Strategic management is an elusive term that has as its basis various theories of leadership and the associated various factors that comprise the leader that is effective in leading the organization to success. This chapter provides a review of previous examinations of leadership theory and the formation of leaders in today's organizations as well as providing a brief review of the factors that impact strategic leadership in the organization. This chapter sets the stage for a study of what factors and elements serve to formulate, affect, and drive strategic management within the organization and more importantly how these factors, elements, and drivers affect strategic management in the globalized and highly technologically enabled contemporary environment. This chapter is simply a review of what this book will examine more deeply and thoroughly and that being what comprises and serves to form successful and effective organizational strategic management in today's globalized business environment.
The New Business Environment
Historically, strategic management has had a localized focus and strategy was formulated based upon local beliefs about management techniques, which were derived from tradition and established organization culture. However, globalization has shifted the focus of strategic management to a broader perspective that is inclusive of a diversity of considerations including cultural differences in management strategy. Buytendijk (2009) defines globalization as "the integration of the world's culture, economy, and infrastructure driven by the lowering of political barriers to transnational trade and investment, and by the rapid proliferation of communication and information technologies."
Globalization is a term that is often used to refer to the impact of the free-market on the economies including local, regional, and national. One of the effects of globalization and one of the new considerations in strategic management is that of outsourcing. Outsourcing is economical because the work is contracted out and costs less. This changes the focus of strategic management greatly and the necessity of reduction of costs results in the shift in focus in managing the organization and its resources, particularly the resource of human capital within the organization.
Expansion and Benchmarking
Today's organizations have the potential for expansion into other geographic regions and this creates threats to the organizations already existing due to new entrants into the market and increases the rivalry among already existing firms. In addition, globalization has increased the bargaining power of consumers and buyers and changes the way that businesses are required to compete in the globalized market. This also makes a requirement of evaluating competitors more thoroughly to understand the organization's needed policies and procedures that lead to success. This may include evaluation of the organization's products and services in order to understand how the organization can improve its own products and services to gain a competitive advantage in the global marketplace. This process is known as benchmarking and is a process that provides the organization with benefits and leads to education of company executives on methods of product improvement as well as improvement of business operations and the areas in the organization that requires improvement in strategy.
Today's organizations operate in a business environment characterized by variations in culture, religion, as well as variations in economic conditions in the marketplace. Therefore, marketing operations have to be sensitive to these variations and adjust accordingly, however; these adjustments have to be fully informed by research into the differences existing in global cultural, religious and local traditional factors. The organization's mission and vision is critical in directing the organization toward goals that are achievable and principles by which to guide the organization in reaching those goals. However, all too often the organization's goals and mission is viewed simply as rhetoric with no real or material meaning.
As stated by Buytendijk (2009) the problem that exists with the majority of organizational mission statements is "that they are often not implemented, because system goals usually supersede them." (p.192) The connection or relationship between the mission of the organization and what they witness on a daily basis in the organization are far too different and inconsistent. Because the mission statement is often misaligned the organization's employees hold a cynical view of the mission and become indifferent to the organization's stated mission. There has been a failure on the part of organization's to properly invest in the organization's human or social capital.
Nature of Human Behavior
Strategic management must take into account the nature of human behavior in the strategic management initiative as the human factor is of primary importance in optimization of business processes and in the product and service line conception, development, and production processes. There are various schools of thought on the issue of human behavior and motivation and this includes the work of Plato, Thomas Hobbes, Hume, and others. While variations do exist in the approaches and the theoretical underpinnings, today's strategic manager will benefit from the knowledge of this various approaches and theories in the strategic management initiative.
Human Networking & Human Capital
There are in fact books recently published on what are termed 'human networks' held to be inherently important in the consideration of human capital in today's globalized world. Human capital concerns are those driven by such as globalization, the knowledge-based economy, and the rapid evolution of technology all of which have served to motivate the organization in seeking new methods of gaining and then maintaining competitive advantage.
Semantically speaking the concept of human or social capital is a combination of 'human' and 'capital' with the capital speaking of the factors of production used in the creation of goods and services and which are of the nature that are not consumed in a significant manner in the process of production. The human is the 'subject' that works in directly the economic activities taking place including the production of goods, the consumption of goods and finally the transaction of those goods. From this view, human capital has the meaning of being one of the elements of production able to generate values that are added-in by input.
Rules and Principles of Management
While the rules of management and its principles remain the same the people with whom the management and leadership of the organization interact with in foreign countries presents a different landscape especially as noted by Barlett, Ghoshal and Beamist (2008) that organizations on the global level result in changes that are affected by three primary factors including the dominant cultural lifestyles of individuals in the organization, change agents and leaders in strategic opinion. The reason for the importance of these considerations is the impact of the various cultures, genders, races, and ethnicities on the organization. The ways in which these factors affect the organization and its strategies are important for the strategic management initiative and important for the manager to have knowledge of and to understand.
Total Quality Management
Total Quality Management (TQM) is a structured process used in the establishment of long-range goals in the organization and at its highest levels and the means that can be utilized in reaching those goals. This philosophy is one that is centered on the customer and involves all members of the organization both management and employees seeking to systematically determine the problems in terms of their root causes and to then effectively manage improvement addressing these problems.
The principles of Total Quality Management are used in promoting efficiency in the operation in order to drive the organization's efficiency and profitability. Within the principles of Total Quality Management is the Six-Sigma approach and which is a tool that is valuable in managing the company's improvement in productivity and performance.
This tool is primarily used in the quality management initiative and has been demonstrated to positively impacts the organization's performance and the quality of the product produced by the organization. This is a time-consuming process that is based upon a methodology that is highly definitive and that involves ongoing monitoring and measuring of the results in comparison to the metrics used for calculation of the defect rate of the product during the manufacturing process.
Innovation is also cited as being key in the competitive advantage gain for organizations and specifically in the financial situation characterized by global change and rapid expansion in IT resulting in the necessity to reexamine and re-identify the creation and management of innovation. This has resulted in the increasing importance of external knowledge and this accelerates the need for innovation that is new in the organization. Studies on innovation of organizations have been centered in transitions within the organizations and on the evolution of innovation.
There is a need however for additional studies in the area of determination of specific practices that supports ongoing innovation and financial outcomes that are improved. There are many unknowns…