Stakeholder Approach
The concept of strategic management is mainly based on the analysis of the process of managing the resources of an organization so that the objectives and goals can be achieved in an effective manner. This thereby involves the outlining of various strategies which have to be developed for the effective management of the organizational processes. The main objectives that are based on the implementation of strategies are related to the culture of the company and the competencies that are possessed by the employees (Hubbard, Rice and Galvin 2014). The organizational structure on the other hand also affects the achievement of the goals. The companies require to manage the changes that take place in the company and the different strategies that can be applied in the changing environment of business (Hill, Jones and Schilling 2014).
The top level managers are responsible for the effective implementation of the strategies which can help in achieving objectives. The employees of the company need to dedicate themselves towards the formation of successful strategies. The process of strategic management also involves the effective communication of the goals of the company to the employees and the other stakeholders as well (Wheelen et al. 2017). The process of strategic management in the companies need to be fulfilled with the help of various approaches. The three different approaches based on the management of strategy that will be used in the analysis are, dynamic capabilities approach, stakeholder approach and sustainable approach (Meyer, Neck and Meeks 2017).
The analysis in the report will be further based on the detailed discussion about these approaches and the ways by which they are used in different companies. The three approaches will be further explained based on the examples of real-life companies that use them in different situations.
The three approaches to strategic management that have been chosen for the analysis are, the stakeholder approach, dynamic capabilities approach and sustainable approach.
Stakeholder Approach – The first approach is mainly based on the ways by which the managers of the companies can use the various stakeholders for the purpose of effective strategy formulation. The company in this case aims at satisfying the needs of stakeholders for ensuring the long-term success of the company in the industry. The imperfections that exist in the market can be used by the organizations according to the degree of participation of various groups (Bettis et al. 2016). The approach thereby emphasizes on the management of the various organizational processes like, promotion, business environment and relationships that are created with the stakeholders in an active manner. The approach based on stakeholder management is considered to be a part of the stakeholder theory. The approach helps in increasing or restoring the value of the firm among the stakeholders. This further leads to the creation if competitive advantage by the firm in the market (Morschett, Schramm-Klein and Zentes 2015).
This approach to the management of strategies is related to the management of the goals that are set by the organizations for its future improvement in the industry. The decisions that are taken by the companies based on this approach of strategic management are related to the interests of the various groups which are a part of the organizational processes. The different groups which are considered for the analysis in this case are, the suppliers, the employees, the customers of the company. This approach has therefore been implemented by the organization with assistance of stakeholder theory (Frynas and Mellahi 2015).
Dynamic Capabilities Approach
Dynamic capabilities Approach – The approach of dynamic capabilities is mainly related to ability of the company to adjust with the amount of resources that are present with the company. This term is thereby based on the ways by which the company can react in timely and adequate manner to changes that have taken place in the external environment. This concept is mainly based on the various operational capabilities which the firms have in the modern working environment. The framework that is related to the implementation of dynamic capabilities was developed by Amy Shuen who is a writer and researcher of the various strategies that are used by the companies (Durand, Grant and Madsen 2017).
The main assumption which is made by this framework is related to the formation of short-term based competitive positions that are thereby developed into long-term based competitive advantages. The dynamic capabilities of the organizations are based on their survival in the competitive business environment. The improves framework of the dynamic capabilities are further based on the changes that have taken place in the external environment based on the use of modern technologies. The firm-level strategies are also analysed with the help of this approach (Chen, Delmas and Lieberman 2015). This is mainly based on the creation of wealth by the organizations and their ways of operating in the environment. The wealth creation process is related to the cushion or shield that is created by the companies so that they are able to survive in the fast changing environment. The changes in the technologies are mainly based on the ways by which the firm can survive in the environment by improving its processes (Trigeorgis and Reuer 2017).
Sustainable Approach – The third approach is mainly related to the sustainable ways of operations of the firms. This approach of strategic management helps the firms to create a position in the industry and supports their long-term operations as well. Sustainable strategy thereby deals with the integration and the development of the detailed vision of the firms that is related to the sustainable long-term operations. This also leads to the increase in the productivity of the companies by using less amount of resources (Engert, Rauter and Baumgartner 2016).
The sustainability based concept provides the total perspective based on development of companies with respect to the integration of the goals. The idea based on sustainability is thereby used by the companies so that they are able to formulate effective long-term strategies that are helpful in fulfilling the external environment based objectives. The sustainability approach thereby helps in creating a discipline in the various organizational processes. The different aspects of the company are related to the sustainable approach of strategic management (Theriou 2015). The first aspect is based on the corporate values that are developed by the firm, the second part is based on the employees and the areas which is important for the proper operations of the firm and the third part is based on the relationship between the employees and the resources of the company. The attitudes of the managers also play an important role in the successful implementation of the sustainable strategy. The last and fourth aspect is thereby based on the relationship of sustainability with the strategic level of the company (Hubbard, Rice and Galvin 2014).
Sustainable Approach
Example 1 – The first example is of an organization which has implemented the stakeholder approach for strategic management. The company which is taken into consideration for this is Starbucks. This is an American multinational coffee producing organization which has its stores in different locations of the world. The company mainly implements this strategy with the help of the feedback or reviews that is provided by the customers who visit the stores of the company. The company takes the opinions of the customers for the purpose of deciding the ways by which they can source coffee beans from different locations in the world (Starbucks Coffee Company. 2018). The approach that was used by Starbucks was named as “The Guidelines and Program” which helps the management to decide the products that will be offered to the customers. This process thereby involves the customers and the other stakeholders in the decision making of the company. The company has thereby gathered feedback from the customers based on the ways by which the products can be offered to them. This approach was launched by the company in the year 2001 (Popkova et al. 2015). Starbucks has acquired the position of the topmost coffee brand in the world which been created with the help of the services that it provides to the customers. The company thereby aims to include the growers and the farmers in the processes and the ways of manufacturing the products. The main benefits that will be provided to Starbucks in with the help of this approach is based on the increase in the base of loyal customers and satisfaction that is provided to the stakeholders as well. The limitations are based on the hindrance that can be provided by the employees in the implementation of changes on a frequent basis (Sakas, Vlachos and Nasiopoulos 2014).
Example 2 – The second approach of strategic management can be explained with the example of Apple which is an American multinational company that operates in the technology industry. Apple has been famous in the market for the innovative products that are offered to the customers all over the world. The huge financial strength of the company has been major reason behind its ability to maintain an advantage in the industry. The dynamic capability of financial strength of Apple has been used for making investments in the research and development based capabilities of the company (Apple. 2018). The appointment of highly skilled staff has also been possible with the help of the financial status that is held by Apple in the industry. The financial capabilities have thereby provided Apple with a cushion which has helped the company to survive in the highly demanding and fast changing technological environment. The premium position that has been developed by Apple in the market is also based on the high levels of dynamic capability of the firm. The benefits that are provided to Apple by these capabilities are huge as the company is able to create its position in the market easily with the help of this. The company is also able to invest in the various operations due to the financial strength (Apple. 2018). The main limitation is based on the pressure that is put on the resources due to the usage in the various research activities. This can also cause a lack of resources for the company in the future (Kenworthy and Verbeke 2015).
Real-life Examples
Example 3 – The sustainable approach to strategic management can be explained with the example of Ikea which is a furniture based multinational company.
Ikea has used this strategy for the purpose of building the competitive advantage of the firm in the industry. Sustainability has become a major part of the processes and operations of Ikea in the industry. The strategies of Ikea are formed based on three major concepts that are, planet, people and positive. The company also aims at operating in a resource and energy independent manner. Ikea further plans to use the various processes based on the usage of renewable resources for production of the goods (IKEA. 2018). The company has leading the process of creating a better life for the people or the communities that are a part of the external environment in which the company operates. The sustainable approach of the company thereby helps Ikea to operate profitably on a long-term basis. Ikea has taken the lead in the process of creation of better life for people and communities in the local areas where they operate. Ikea also operates in the industry with the help of sustainable processes. The development of better places for working is also a part of the sustainable strategy of the firm in the market. The focus of the company is thereby based on the compliance of activities that are related to sustainability of operations (IKEA. 2018). The concept of shared values also has been used in the organizational processes of Ikea so that the company can implement sustainability in the operations. The management of Ikea has gone beyond the reach of supply chain for the purpose of achieving the shared values. The main benefits that are provided by the sustainability approach is related competitive advantage that has been gained by the firm in the various operations. On the other hand, the company can also formulate strategies for its long-term operations in the market in a sustainable manner (Chen, Delmas and Lieberman 2015). The limitations or the issues that are related to the implementation of sustainable approach to strategic management is based on the participation levels of the employees who are considered to the most important part of the strategic process.
Conclusion
The report can be concluded by stating that the modern organizations need to apply innovative methods for the formation of strategy. The various approaches that are used by the organizations are thereby based on the ways by which the companies operate in the modern environment. The three approaches that have been analysed in report are, stakeholder based approach, dynamic capabilities based approach and the sustainable approach. The implementation of the strategic processes is based on the types of organizations and the areas in which they operate. The three organizations that are taken into consideration for this analysis are, Apple, Starbucks and Ikea. Starbucks has used the stakeholder approach to manage the employees and the customers. Apple uses the dynamic capabilities approach to maintain the competitive advantage in the market with the help of its strong financial backup. Ikea uses the sustainable strategy for the purpose of creating a different position in the industry and increasing its customer base. The usage of the three different strategies are thereby based on the needs of the company and the ways by which they operate in the market.
References
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