This is because managers from different departments often view the organization from different perceptive, which are narrow for the whole org...
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 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.
In order for a firm to compete within its industry, it must plan and relate to the industry