The ways in which Strategic management is undertaken by the organisations
Discuss about the importance and execution of strategic management in various organisations.
This report aims at analysing the importance and execution of strategic management in various organisations. The importance of strategic management like goal planning or gaining control over resources and supply chain have been highlighted in the report. Other than that the SBU model and the four step business planning model have also been used to demonstrate the advantages of strategic management.
Need of Strategic Management in the Organisations
Strategic management in an organisation is instrumental to the success of the company. The coordination of physical resources and the human resources is the goals of strategic management which in turn allows in the fulfilment of the assigned goals of the organisation (Bititci, Cocca and Ates, 2016). Strategic management gives direction to the policy makers of the company for arrangement of its core activities. Strategic planning is required for designing the course to spend business resources. In my opinion, proper resource allocation would help in avoiding wastage of resources in the course of the entire business plan. However, I think that strategic planning is directly linked with situational analysis (Brewster, 2017). As such the organisations are able to realise their position in the industry. The other advantage of strategic management in a company is strategic alliance. In case, if the organisation has an infrastructure for rapid work flow, strategic planning might help the company for engaging in strategic collaboration with other local enterprises. I believe the most feasible example would be the acquisition of smaller companies by some frontline branded company in the same industry. Lastly, I think all organisations needs to improvise and innovate for ensuring their growth. Strategic management have a key role to play in that context (Engert, Rauter and Baumgartner, 2016).
Strategy have become the business buzzword in the last one or two decades. Strategic management can be distributed into 4 sequential phases. This is in alignment of the Four Phase model, which I suppose is most effective is evaluation of the corporate planning systems (Hubbard, Rice and Galvin, 2014).
Challenges in the Strategic Management Discipline (Four Phase Model)
According to this model, the first phase for any organisation is the primary financial planning. The formal strategic planning of an organisation should be followed by the framing of annual financial budget, I suppose. The management should frame strategies for forecasting revenues, cost and the investment needs of the company. More than anything, I feel that this would be able to set the limits for the expense budgets for the respective year. The information systems planned as a part of the company’s strategies would be able to evaluate the functional performance of the companies in comparison with the budgetary targets (Omotayo, 2015).
Key Tasks of Strategic Management in Organisations
I have often observed that the companies in this primary phase frame really potential strategies, however by the end they are not able to keep up their organisational performance in alignment to the framed strategy. Hence, I feel that a tertiary component of this primary stage should be framing of an information system that would help them to analyse the projected steps of their peering rivals. I think that this would make their cost structures more impactful. Again his would also help the companies to realise how the market would react to the introduction of a new product or new marketing change (Rosenberg Hansen and Ferlie, 2016).
The second stage of the fours step model is a purely forecast based planning stage. As the financial managers of the companies calculate business costs and pro forma expenses, it has been often observed that they extrapolate previous expenses. I believe that the biggest advantage of including this phase in a company would be that the business planners would be able to foresee the influence of the economic, social and political drivers in the corporation. Biggest and strongest planning teams execute the most lengthy forecast planning phase.
The third phase of the Four Stage Model is externally oriented (Secundo et al. 2015). The allocation of resources is planned in this phase. The business strategists who plan this phase, according to me, must have a look at the product offerings of the company and also of the other peers from the perspective of an objective outsider. I can provide an example in this context. A heavy equipment manufacturing company might allocate a strategic planning team comprising of engineers and cost analysts to refigure one potential product of a company who is a market rival. The engineers’’ team would analyse the product, reverse engineer it, then reconstruct the probable manufacturing facilities involved in its production on theoretical basis and the cost analyst in the end would decide the manufacturing costs at every step. This would clearly indicate the market policy of the peer. Is suppose that this might help the company to formulate a manufacturing design that would enable them to cut cost in every unit production. As such they would not need to introduce any competitive price strategy.
The last phase is technically named strategic management. This is a formal phase and as far as I can say that big corporations, who maintain diverse manufacturing units and have a rapidly evolving business pattern recheck all of their policies in this phase. Many effective and integrated planning techniques work behind their success. This is just a final step of revaluation. Again, corporations who operate in the market with two or three closely related products might not adequately require this stage. However, I feel that the last stage is actually very essential. Critical business policies can fail for a tinge of fissure. Therefore I would say that proper execution of this phase is a pivotal responsibility of the top management of any organisation.
Challenges in the Strategic Management Discipline (Four Phase Model)
This theory is directly related to the third phase of the four step model. This business model is most effective for diversified companies. This theory speaks for a formal grouping of the related businesses of the companies into strategic units. This would help the strategic planners to exercise control over the factors affecting each business properly. There are two clearly defined business steps of this theory. The first is undertaking of corporate decisions that determine the direction of strategic planning as a whole. The next phase is executed after the grouping of the business activities. The decisions taken in the second phase influences the individual SBU only. However, I think that this business theory have some limitations also. The companies whose product line is vertically integrated especially the process oriented industries, cannot sort out SBUs clinically. The corporate resources of the companies like sales, manufacture and Research and Development are very closely linked. In other instances, the business strategy is able to impose a concerted thrust on several business segments that plans to meet the demands of the shared consumer groups. In exceptional cases, the multiplied purchasing power of various SBUs or freedom of transferring technologies from one SBU to another can stand out to be more valuable than the chance of making profit oriented decisions in the individual business units (Stark, 2015).
I can substantiate the fact with an example. One important chemical firm noticed that who have achieved considerable growth to integrate backward in feedstock production, had started to gnaw at the historical competitive edges, as a completely integrated producer. The reason was that by the company had sacrificed the cost advantage of its raw materials by licencing some of the technologies to its competition.
Strategic management learning concepts have helped me to gain knowledge of the executive policies that are implemented in an organisation. Besides, I have also learned about effective organisational planning. This knowledge would enhance my career scope and help me to flourish as an effective member of the management team of any organisation.
Conclusion
On analysing the strategic management processes, it can be concluded that irrespective of the size or the market growth rate of a company, it needs strategic communication. Moreover, it can also be concluded that various business models of large corporations should carry out separate planning programmes that would enable them to see through the strategies properly
References
Bititci, U., Cocca, P. and Ates, A., 2016. Impact of visual performance management systems on the performance management practices of organisations. International Journal of Production Research, 54(6), pp.1571-1593.
Brewster, C., 2017. The integration of human resource management and corporate strategy. In Policy and practice in European human resource management (pp. 22-35). Routledge.
Engert, S., Rauter, R. and Baumgartner, R.J., 2016. Exploring the integration of corporate sustainability into strategic management: a literature review. Journal of cleaner production, 112, pp.2833-2850.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Indermun, V. and Mthembu, D.E., 2015. The Effects of Performance Management and Development on the Performance of Modern Public Sector Organisations. JOURNAL OF SOCIAL SCIENCE RESEARCH, 8(1), pp.1529-1534.
Omotayo, F.O., 2015. Knowledge Management as an important tool in Organisational Management: A Review of Literature. Library Philosophy and Practice, p.1.
Rosenberg Hansen, J. and Ferlie, E., 2016. Applying strategic management theories in public sector organizations: Developing a Typology. Public Management Review, 18(1), pp.1-19.
Secundo, G., Elena-Perez, S., Martinaitis, Ž. and Leitner, K.H., 2015. An intellectual capital maturity model (ICMM) to improve strategic management in European universities: A dynamic approach. Journal of Intellectual Capital, 16(2), pp.419-442.
Stark, J., 2015. Product lifecycle management. In Product Lifecycle Management (Volume 1) (pp. 1-29). Springer, Cham
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