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. 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... ... middle of paper ... ...ar, the shares of the company were reported to be $255million (Enz, 2010). In 1994, Callaway Golf introduced an innovative design for irons that would accompany their earlier innovation and increase the company’s profitability. Pehlchen (2003) argues that Callaway pursued its strategic mission of producing innovative products that increased profitability of the company. A case study analyzing Callaway indicate that the company believed that innovation could enable the business profitability. As the golf industry continued to grow, the company embarked on innovation strategy to its sustainability. Therefore, strategic management plays an important role in ensuring that an entity competitive to increase chances of its overall growth. Efficiency in strategic management can enable a company acquire sustainable competitive advantage over its competitors in the market.
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
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.
Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2008). Crafting & executing strategy: The quest for competitive advantage (16th ed.). New York: McGraw-Hill Irwin.
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).
In order for an organization to increase its value over a period of time it uses what is often referred to as strategic capability. With this process, businesses use competitive strategies to reach targets. (Hartman, n.d.) As competitive strategy goes hand in hand with strategic capabilities, the Business Directory defines competitive strategy as a “long term action-plan that is devised to help a company gain a competitive advantage over its rival.” It goes on to state that these strategies are useful in relation to discrediting another organization’s products or services; as such, they are a main part of advertising campaigns. (Business Directory, n.d.) Laureate Education further explains strategic capabilities as key elements of an organization
Strategic management is concerned with a set of decisions and actions intended to improve the long-run performance of an organization (Boddy, 2009). It draws from the company’s will to adapt and survive in varying external and internal environments. Strategic management incorporates rationalization, planning ahead, setting clear goals, designing logical structures and monitoring systems for efficiency. It helps to determine a model of investment of resources, time, effort and capital. Thus it is a plan to reduce uncertainty about the future and to choose viable and potential solutions for growth.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 25-40.
Sivakumar (2004) describes a strategic decision, a decision that significantly affects the scope of a company, requiring a high degree of commitment. Strategic decisions are interconnected with a company’s long-term goals. For example, a company’s decision to focus its expansion within their domestic market or enter a new geographical market. Strategic decisions are increasingly difficult for managers to make because of ever increasing uncertainty and lack of reliable information. When it comes to making decisions managers tend to rely on past experiences and their gut feeling when coming to a decision (Soll, Milkman & Payne, 2015). Fortunately, tools to correctly identify uncertainty and biases are available to managers. In order to improve the overall decision making process managers must address and understand uncertainty, cognitive biases and the open-endedness of strategic decisions.
The study of the external environment is a crucial step in the mapping of business strategy for an organization.
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).
Over the last few years, research about relations between strategy approaches and organisations ’performance has increased. The rules of management within organisations have evolved and managers had to adapt their operating models to all these changes. Nowadays, the environment becomes wild and more complex, it is primary for companies to be very flexible and able to react quickly to any changes on the market or related to competitors. Analysis and evaluation of practises are constantly required to reach the « best practises », the methods which will bring the add value and benefits. Over the time, competition’s level is becoming bigger and bigger and competitive advantage is hard to be reached by most of the companies (Segal-Horn, 2004). They
...c management or planning presents a structure or agenda for dealing with issues and solving problems, therefore, understanding potential risks or pitfalls of strategic management and being prepared to deal with them is critical and vital to success. Strategic management not only permits top leaders and managers to be more proactive than reactive in building or developing their own potential or outlook in an organization, and it also lets them to make the first move and influence activities, consequently, executives and management can control or in charge of the company’s own future, and achieve its main goals and objectives. Overall, increasing cost-effectiveness and efficiency, improving the value for its stakeholders, and advancing customer services and management excellence are the key objectives of strategic management and decision making in an organization.
“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment” (Lamb, 1984: ix).
Paul Lines (2008) states that, “Strategy is a plan that the business used in order to reach its long-term goals and objectives. An essential element of a strategic plan is to achieve competitive advantage commercially, politically and socially. The company needs a strategic management process in ensuring its success but all plans should be managed efficiently and effectively. Strategic management is effective when resources match stakeholder needs and expectations. It consists of four main components and these are as follows: