Essay on Strategic Management free essay sample

This essay critically analysis Strategic Management and its effect on the various levels of hierarchy. Strategic Management â€Å"Strategic Management consists of the analysis, decisions, and actions an organisation undertakes in order to create and sustain competitive advantages. †(Dess,Lumpkin,Eisner,2010) â€Å"Strategic Management is the process of identifying, evaluating and implementing strategies in order to meet the organisational objectives. † (Chris Jeffs,2008). Chris Jeffs(2008)says that strategic management provides with the tools necessary to study the internal and external environment and this is important as it helps in decision making. Johnson and Scholes however thinks strategic management apart from all that should also differentiate one organisation from another. He says that a match should be acquired between an organization and its environment which provides with a competitive advantage over others. (Johnson and Scholes cited in Russell Hoye, Aaron Smith, Matthew Nicholson, Bob Steward, Hans Westerbeek,2009) Russell et al. (2009)says that an organisation could be a successful one if the decisions it makes are qualitative and strategic in nature. We will write a custom essay sample on Essay on Strategic Management or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Michael Armstrong, Tina Stephens (2005) simply say that strategic management means looking ahead at what they need to achieve in the middle or near future. Every organisation needs a purpose and a set of objectives. Strategic Management not only helps in providing those objectives but also achieving them in within a stipulated time frame even after considering a changing environment. Strategic management also helps in assessing the progress and results so as to make the organisation not only a successful one but also a sustainable one. Many organisations believe that in the sports industry it is not important to undertake strategic management due to its fast changing nature. They believe in implementing decisions as problems arise on a day to day basis. However this is fundamentally against what strategic management teaches us. It is true that on the field performances brings in uncertainty and chaos but strategic management prepares an organisation to adapt or deal with the situation. Fred R. David (2009) infact thinks that strategic management would be a failure if it fails to provide the organisation with a competitive edge. He cites an example of 2 company presidents who encounter a bear. One of the presidents takes out his jogging shoes, while the other president says ‘you cannot outrun a bear’. To this the first president replies, ‘Maybe I cannot outrun that bear, but I can surely outrun you’. (Fred R. David,2009) The Strategic Management process Aaron Smith and Bob Stewart (1999) mention that many authors may have their different techniques or methods. Charles W. L. Hill and Gareth R. Jones (2004) say that during this process it is important to keep a customer-oriented view of the organisation. While that may be true he says that they consist of the basic core. Aaron et al. (2008) 1. Strategic direction – This is the starting point of any organisation. An organisation should create a mission statement, vision statement and organisation objectives. 2. Strategic analysis – Helps in familiarizing and monitoring the environment in which an organisation operates. Also provides the organisation with its own and competitors strengths and weaknesses. This is done by methods such as SWOT and Competitor Analysis. SWOT analysis – SWOT analysis is one of the most basic tools used to analyze the organisation with the industry conditions whether internal or external. SWOT stands for Strenghts, Weaknesses, Opportunities and Threats. Strength is resource or capability which drives an organisation towards completing its goals. Weakness is any inadequacy which prevents an organisational goal from being met, Opportunity is a positive scenario that could be exploited to help towards organisational goals and Threats is a circumstance which will impact negatively towards meeting organisational goals. The strengths and weaknesses are internal, as in within the organisation whereas opportunities and threats on the other hand are external environmental conditions. Basically SWOT analysis places the organisation in relation to its market and competition. (Aaron Smith et al. ). General environment consists of factors that cannot be predetermined or predicted but affect the organisation. General environment consists of Demographic, Economic, Social, Technological, Environmental and Political or DESTEP. Since the internal and external factors are taken into consideration simultaneously and because of its simplistic nature the SWOT analysis has gained high popularity. (Dess et all). 3. Strategic options – The results from strategic analysis are taken into consideration and potential strategic options are worked out and ranked in order of efficiency. 4. Strategic plan – In this step options are converted into actions. This step consists of implementing and carrying out the strategic option. 5. Strategic evaluation – Key performance indicators are used to identify and efficiency of the strategic plan chosen. This is the stage where effect of the strategic plan is assessed. Whether the plan of action was a success or failure. Let us now move onto Organisational behavior which in all aspects affects strategic management. â€Å"The study of human behavior, attitudes, and performances within an organizational setting; drawing on theory, methods, and principles from such disciplines as psychology, sociology, political science, and cultural anthropology to learn about individuals, groups, structures, and processes. † (John M. Ivancevich/Robert Konopaske/Michael T. Matteson,2005). No doubt, this is an important factor as the control of human resource within the organisation is ultimately proportionate to its success. An organisation runs on the collective effort of their employees. A manager’s job is to work individually or with groups of employees to extract the organisations goals. An important factor within organisational behavior that affects strategic management is Leadership. Leadership can be defined as â€Å"the behavior of an individual when he (or she) is directing the activities of a group toward a shared goal. (Judith R. Gordon, R. Wayne Mondy, Arthur Sharplin, Shane R. Premeaux) Judith et al. basically says that leadership is all about controlling and directing the employees within an organisation. Fred Luthans however talks about some organisational behavior theorists who do not consider leadership to be of any importance. They say that â€Å"The social construct of leadership is viewed as a myth that functions to reinfor ce existing social beliefs and structures about the necessity of hierarchy and leaders in organizations. (Fred Luthans,1998) But there is enough evidence to say that leadership is a key factor towards the success of a company. Eg : Thomas J. Watson, T. Vincent Learson have made sure IBM monopolize the computer business. Andrew J. Dubrin(2007) says that a leader should not only adapt to change but also motivate, inspire and influence his employees. Peter G. Northhouse(2010) says that the leader and his followers have to have a common goal as that reduces the possibility of the leader acting in ways which are unethical. Eg : Thomas J. Watson, T. Vincent Learson have made sure IBM monopolize the computer business. There are various forms of leadership such as * Autocratic – They are those types of leaders that make all the decisions and tell the workers exactly what to do. They expect to be obeyed without any question asked and are generally a little aggressive in nature. E. g. : One of the most powerful business entities Donald Trump appears to be autocratic in nature. Another good example is SCI president Eugene Sapp. Even details like travel requests and approvals have to go through him. Participative – Subordinates are allowed and involved in the decision making process but the final word or authority rests with the leader himself. E. g. : Sam Walton, the founder of Wal-Mart has an established management team that invites the employees to participate in the decision making process but the final authoritative power lies with him. * Democratic – As the name states a democratic leader not only includes t he employees towards the decision making but also tries to implement the strategies chosen by them whenever possible. They are not single minded and encourage employees to step up and get involved. E. g. : The general manager of Westinghouse Furniture Systems appears to fall under this category. He encourages the workers to get involved in whatever way possible. Infact, after implementing a democratic leadership approach there was a 74% increase in productivity in a span of 3 years(1983-1986). * The Laissez-Faire – This kind of leader is uninvolved. He leaves most part of the running of the organisation to the management team. He could be termed as a mere spectator. It may not be a very effective method but then again in mostly depends on the type of organisation. This kind of leadership style is usually used in the field of scientific research and social service. (Judith et al. ) Judith et al. () goes on to say that most people follow the ‘Great Man’ theory which says that leaders cannot be made, they are born. It is widely acknowledged that a leader should have some basic characteristics but research has not completely proved that physical traits make an effective manager. There are certain theories to how a leader should be selected. Personality/Trait or Great Man theory – This is the oldest and most widely recognized approach. Locke(1991)cited in (Russell Hoye et al. ) says that there needs to be many characteristics which are acquired by leaders from birth. This theory stresses on the importance of converting your personality traits into a tool which will help towards organisational goals. He believes that successful lea ders have an edge over poor leaders in terms of having a better social background, physical and personal characteristics. This theory however does not have enough empirical evidence. * Behavioral approach – Russell et al. 2009) talks says that one must need not possess leadership traits and a leader can be taught how to cope and adapt to a particular situation. John M. Ivancevich et al. (2005) go on to say that how a leader acts towards a situation can go a long way to determine the effeiciency of a leader. He says that reacting differently towards subordinates could affect the efficiency of the organisation. E. g. : A football coach could calmly tell his player what he did wrong instead of yelling at his player for missing a goal. Fred Luthans (1998) does not stop here. He says that there is an exchange from both sides, to and from the leader. He says that when the followers are doing a good job, the leader in turn performs well. If the followers however do not respond, then the leader performed at a lower efficiency rate as well. Eg : A football coach could calmly tell his player what he did wrong instead of yelling at his player for missing a goal. * Contingency approach – Russell et al. (2009) say that the behavior of leaders often changes according to different changes. The changes could be situational, environmental, emotional etc. Personality and behavioral approaches fail to take into context any situational changes. Different leadership styles are chosen to deal with different outcomes. E. g : Lionel Messi year after year performs for F. C Barcelona but for Argentina however he did not perform as well. FORMAL AUTHORITY AND STATUS Henry Mintzberg(2003) says that a leader has 3 distinguishable roles INTERPERSONAL ROLES (Figurehead, Leader, Liaison) INFORMATIONAL ROLES (Monitor, Disseminator, spokesperson) DECISIONAL ROLES (Entrepreneur, Disturbance handler, resource allocator, negotiator) * Interpersonal roles – This refers to the relationship between the manager and his employees. He is not only a figurehead, which means he performs ceremonial duties but also a leader, which means he will have to control and motivate his followers. * Informational role – This is the biggest aspect of the leaders job. Research shows that leaders spend most of their time giving and receiving information. They are also responsible for the information that the organisations provides to outsiders. * Decisional roles – In this role the leader not only initiates and assembles all the resources needed for a project but allocates the resources and delegates work. Conclusion Basically I think that strategic management is not a matter for top management alone. I propose a mix between an autocratic structure and leadership style with a democratic structure and leadership style. A management team should be appointed and enough power should be given to them to see off certain approvals and decisions. However, when it comes to major and big business decisions it should be taken by top level management only as they will precisely take all relevant aspects into consideration and do what’s best for the organisation from a strict business point of view.