Stakeholder Approach
Discuss about the viability of stakeholder approach, dynamic capabilities and sustainable development.
Nowadays, strategic management is considered as a matter of grave importance. It has been noticed that effective business strategies aid the business organization to survive in the existing competition of the market. It is seen that strategic management helps the organizational management to undertake significant business decisions that will aid the companies to sustain their advantageous position in the existing market. In accordance with the opinion of Rothaermel (2015), strategic management means the creation as well as the implication of main goals as well as initiatives that are undertaken by an organization’s top managers, on the basis of available resources. As opined by Wheelen et al. (2017). Strategic management also evaluates competitive environment as well as assesses the business strategies. The significance of strategic management lies in understanding the business objectives and schemes of the companies.
In the opinion of Ginter(2018), strategic management concentrates on the long-term planning. Effective strategic management paves the growth of the business organizations. From the perspective of Hill, Jones and Schilling(2014), fruitful strategic management aids the business organizations to increase its overall productivity and profitability. In other words, strategic management is required for managing the business strategies so that it becomes easier for different business organizations to sustain their comparative edge in business. In this particular study, concepts of different approaches such as stakeholder approach, sustainable approach and dynamic capabilities are explained in this particular study. The benefits and limitations of every approach are covered in this particular study. This study also throws light on the viability of these approaches.
In accordance with the opinion of Lasserre ( 2017), stakeholder approach is such an approach which helps the company’s management to create as well as implement procedures, that satisfies the needs of stakeholders with the intention of ensuring company’s long-term success. It has been observed that stakeholder approach if applied properly within the atmosphere of business organizations, it will bring innovation in its working procedures through building fruitful business strategies.
It has been noticed that by taking assistance of the different stakeholders, it is possible for the business firms are using imperfections existing in the market as an advantages through building fruitful strategies(Bettis et al. 2016) . Moreover, it is the responsibility of the managers working at different companies to satisfy its shareholders in order to achieve the targeted business goals. In the opinion of Daspi et al. (2017), The implication of stakeholder approach can strengthen the values of the business firm and formulate comparative edge. In this context, it can be stated that this approach creates a connection between the business organization and stakeholders including managers.
Dynamic Capabilities
From the perspective of Michael, Storey and Thomas( 2017), the stakeholders of the firms aligns their personal values with the values of the organizations thereby enhancing the organizational performance and efficiency. This is applicable for the managers also as they are also shareholders of the companies. In this context, Frynas and Mellahi (2015) commented that manager need to align the formulated strategies with the organizational values as well as values of the stakeholders. This approach of the managers will increase the organizational productivity as well as profitability. It is seen that by aligning the strategies and values with organizational goals, it is possible for the managers to achieve success in strategic management. As a result, brand loyalty of its stakeholders including managers and customers will be increased. It has been noticed that firms adopting this particular approach will be able to enhance its core competencies thereby increasing the effectiveness of the strategic management. It has been observed that job satisfaction of the workforce creates a direct impact on company’s capability to incorporate innovation within the working process of the company ( Morden 2016).
Satisfied Employees including managers engages them in the long-term thinking. They also gets involved in generating valuable ideas, which helps the company’s top-level management to formulate and apply those strategies within the workflow of the respective organization. It has been noticed that there are high chances that difference of opinions might occur among stakeholders at the time of decision-making processes. Each stakeholder wants to care about their own interests. In other words, these stakeholders seem to fulfil their own needs rather than thinking about the company’s benefits. From the perspective of Morden (2016), difference of opinions among the stakeholders might give rise to conflicts thereby lowering the productivity of the respective organization (Shrestha et al. 2018) In this context, it can stated that it becomes very difficult for management working at different companies to implement this particular approach in the working process. As a result, productivity of the company gets hampered in the due process. This is one of the issues that are faced by managers while implementing stakeholder approach. As opined by Pascual et al. (2017), interests of one stakeholder differs from another stakeholders. Therefore, it becomes difficult for managerial section of the company to cater and fulfill interests of all the stakeholders. In other words, conflict that takes place between various stakeholders delays the managers to undertake strategic decisions or create fruitful strategies. These are the limitations of strategic approach. It is seen that customer as a stakeholder impacts on the strategic business decisions.
Sustainable Development
It is seen that the managers working at companies want to satisfy its customers by providing their desired products. Besides, they makes a constant effort to provide best-quality customer service. In this context, it can be stated that the main purpose is to strengthen their relationship with its customer base. In other words, long-term relationships between management and customers are key to success thereby retaining the competitive advantage of the market. It has been observed that employees are considered as valuable assets by the management of the companies. In order to retain the skilled professionals for a long time, it is required for the companies to motivate the employees to take part in the decision-making procedure. In this regard, Pascual et al. (2017) commented that it is needed for the managers to allow the employees to share their ideas or thoughts in front of the hierarchy without any hesitation.
After analyzing the viewpoints shared by the skilled workforce, it is possible for the managers to create best strategies or formulate strategic plans thereby fastening the decision-making process (Frynas and Mellahi 2015). In addition to this, it is the responsibility of the managers to provide a non-discriminatory environment and flexible working environment to its skilled professionals. Daspit et al. (2017) commented that this approach of the management will motivate the employees to meet their individual targets as well as the strategic goals and objectives of the business firms. Improving the relationship with suppliers, is required for achieving success in business.
In accordance with the opinion of Khodyakov et al. (2017), stakeholders have their interests in the business firm and they can either influenced or be influenced by the company’s activities, goals and policies. According to Aziz et al. (2017) stakeholders invest their capital in the business firm whose activities decides the results of the business decisions. In this context, it can be stated that influence as well as power of the stakeholders can create an impact on the success and failure of the strategic initiatives.
In the opinion of Segarra?Oña et al. (2017), project manager, project team, sponsors, consumers and functional management are considered as stakeholders of the respective organization. There are other stakeholders such as government, rivals as well as the environment. Stakeholders are classified into primary stakeholders, secondary, internal stakeholders and external stakeholders. It has been observed that primary stakeholders are directly influenced by the results of any project. It is seen that customers, end users, project sponsors, team members as well as project managers are the primary stakeholders.
In the opinion of Ren (2018), project sponsors need to offer feedback as well as make decisions about project implication. It has been noticed that sponsors are subjected to allocate as well as supply the resources. It is the responsibility for the sponsors to finance for funding the project. The sponsors need to have a clarity in understanding about the scope, schedule as well as resources required for the success of the project. It is seen that customers support the business firm by purchasing items from them. On the other hand, Kerzner and Kerzner (2017) commented that company gets a clear idea on what kind of goods they have to manufacture and what amount of capital they will have to invest.
Secondary stakeholders assist with the administrative procedures, financial as well as legalities. In order to achieve the objective, it is required for the primary as well as the secondary stakeholders to work in a collaborative and coordinated manager. Project managers as an internal stakeholder are assigned with the responsibility of developing a project. Project managers are assigned with the responsibility of organizing as well as planning of the project. They are assigned with the responsibility of supervising the entire project. It is seen that vendors, suppliers as outside business firms are considered as external stakeholders. Team members are termed as direct stakeholders because these individuals are concerned with everyday actions of the project.
According to Khodyakov et al. (2017), stakeholders can create a direct impact on the strategic decision-making process. It has been observed Customers directly influences the decision-making process of any business firm. Without getting any kind of support from the potential customers, it is not possible for the company to continue its business in the long run. Moreover, it is the primary responsibility of the company is to provide their desired goods and services. By fulfilling their demands, company can increase their satisfaction level, that will help the company to meet its long-term goals. In addition to this, an honest conversation should exist between organizational managers and customers thereby helping the company to build and implement strategies that will help them to sustain their advantageous position in the existing market.
It has been observed that internal stakeholders offers their mentoring advice to the owners of the company. In the opinion of Bouzon, Govindan and Rodriguez (2018 ), stakeholders acts as a guide of the company so that they can prevent the business firm from incurring huge financial loss. Apart from this, Simeone, Secundo and Schiuma (2017) commented that they can anticipate bigger problems while the business firms are continuing their business operations. Therefore, this ability to foresee things acts as an advantage for the company owners. As opined by Khodyakov et al. (2017)), managers need to consider their employees as valuable assets of their company. It is the responsibility of the managers to retain the workforce for a prolonged period in order to attain the long-term objectives of the company. For this purpose, they need to improve the working conditions and they have to develop the pay structure. In addition to this, non-discriminatory environment should be provided to them. These are some of the techniques by which employees can be retained in the business firm for a long time thereby increasing the productivity of the firm.
Apart from this, Daspit et al. (2017) asserted that management should engage the employees to actively participate in the decision-making process where they can freely share their opinions based on which effective strategies would be created and implemented by the management of different business firms. In this regard, Kerzner and Kerzner (2017) commented that this approach is capable of increasing the effectiveness of strategic decision-making procedure. It is needed for the management to maintain good relationships with its suppliers and vendors as they indirectly affects the decision-making process.
It is seen that it is beyond the capability of the management to please each and every stakeholder of the companies. It has been noticed that stakeholders often argue among themselves regarding returns on investment along with high costs. Therefore, disagreements among the stakeholders often compels the management to take wrong decisions. Not only this, it also causes delay in decision-making process. This is one of the major implementation issues faced by the managers while they are applying dynamic capabilities in their workflow. From the perspective of Simeone, Secundo and Schiuma (2017), sometimes management gives importance to the values or ideas of any one stakeholders, which makes other stakeholders angry or disappointed towards the management of the company. In accordance with Bouzon, Govindan and Rodriguez (2018), inequal distribution of power and status among the stakeholders can create conflicts among them . In this context, it can be stated that conflicts among these stakeholders can create adversely affect the decision-making process. These are the limitations of the dynamic capabilities. Khodyakov et al. (2017)
In accordance with the opinion of Daspit et al. (2017), sustainable approach conducts the economic growth without depleting the natural resources. In other words, according to the definition of Brundland report, “Sustainable Development is a development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” In the opinion of Pascual et al. (2017), environment, society as well as economy are the important components of sustainable approach. The main purpose of sustainable development goals is to eradicate poverty, protect the environment as well as ensuring enjoyment, peace along with prosperity for every individual (Shrestha et al. 2018). There are certain advantages and disadvantages of sustainable development.
In the opinion of Ren (2018), reducing waste is one of the primary aims of the sustainable environment. It has been observed that sustainable development causes the organizations to improve their brand image in the eyes of its customers. From the perspective of Aziz et al. (2017), maintaining the ecological balance is one of the important goals of sustainable development. In addition to this, the companies can enhance their overall productivity and profitability by incorporating sustainable approach in their working procedure. Depending on the strategies, cost of investment might vary. This can be regarded as the disadvantage of sustainable development. In accordance with the opinion of Segarra?Oña et al. (2017), it is seen that cost of manufacturing environmentally sustainable goods is comparatively higher than other goods and services. This is another disadvantage of sustainable development. It has been noticed that company’s management need to imbibe the concept of triple bottom line where they would place equal importance on three Ps such as People, Planet and Profit and accordingly they will take strategic business decisions. In this way, sustainable approach affects the decision-making procedure of strategic management
Conclusion
From the above discussion, it can be stated that proper implication of stakeholder approach, sustainable approach and dynamic capabilities can maximize the profit of the companies. In this context, it can be stated that proper implication of stakeholder approach, sustainable approach and dynamic capabilities can help the various business organizations to sustain their advantageous position in the existing market. It has been observed that the stakeholders are aligning their individual values with that of the values of the companies. This approach enhances the overall performance along with efficiency of the companies. It has been noticed that if the company successfully imbibes the triple bottom line within its working procedures, then it is possible for them to undertake significant strategic business decisions thereby retaining its comparative edge in the current market. This is how sustainable approach affects the strategic management.
References
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