Approaches to strategic management
Strategic management is the process to integrate the strategies along with the management processes. In this form of management the strategic tool are used to conduct the activities in the strategic manner. Strategic management has different approaches that have been used by different organizations (Freeman, 2010). This report discusses about the three main approaches of strategic management. The first approach that has been discussed is the approach of stakeholder’s management, second one is the dynamic capabilities approach and the third one is the approach of suitability (David, 2011). The detailed description of all the three approaches has been done in order to explain the points such as their benefits, limitations, the issues and their viability. Different examples have also been given in each approach in order to make the study easier.
The stakeholder’s approach of strategic management suggests that it is the duty of the management to develop the ideas and formulate the processes that helps in satisfying the interest of the groups that have any type of stake in the organization (Ansoff, 2007). This means that it is the approach that looks after the interest of the shareholders, employees, managers, suppliers, customers, etc. in order to frame any of the policies and making any of the decisions. This approach basically deals with the environment of the business management and the interest of the stakeholders. Stakeholders approach is the one that considers the process of strategic management rather than planning (Hitt, Ireland and Hoskisson, 2012). This is because strategic planning deals with prediction of the results and planning for the activities to be conducted but the stakeholders approach of strategic management believes in designing the process that needs to be constructed by innovating and modifying the existing processes actively. The major concern of this approach is the survival of the organization and the organization can survive in the market only when its objectives are achieved (Hill, Jones and Schilling, 2014). The achievement of objectives can be possible only with the help of the stakeholders that are associated with the firm. Therefore, it is essential for the organization understand the relation between the firm and its stakeholders is that it can be assessed and the activities can be processed according to that only. This approach considers the objectives related to every stakeholders and not just one. This means that providing profits to the shareholders is not the ultimate aim of this approach but considering the benefits of every stakeholder is the major focus of the firm with this type of approach (Swayne, Duncan and Ginter, 2012). Thus, this approach allows the firm to form the strategies that helps the organization to identify and link its strategies with its values.
Coca cola is the firm that uses this approach for management. The company claims that they engage with their stakeholder groups by informal or formal means. The company engaged with the local suppliers and the customers by meetings and by dialogues. The company also focuses on involving the international stakeholders (Darnall, Jolley and Handfield, 2008). It has been identified that the company engages with the committees such as World Economic Forum and United Nations Global Compact in order to address the international and global challenges. The company is very much committed towards the stakeholders involvement and consider it as the core business activity of the firm. Working with the stakeholders helps the company to identify the external issues that are not being addressed without remaining in contact with the stakeholders (Klein, 2009). Acknowledging these issues helps the company to come up with the expertise to resolve the same. One of the major examples that describe the stakeholder’s approach of the company is the involvement of stakeholders in the case of water sustainability project (Gond, Grubnic, Herzig and Moon, 2012). The company has interacted with the local suppliers, government, community members; agencies etc. sustainable agriculture was anther program of the company in which the agro-suppliers have been involved for the success of the project.
Stakeholder’s approach to strategic management
It is a very basic question in the field of strategic management that how the firm attains their competitive advantage. The firms have certain quality that provides an upper hand to the company over other companies in the same industry. These qualities are called the capabilities of the company (Epstein, M.J. and Buhovac, A.R., 2014. As the environment of the market is very much volatile and changing, thus the companies need to develop a competitive advantage by some of its capabilities so that it can withstand the market. That capability of the company is called the dynamic capabilities; the approach of dynamic capabilities is the strategic management approach of the firm that helps the firms to capture the wealth. The companies which are great always focus on developing the great capabilities in them (Adams and Frost, 2008). The companies try to gain the competitive advantage from the things that they do exceptionally well. For the last few years the important of the capabilities in strategic management processes has increased a lot. David Teece has worked upon this theory and identified that the companies that follow the approach of dynamic capability have to deliver the value to the customers in their way and also made the changes according to the demands of the environment. If the definition of capability is concerned, it suggests that the capabilities if the companies are the set of processes that helps the company to take out some results out of their processes or activities. These can be learned are called ordinary capabilities (Ambrosini and Bowman, 2009). Unlike ordinary capabilities, there are some unique capabilities that exist in each of the company that cannot be learned by other company as it is the specialty of that particular firm only. These capabilities are called dynamic capabilities. It is very easy for some of the companies to reinvent themselves in order to compliment the changes in the environment. Apple is the company that is the perfect example of the company that follows the dynamic capabilities approach to strategic management (Eden and Ackermann, 2013). This is because the company always manages to bring the changes along with providing the value to the customers in their own similar way. Apple is considered as the very unique firm as it is a technological leader but still mangers to serve the market with the best technologically based products with some of the unique features. Apple has got this success because it has the capability to overcome the downside of the market (Thompson and Martin, 2010). Apple has the capability to innovate their products and this is because of its Research and Development department. Leadership is also a great and important part of determining what the capabilities the company should focus on and which needs to be developed.
Since nineties, the issues of corporate responsibility are becoming popular in the content of business and political framework. This requires the companies to use the balancing approach in order to deliver the products to the market as well as maintaining the environmental growth. There are three movements that are interlinked with each other in terms of sustainability. The first one is the CSR that is the corporate social responsibility, second one is corporate sustainability and the last one is the worldwide reforms on corporate governance. CSR and corporate sustainability is all about assessing the economic, social and environment impact the company processes has (Paiva, Roth and Fensterseifer, 2008). CSR is the processes in which every company needs to conduct for the environment and the growth of the society. As the world is facing so much of environmental issue because of the advancement in the technology and the processes that the companies these days are conducting, thus the companies have to make their contribution towards the environment and sustainability. The approach of sustainability is used by the companies in their strategic management processes so as to pay back the society. This can be done by using some of the sustainability practices such as reduction in the emission of the gases and contributing towards the society by associating with some of the NGO’s. A company can only see its future if it has the positive impact on the society and this can only happen if the organization is sustainable in nature. For achieving that success the companies need to integrate their strategic process with sustainability. It is not that easy to integrate or implement sustainability into strategies. This is because it requires the company to modify its processes to such an extent that it harms the environment at the lowest. BMW is the firm that is considered as world’s most sustainable company and used the practices that are very much sustainable. For the company, sustainability is making their future (Stead and Stead, 2013). The company not just looks for sustainability in their vehicles but try to bring the same in their value chain and their process. The company believes that it can attain the long term successes only when they take sustainable action. The sustainability strategies of the company are according to the goals of United Nations. Now, the time has come when sustainability has become the success factor of the company the company focuses on reduction of co2 emission from their vehicles and also get success in the same. The company tries to look for the individual mobility in urban areas and also implement the feedback that has been bought by the stakeholders. The company has done great efforts in aligning the sustainability actions with their strategies so as to achieve the success in business as well as in sustainability.
Dynamic capabilities and strategic management
Conclusion:
Viability of the approaches: as far as the viability of the stakeholder’s approach of strategic management is concerned, it has been analyzed that this approach is very viable for stakeholders. This is because considering stakeholders in every aspect of business provides them extra value other than the monetary benefits. Stakeholders are the basic elements of the business. Stakeholders are not happy thane a business cannot get successes. Stakeholders such as shareholders, employees and customers are the most important part. This approach is viable because it results in success of the company as well as the individuals working for the company. Along with giving importance of stakeholders, it is also important for the company to achieve competitive advantage (Gond, Grubnic, Herzig and Moon, 2012). In case of dynamic capabilities of strategic management, the companies can have one or more capabilities that differentiate the company with other companies. As far as the viability of this approach is concerned, it has been analyzed that the company which adopts this approach results in attaining some of the competitive advantages and creates an image in the market which is very much different from others. Development of such capabilities provides success to the company is a way that it attracts the attention of the customers more than the companies that do not have competitive advantage over others. This is because it is easy to substitute the products and the process that are not very much unique. The last approach that has been used by the company is the approach of sustainability. This approach helps the company to see their future. If the company needs to be futuristic in their vision it has to be sustainable in nature because this helps the company to be connected with the city and to play their part for the society.
All the three approach of strategic management have different benefits to the companies. The company with stakeholders approach helps the firm to maintain the relationship with their stakeholders and the stakeholders are benefitted with some extra profits. In case of dynamic capabilities approach, it has been analyzed that this approach provides a competitive advantage to the company in the industry. The last approach is the approach of sustainability that is related to the societal benefits. The companies with this approach to have a secure future as they connect with the society and play their part for the same.
Implementation issues can be defined as he issues that raised out at time of implementing nay strategy in the organization. In case of stakeholders approach the major issues that arises at the time of its implementation is about the balance between all the stakeholders. It is difficult for the organization with this approach to make the decision considering the benefits of all the parties. In case of dynamic capabilities, the company needs to e make the decision at which capability the company should focus on and this act as the challenge for the firm. The last approach that is about sustainability is most difficult to implement (Hill, Jones and Schilling, 2014). This is because aligning the activities and modifying the process at the same time is a challenge for the company.
As all the approaches have their benefits but they also have some of the limitations associated with them. Stakeholders approach is the approach that results in providing benefits to the stakeholders of the organization (Thompson and Martin, 2010). This approach is implemented in the company in order to maintain the relationship with the stakeholders but has a limitation that the companies with this approach fail to cater the market ad to compete with the competitors in terms of innovation. In case of dynamic capabilities, the companies with this approach have the competitive advantage over others but they generally exploit the resources in order to attain those advantages and may ruin the security of the future for the company. The last approach that is related to the sustainability is one of the best approaches these days; this is because it is the approach that requires the firm to change all its process so that they can reduce the harm to the society and the environment. They need to limit their process and have access to limited resources.
References:
Adams, C.A. and Frost, G.R., 2008, December. Integrating sustainability reporting into management practices. In Accounting Forum, Vol. 32, No. 4, pp. 288-302
Ambrosini, V. and Bowman, C., 2009. What are dynamic capabilities and are they a useful construct in strategic management?. International journal of management reviews, 11(1), pp.29-49.
Ansoff, H., 2007. Strategic management. Springer.
Darnall, N., Jolley, G.J. and Handfield, R., 2008. Environmental management systems and green supply chain management: complements for sustainability?. Business Strategy and the Environment, 17(1), pp.30-45.
David, F.R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.
Epstein, M.J. and Buhovac, A.R., 2014. Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.
Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge University Press.
Gond, J.P., Grubnic, S., Herzig, C. and Moon, J., 2012. Configuring management control systems: Theorizing the integration of strategy and sustainability. Management Accounting Research, 23(3), pp.205-223.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases: competitiveness and globalization. Cengage Learning.
Klein, D.A., 2009. The strategic management of intellectual capital. Routledge.
Paiva, E.L., Roth, A.V. and Fensterseifer, J.E., 2008. Organizational knowledge and the manufacturing strategy process: a resource-based view analysis. Journal of Operations Management, 26(1), pp.115-132.
Stead, J.G. and Stead, W.E., 2013. Sustainable strategic management. ME Sharpe.
Swayne, L.E., Duncan, W.J. and Ginter, P.M., 2012. Strategic management of health care organizations. John Wiley & Sons.
Thompson, J.L. and Martin, F., 2010. Strategic management: awareness & change. Cengage Learning EMEA.
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