Strategic Management the Concept of Strategic Management

Strategic Management

The concept of strategic management is one that is highly important to organizations around the world (David, 2009). It involves taking a look at the top management of a company and the resources that management team is using on behalf of the company's owners and in order to show a specific level of performance. The mission, vision, and objectives of the organization must be examined, and it is necessary for them to come into play when attempting to understand the issue (Mintzberg, Ahlstrand, & Lampel, 1998). Plans and policies also have to be developed, and programs and projects must be created to meet the objectives that have been set by the company. When resources are allocated in order to ensure that these objectives can be met, strategic management helps to set out the right resources in the right amounts and at the right time so that the company can become and remain successful (Dess, Lumpkin, & Taylor, 2007; Grant, 2010).

The company then uses a balanced scorecard to evaluate its performance and see how much progress it is making toward its objectives (David, 2009). Studies have indicated that the expectations of stakeholders should be used as a jumping-off point for companies that are attempting to determine what kinds of goals they should have and how they should go about reaching those goals (David, 2009; Dess, Lumpkin, & Taylor, 2007; Grant, 2010). Addressed here will be the current situation as it relates to strategic management, as well as the history of the issue. Both of these are important to understand, because where something came from is often just as important as where it is now and where it is going. Understanding the past can help a company make good choices about its future, and can help a person or a company determine whether there were mistakes made that should be corrected in order to keep moving forward and remaining successful.

In order to have a successful study, a review of the literature will be undertaken. Then the methods and standards that were used will be addressed, and any questions that are being considered for further research into the area of strategic management will be discussed. From that point, it is vital that conclusions be drawn and recommendations be offered to wrap up the study. Without these components, it is often not clear whether a researcher has a thorough understanding of what the study was designed to do, and it is also not clear if said researcher is certain as to what else should be done in the area and should be questioned when it comes to that particular issue. In short, studies without these components lack completeness and that can make it difficult for anyone in the future to use the study as a jumping off point for similar studies or studies into related issues.

Literature Review

Reviewing the literature is a significant part of any kind of study, and that is true when it comes to understanding strategic management. The goal is not to address how it works with every type of company because there are often differences that are significant. Instead, the goal is more about looking at the way strategic management was handled in the past and the way it is being handled now. There are important differences to address, and there are some things that have stayed virtually the same throughout any other changes that have been made to the business world. With that in mind, strategic management is an ever-evolving issue with roots that really do not change much from one time period to the next. Having a good understanding of that and being aware of how it plays into what companies do and do not do in order to be successful can go a long way toward being more effective in business (Dess, Lumpkin, & Taylor, 2007; Grant, 2010).

History

Strategic management is a term that came about in the 1950s (Grant, et al., 2011). It was started and utilized by several different businessmen during that time period, including Peter Drucker and Alfred Chandler (Grant, et al., 2011). The strategy and strategic thinking on which the term is drawn, however, goes back many thousands of years. There has nearly always been strategy of some kind. The value of having a management strategy that was coordinated and that encompassed all of the issue the company was facing was at the heart of strategic management (Grant, et al., 2011). With that in mind, others took that information and ran with it, formulating a vocabulary of words that went with strategic management concepts and defining them so that they could be built upon by others, as well. Since managers were generally in charge of a department and relayed various information between that department and other departments, it was vital that they were on the same page.

When it came to how management worked and how it interacted with one another, the employees, and other companies, there were many issues to address. The way a manager led his followers was a part of the strategic management of any organization, and people who had highly conflicting management styles could sometimes struggle with management issues because they were in disagreement about how the management should be handled (Lewis, et al., 1999). Not all managers disagreed with others who were handling their management goals and responsibilities differently, of course, but it was an issue and a concern that needed to be faced. One of the main issues of strategic management that all managers could agree upon was the idea of addressing issues long-term (Lewis, et al., 1999).

A long-term strategic outlook is a big part of the history of strategic management, as it encouraged people to look outside of their immediate area and time frame so that they could consider strategies that would help them further down the road. The structure of a company follows the strategy, and a company that does not have one does not have the other (Lewis, et al., 1999). Naturally, this is a serious concern for any company that knows it needs to move forward, since there are only so many opportunities for a company to achieve and hold onto success. Without a strategy, there is no proper structure for the company, and without a proper structure the company does not run smoothly and can have trouble making decisions and moving ahead with any issues it needs to address. The history of strategic management is full of fallen companies that did not heed advice and did not build a successful structure based on the proper strategy for long-term success.

Another issue that came about with strategic management was the idea of making sure that the internal factors of the organization matched the external circumstances of the environment (Hamel, 2002). In other words, an organization does not (and cannot) exist in a bubble of its own making. No matter what it plans to do or what it is doing internally, it still must exist in and interact with the outside world. Because of that, it cannot ignore all of the issues that are faced by that outside world, or the changes that may be taking place there. Business regulations, the economy, and all types of other issues affect any organization, and the strategic management of that company must focus on the proper understanding of the outside issues as they relate to internal concerns in the company (Hamel, 2002). If the company does not spend time considering how it will work internally with the issues and requirements of the external world, it will not have an effective strategy that will carry it through problems that could arise (Hamel, 2002).

As strategic management started to evolve, one of the most important issues was to create objectives that were well-defined (Mintzberg, Ahlstrand, & Lampel, 1998). The idea was to ensure that the company knew where it came from and where it was going, and it was not able to do that unless it had objectives that were actually properly defined. A lack of objectives means a lack of direction, and not knowing where it is going can be the kiss of death for any company. In short, a company that does not know where it is going will not be able to formulate a plan for how to get there - and thus will not get anywhere (Mintzberg, Ahlstrand, & Lampel, 1998). Many companies that simply languish do so because they have no clear goals and objectives. They certainly want to succeed and grow and prosper, but they do not know how they can do so and they have no real idea of how they wish to go about moving in the right direction. A company needs to know what it wants.

When managers of a company are unclear about the objectives they want to meet and the time frame in which to meet them, very little gets done. However, it is also highly important to be realistic when it comes to whether an objective can be met and how quickly it can be accomplished. Setting goals is vital, but setting goals that cannot be achieved will only sour the plan for the entire company. There will be no incentive to work toward something that is not achievable, just as there will be no incentive to work toward something that is too easily achieved. A balance is needed, and a large part of the history of strategic management is about finding that balance and using it to motivate and lead employees in order to make the entire company successful.

Current Situation

Currently, strategic management has changed and evolved into what it is today, and it is still changing because the business world is not sedentary. There are some specific aspects of strategic management that are being used now, and that were not used in the past. Whether they remain part of strategic management in the future remains to be seen. Change is good, and is often necessary for proper planning (Nag, Hambrick, & Chen, 2007). In other words, if a company has goals and objectives and refuses to ever make any changes to those goals and objectives, that company may find that it is not able to accomplish the things that are important to it. Part of management - and a very large part of strategy - is the idea that goals and plans and objectives have to be reachable and also changeable in order to fit the changing times and any adjustments in the marketplace (Nag, Hambrick, & Chen, 2007). Companies that have no goals do not succeed, but companies that are too rigid and immobile often have the same kinds of problems.

Strategic management should apply to the entire organization, but it should also target a specific area in order to make sure that the company has a focus. Cost leadership, differentiation, or the actual focus of a company are three of the generic strategies for management that can be chosen from in order to make sure a company is aware of where it should be headed next (Nag, Hambrick, & Chen, 2007). A company that attempts to follow strategic management of all three of those areas will often fail, but a company that chooses just one and makes it "their own" can see a great deal of success. Companies need to consider the area in which they want to stand out from their competition. Do they want to have the lowest prices, the most focus on a specific area, or the widest differentiation of goods and services? What really matters most to the company, and what is the company good at from an overarching standpoint? Answering those questions will allow the company's management to make choices regarding which path would be the best for success.

There has been some argument, however, that a pursuit of both low cost and differentiation can pay off big for businesses (Hill, 2007). When a company provides a large number of products and services, and it provides all of them at a lower price than the competition, it is highly likely that the company will be able to see success (think companies like Walmart, that provide a wide variety of goods and do it cheaply). While differentiation and/or low cost is not the only way to make money and have success as a business, it is one of the best ways for management to move forward. Especially in a tight economy, consumers want to be able to buy things that are inexpensive, and they want to get everything all in one place so they do not have to spend gasoline to go to a bunch of different places to get what they need. Companies need to strategize in a way that utilizes the external environment and provides consumers with what they want (Hill, 2007).

Strategic management is very fluid, and highly complex (Hill, 2007). The organization has to adapt to what consumers need, and it also has to focus on what it wants and the goals it has set. Management can set goals for the organization, but those goals will not be realistic if the company does not account for what matters to consumers (Hill, 2007). The entire organization will be affected by the strategy created by management, and managers have a serious obligation to do their best so the people who are working under them are protected. Poor strategic management decisions can easily lead to a company that is not successful, and that can put a large number of people out of work. When that happens, it hurts not only those people but the company's customers and the entire economy. Strategic management is analytical, but it is also conceptual. In other words, managers have to be both logical and intuitive in order to consider everything they need to do to keep a business operating correctly and keep seeing a high degree of success.

One part of strategic management that started in the past and continues through the present day is the concept of strategy that is driven by technology. As early as the 1950s, Peter Drucker talked of the "knowledge worker" (Hubbard & Beamish, 2011). That idea continued all the way through the development of strategic management and is still important today. Now, the knowledge worker of the past has become the information technology worker of today and the future. Iphones, computers, email, and other technology and communication options have been increasing in availability and usage, and that will continue to be the case well into the future. Because that continues to occur, strategic management will continue to evolve (Hubbard & Beamish, 2011; Johnson, Scholes, & Whittington, 2005). Information technology has sociological implications for strategic management and leadership, as well (Hubbard & Beamish, 2011).

In order to have sound strategic management, a company needs to pay close attention to how it structures itself (Johnson, Scholes, & Whittington, 2005; Liebeskind, 1996). With too much structure, there will not be any way for a company to expand and move forward. People will be "stuck" where they are, and they need to have the opportunity to be productive and expand their capacity for learning and development (Johnson, Scholes, & Whittington, 2005). That nurtures new and different patterns of thinking, which can also help people focus on the things that matter to them and how they can consider ideas that are "outside the box" in order to come up with creative options for the company (Johnson, Scholes, & Whittington, 2005). When being creative, a company can expand its horizons and provide more options to customers and potential customers, as well.

How people learn and interact with one another is a very important part of strategic management, as well (Liebeskind, 1996). When a strategy is created, it has to be used by everyone in the company or it will not be successful. That means each person in the company needs to be "on board" with that strategy. The job of a leader who is undertaking strategic management is one that can be stressful at times. However, that does not mean a leader should ignore what he or she knows is right when it comes to creating strategy for the company. Not every person in a company may agree with a strategy, and that can make it difficult to keep everyone on the same page (Liebeskind, 1996). Still, most strategies created by individuals in management positions are designed so that the vast majority of the people in the company are in agreement with what the leadership has determined. That makes things easier for everyone involved.

It is important to consider all of the information that has been collected about strategic management, but there is such a large number of books and articles that have been written about it. That can make wading through everything written about the issue highly time consuming. It is also possible that a great deal of contradictory information will be found, and that can lead to confusion in those who do not have a strong grasp of strategic management already. Confusion can result in a struggle to be sure about what should be done from a strategy standpoint, or in an inability to make a decision about what to include in a review of the literature. However, the fact that strategic management continues to change and evolve means that there will always be disagreements and dissenting opinions regarding the issue. That has to be considered, since it is one of the issues with which researchers deal when they work to create new studies on management trends.

Methods and/or Standards

Researchers have to consider how others have examined the issue, and they also have to consider whether there have been large changes in the field they want to study since the last study has been undertaken. Without being aware of these things, a researcher could miss the mark when it comes to the current study he or she plans to conduct. For this particular study, it is also important to address what standards will be held to and what methods will be used to conduct the study. The standards will be those that are used in all proper research, but there will not be a need to consider protecting the subjects because the study will not be collecting new data from individuals. Instead, what will be collected will be information that is already available in books and journal articles, as well as reliable online sources. By collecting information that way the researcher has a large base of knowledge and information from which to draw and is not concerned with any regulations that are related to collecting information from actual participants for the current study.