Current standard linear approach of Strategic Management
The strategic management is concerned with the formulation as well as implementation of the goals as well as initiatives of the top management of the company by suitable utilization of the available resources (Hill, Jones and Schilling 2014). This type of management is done in consultation with the senior managers and takes into account the internal as well as external environments. This branch of management is concerned with providing direction to the company by aligning itself to the organizational objectives. It is also concerned with the achievement of the objectives and then proper allocation of the resources so that the necessary plans are being implemented (Hill, Jones and Schilling 2014). There are certain principles underlying the strategies such as creation of unique market proposition, creation of market fit and alignment of the company activities with the formulated strategy.
The conventional approaches to strategy management is concerned with the systematic action plan that is usually being designed a particular goal in the long run (Hill, Jones and Schilling 2014). The traditional strategic management approaches provides a unique link between the operation management and the strategic management (Eden and Ackermann 2013). It was also considerate about the goals of the company and formulates strategies accordingly. However, there has been paradigm shift in the approaches to strategic management. The final strategic management strategic management strategy is usually a process of adaption, evolution, continuity and alternation. This report would identify three alternative of strategic management namely stakeholder approach, dynamic capabilities and sustainable approach. The real organizational examples for each of these three approaches would be given and analyzed in detail.
The current strategic management approach focuses on the analysis of the internal/external environment, formulation of strategy, implementation of strategy and the effective formulation of the strategies (Bettis et al. 2016). The traditional strategy management initiateswith a vision as well as mission for the company, based upon which the internal/external analysis is done. This analysis is being done with the help of SWOT analysis, the results of which is thoroughly evaluated and one suitable strategy is chosen for implementation (Peppard and Ward 2016). The strategic options are analyzed with the help of several tools such as PESTEL analysis, Porter’s five forces, Ansoff matrix and others. The evaluation process is also standard and fails to take into account the different aspects of the environmental protocols (Hill, Jones and Schilling 2014).
The current strategy implementation process is a linear one, which fails to consider the multiple environmental aspects and incorporate them in the strategy formulation (Konrad, Yang and Maurer 2016). The current approach to strategy management assumes that the external environment of the organizations is fairly stable and they are predictable in nature (Hill, Jones and Schilling 2014). The traditional schools of thoughts on the strategic management believe that the strategies are only means of achieving competitive advantage and gaining a favorable market position (Guerras-Martin et al. 2014). They also assume that there would be minimal environmental changes by exploitation of competencies as well as resources. There are several limitations of the linear approach of strategy management-
- There is an increasing tendency of the strategic thinkers limit their focus to particular parameters only. This can be attributed to the increasing uncertainty (Hill, Jones and Schilling 2014). They mainly rely on the immediate future and internal analysis attributes only.
- The existing process and tools used in the traditional strategic management have been outdated and they are not able to keep the pace of change with the existing business environment. This always leads to lagging results (Hill, Jones and Schilling 2014).
- Traditional strategic plans are often inflexible and they are unable to accommodate the changing environment of modern times.
- The strategies that are being formulated in a traditional manner are restricted to corporate vision and objectives (Konrad, Yang and Maurer 2016). This may not include the changing demands of the external and internal environment.
- Linear strategic management is often limited to the current situation and has limited scope for future incorporations (Bettis et al.2016).
Stakeholder approach
Three approaches to Strategic Management
According to Wheelen and Hunger (2017), the stakeholder approach to strategic management relies on the different actions of the stakeholders that have a direct as well as indirect effect on the management of the firm. The corporate planning of modern organization takes into account the various limitations that the stakeholders can impose on the actions of the firm. It is important to understand the requirements of the stakeholders so that the operational guidelines can be set (Bettis et al. 2016). The strategy development process is related to the stakeholder analysis, which is considered as a part of the environmental scan. The stakeholders are usually defined by the job roles rather than the multifaceted and complex individuals (Tantalo and Priem 2016). It is important to do stakeholder analysis at generic level, which would help in the better understanding in their contribution to the organizational decision-making.
The central concern behind the stakeholder approach is that the managers should implement appropriate policies which would satisfy all groups of the stakeholders (Bridoux and Stoelhorst 2014). This process involves the management and integration of the relationships as well as interests of the different group of stakeholders (Bridoux and Stoelhorst 2014). There can be number of stakeholders for the company such as customers, employees, communities, suppliers and all other groups in such a manner so that the long term success of the firm can be ensured. The stakeholder approach to the strategic management emphasizes on the effective management of the business environment and fostering the shared interests.
Apple Inc. follows stakeholder approach to strategic management. The company has taken care of the stakeholders and has impacted the business in terms of revenues and customer perception. The company has made succinct policies for the betterment of the stakeholders Tantalo and Priem 2016). For example, Apple addresses the various environmental concerns of the stakeholders through the effective use of “sustainable material sourcing” policies (Bridoux and Stoelhorst 2014). Apple also undertakes a large number of CSR activities (corporate social responsibility) so that the interests of them are properly addressed. The external stakeholders of the company are always satisfied and their needs are being met by the company. The company views the customers as their topmost priority and makes effective products for them Tantalo and Priem 2016). The decision of the company to make premium price strategy matches with the customer requirements since this strategy matches with the aesthetics as well as quality of the products (Weiss 2014). This strategy has been highly successful in the organization as the company has been able to retain a loyal group of customers who are unlikely to switch the company.
Stakeholder Approach to Strategic Management
The success of this approach in Apple shows that the companies can actually adopt the stakeholder approach to strategic management (Xu and Li 2013). The stakeholder approach aids in the strategic management process and gives new direction to the firm. The primary concern of this approach is the survival of the organization in the long run and optimization of the current output (Tantalo and Priem 2016). It can be concluded that the stakeholder approach is a continuous approach of balancing as well as integrating the different kinds of stakeholders with multiple objectives.
Dynamic Capabilities
One of the most innovative approaches to the modern strategic management is the exploitation of the dynamic capabilities of the firm. As opined by Lin and Wu (2014), the dynamic capabilities framework analyses the methods as well as sources of wealth creation which would be beneficial for the company. The dynamic capabilities are being utilized by the private firms operating in environments facing rapid technological changes. The dynamic capabilities of a firm can be defined as the ability of the firm to build, integrate, reconfigure and implement different competencies of the firm so that the necessary changes in the external environment can be addressed (Chae and Olson 2013). The dynamic capabilities of an organization reflect the organizational ability to gain new or innovative forms of gaining competitive advantage.
The modern day organizations focus on their core competencies of the firm such as the good capabilities of the firm which cannot be easily duplicated by the competitors. It is possible to enhance the value of the core competencies of the firm by combining the values of the suitable complementary assets (Teece 2014). It is also important to create some fundamental distinctions between internal organizations and the markets. It is important to detect the changing elements of a firm and know how to utilize them effectively (Chae and Olson 2013). The competitive advantage of the modern day organizations can be seen as the specific processes that are being shaped by the asset positions of the firm as well evolution of paths that have been chosen by it (Wadhwani and Jones 2016). The asset positions of the firm is concerned with the complementary assets of the firm and the “difficult to trade” knowledge assets of the firm (Chae and Olson 2013). It is important to amplify the path dependencies so that there is existence of the increasing returns.
The dynamic capabilities approaches to strategic management can be widely seen in oil and gas sector. Exxon Mobil Corporation uses the “dynamic capabilities framework” to understand their strategic agility which operates in the high-velocity markets (Cabral 2015). The managers of the company handle the key challenges of the firm by tackling enhanced demand for the different energy resources, increased competition and the shrinkage of global geosciences talent pools. The dynamic capabilities unite with the strategies of the firm to give empowerment of the organizational ability to integrate different internal/external competencies (Chae and Olson 2013). There are three dynamic capabilities that are being described by the company officials-
- Ability to properly administer the entire “upstream business” ecosystem
- Challenge of proper management of the safety, health, security and environmental considerations in the MNC (Cabral 2015).
- Ambidexterity across emerging and mature domains
Dynamic Capabilities Approach to Strategic Management
The above usage of the dynamic capabilities has been successfully implemented in the organizations, which confirms the fact that this approach can be successfully implemented in other organizations too (Cabral 2015). This strategy can be used successfully to gain competitive advantage as well as gain performance advantages. The organizations would be able to manage the various strategic risks as well as capture the inherent market opportunities.
There has been an increasing pressure for the organizations to enhance the productivity of the firm as well as improve their management systems. The organizations need to have high end functionality of the individual management components. As opined by Dewangan and Godse (2014), the sustainability is defined as the holistic parameter of the various developments that are aligned with the organizational goals, evaluation systems and internal incentives. The aspect of sustainability is being integrated in the strategic management process of the organization, which is aligned with the strategic thinking. The objective of the sustainability approach is to ensure there is a positive relationship between the strategy execution and sustainable implementation of the strategies (Stead and Stead 2013). The effectiveness of a sustainable strategy ensures that the complexity and differentiation of the domains are being properly addressed. The corporate values are considered as one of the most important attributes of the sustainable strategic management.
The sustainable strategic management should be incorporated at three levels namely normative level, operational process and the strategic level (Stead and Stead 2013). It is important to give attention to the corporate values, employees and the leadership of the firm along with the fulfillment of the operational processes. The sustainability factor should also be integrated well with the organizational objectives. The sustainable component of the management should be well integrated with the strategy implementation process (Stead and Stead 2013). The employees should be well acquainted with this process since the success of sustainable strategy execution would not be possible without their support. The sustainable approach also takes into account the optimum utilization of the resources (Gamble and Thompson 2014). The effective use of the resources is important which would help in the successful accomplishment of the organizational mission.
The sustainable approach to strategic management has been implemented in several companies. Hilton Hotel Corporation has used the sustainability approach in their strategic management. The hospitality group is well known for the sustainability supply chains at a global scale (Kasim et al. 2014). The company has responsible business objectives and it has taken subsequent steps to nurture their business processes. It has adopted a consistent approach in the delivery of their message of the global audience and increase the awareness of their programs (Stead and Stead 2013). The company has also engaged in corporate social responsibility activities to prove their concern towards the social and the environmental affairs.
Sustainable Approach to Strategic Management
The effective implementation of the sustainable approach to strategic management showcases the fact that the business entities can gain a lot from this process (Kasim et al. 2014). There would not only be increased sales of the company but there would also be an improvement in the brand reputation of the firm. The company would be able to save considerable amount of resources and hence there would be significant reduction in the operation costs of the firm (Kasim et al. 2014). Hence, it can be concluded that this strategy can be effectively implemented by the firm.
Conclusion
The three alternate approaches to strategic management have proved to be unique and they are implemented based on the type of industry. The stakeholder approach is beneficial when there are a large number of internal and external stakeholders of the firm. This approach can be best implemented in situation when it is important to satisfy the needs and preferences of the stakeholders. However, there are possibilities of conflicts in this approach and it can be real problem if it is not managed well. The limitations of this approach lies in the fact that there can be issues in the accountability factor in supervisor roles. It can be a challenging affair to include the stakeholders in ever decision making activity. The dynamic capabilities approach highlights the core competencies of the firm, which can be used to gain competitive advantage. This strategy can be implemented with little extra effort; however, there are chances of duplication by other similar firms. If there is leakage of company confidential information, then there would be reduction in the effectiveness of this approach. The sustainable approach to strategic management not only focuses on increasing of the operational excellence but also focuses on building amicable relations with the external community.
References
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