Is Strategy an Essential Component of Management - Coursework Example

Is strategy an essential component of management? Contents Introduction 3 Discussion 3 Nature and significance of strategy 3 Strategic management 4 Strategy concepts 5 5 Ps of strategy 6 Corporate and business level strategies 7 Strategy and ethical relationships 9 Conclusion 10 References 11 Introduction The term strategy has gained it importance in the present scenario and it states the thought process of managers in relation to their organization and team members. Strategy is an essential tool for managerial actions. All the decisions that are taken by managers are based on strategy formulation. Strategy making is considered to be important as it helps to outperform in the market place. It requires proper planning so as to beat rivals in the highly competitive world. The concept of developing strategies has strong links with military forces. However, this term is widely used in corporate sector and forms the basis of management. There are certain essential factors of strategy such as adopting planning tools, future forecasting, being competitive and making arrangements to remain competitive. In business environment there often arise situations that appear to be complicated for managers and to handle such situations they develop prescriptions for suitable actions. The entire action plan totally depends on the kind of strategy being adopted by the managers. However, appropriate selection of strategy is essential as that denotes whether a firm would survive in the industry or witness failure. Strategy thus can be stated as crucial or important for managers. In certain scenario this factor even creates conflict within a firm due to disagreements amongst the decision makers. Discussion Nature and significance of strategy Strategy is considered to be a common word in management. There are several factors within an organization that influence approach of strategy making or adopting a particular strategy. The orthodox business organization states that there is a high need for strategy in order to sustain in economically unstable conditions and in an environment that is politically charged. Strategy can even be considered to be rational techniques that enable a firm to survive in changing environment. However there are theorists who question the entire concept stating that there is an extent to which strategy forms a part of the rational process. Since 1947 the concept of strategy is linked with two elements. The first element is overall managerial expansion and second is ownership separation from managerial control. Planning forms the integral component of strategy framing and implementation. However, it cannot be stated that planning is only necessary for strategy implementation (Knights and Morgan, 1990). Since this concept forms an essential component of management it requires considering all the elements which positively or negatively affect strategy formulation. There are organizations which are able to incorporate strategic management in the system but do not possess the required skills to execute proposed action plan. In this particular context there evolve questions related to essential components of strategy and relation between strategy formulation and implementation. Open system is only suitable answer for these questions as it allows a firm to exchange information through its permeated boundaries (Knights and Morgan, 1991). People often consider strategy to be such a concept that encompasses future decisions, actions and intentions. However there is no defined nature of strategy as it varies from one business to another and depends upon the resources or capabilities of an organization. Strategic management Strategic management is an important component of business organizations. Strategy can be regarded as less important in relation to concrete goals or explicit effects in comparison to implicit effects. Practice is the term that defines strategy as it helps management to identify loopholes and resolve issues. On the other hand the other important factor in strategic management is leadership. This phenomenon is responsible to give a social structure to an organization. Leadership roles are essential for giving an organization a strategic direction. In context of current business scenario it can be outlined that strategic management is associated with effectively dealing with rivals. This approach is highly dependent on the nature of the business and its competitive position. Hence strategy is not the only factor that is taken into consideration by the management. Appropriate selection of leaders is also equally important in order to match competencies with successful outcomes of an organization. However there are certain factors that are beyond the control of leaders such as costs and demand (Pfeffer, 1977). These two factors are ever changing but the only aspect which can be monitored by the leaders is its impact on organizational performance. This form of management starts at the core level of an organization and needs to be established at all levels in order to achieve the set goals. In today’s scenario there are no such organizations which are not based on strategic thinking due to highly competitive environment. Strategy concepts Strategy is an essential factor in success or failure of an organization and even is responsible for creating disagreements within the system. A real significance for firms in today’s world is strategic decision making. Various resources are involved in such decision making process and top management plays an active role in this procedure. Strategy is a pattern that integrates objectives, goals, mission and values of an organization. All stakeholders are the reason behind success or growth of firm so it cannot be stated that strategy is the only component that leads a business. It helps in setting a direction for a firm so as to resolve issues and mitigate risks. There are broadly three types of organization business, social agencies and mutual agencies. Each of these segments has a separate concept for strategy formulation. Business agencies normally frame strategies so as to remain competitive and earn high profit margins. However objective of social agencies are completely different which affects its strategic decision making. In all these approaches the most essential factor is romanticization in leadership. It implements optimism throughout the system even in situations that are highly contradictory. Symbolic role of leaders or management is more important than framing strategies in an organization. It can be stated that if leaders are not able to handle adverse situations properly then no form of strategic management can be beneficial for an organization (Meindl, Ehrlich and Dukerich, 1985). Skills and capability are equally important for management apart from strategy. As these factors help in analyzing the external environmental conditions in order to take corrective actions. Thus strategic management is nothing but a journey towards an unknown destination that is encountered by all organizations. 5 Ps of strategy The 5Ps model of strategy was devised by Henry Mintzberg to establish that strategy is not a grand management plan but a significant management concept that can be implemented in a step by step process in any organization (Mintzberg, 1987). This model is formulated on the basis of military concepts of strategy as well as on the basis of strategy in management and industrial economics. The 5ps model of strategy consists of the following five main components: Plan: Strategy as a plan involves the understanding of the core objectives and ideologies in an organization. This also includes an understanding of the overall direction in which the organization is going or wants to go and how the main corporate and business objectives of the organization can be achieved. Ploy: Strategy as a ploy would involve devising a tactical game plan that is more advanced than a simple plan. Perspective: Strategy as a perspective uses tactic ways of thinking and tactic assumptions with respect to appropriate actions that are more suitable in particular organization cases. This means that when strategy is used as perspective then a universally accepted or recognized strategy is not used. Instead a case specific perspective of strategy is devised to ensure maximum success. Position: Strategy as a position is another way of viewing strategy. This approach combines the elements of industrial economics as well as military strategy concepts. In this approach, a market posture is considered and the general desirable goal is to create a defensible and strong position for the organization. Pattern: Pattern is another approach of viewing strategy. Strategy as a pattern includes an evolving and continuous stream of multiple observed events. Strategy as a pattern ensures convergence within an organization which ensures the achievement of consistency within all activities and functionalities in the organization. This mdoel implies that strategy can be used in different forms in order to add to the capability of an organization for being successful. However, it does not imply that strategy is a sufficient condition for success. Corporate and business level strategies Strategies can be categorized as corporate strategies and business strategies. Both the business strategies and corporate strategies are used by organizations to create valuable and secured positions. But it is a debatable topic whether strategies alone are enough to secure a successful position for an organization. It can be argued that strategies are essential components of management but only strategies cannot ensure complete success. Also, strategizing in an organization is a complex and continuous process which may fail at many stages. Therefore, a number of supportive management components are necessary for strategy implementation. There are a number of issues that may be found in implementing strategies in the practical scenario. An important issue in the perspective of strategic management is the sensitivity associated with the different levels of the organization in which the strategies have to be established. The organizational level and the type of strategic leadership are key deciders of the scope of strategy in the organization (Mintzberg, 1971). Both corporate and business level strategies can be mapped within the four strategy frame of reference. This reference frame indicates that different business plans and perspectives can be categorized within the strategy frames of reference (Figure 1). Figure 1 (Source: Whittington, 2001). This frame of reference indicates that the strategies used by both nonprofit and profit based organizations can be categorized as classic rationally planned strategies, evolutionary strategies, negotiated strategies or systematic strategies. In profit based organizations, strategy is an essential part of management which are aimed at the achievement of multiple differentiated aims like profit maximization, risk management, image creation, assurance of control etc. On the other hand, in the nonprofit based organizations, strategy is used as a complex position aimed at achieving multiple competitive aims. Strategy and ethical relationships Strategy is considered to be a way of creating value within an organization. An effective organization is expected to create and deliver different types of value including functional value, financial value and operational value to all its stakeholders including the customers, management, employees, government, and suppliers and so on (Jackall, 1988). The multiple elements of strategy are aimed at creating and sustaining constructive, durable, ethical and mutually beneficial relationships of the organization with its different stakeholder groups. Corporate social responsibility has assumed a dominant role as a common corporate strategy in modern businesses. Every organization, irrespective of the industry, scale and type of operation has to engage in some form of corporate social responsibility activity to ensure sustainability. This is a significant corporate strategy which has emerged along the perspective approach of strategy. Strategic changes may have major effects on the established ethical relationships between the organizations and their stakeholders (Banerjee, 2008). Therefore, the formulation and implementation of strategies in management should focus on ethical considerations. In this context, it can be stated that though the strategies are considered to be vital for the creation of competitive advantage, yet strategies are not the only components of management that can lead to long term sustainability and competitive advantage. Other than strategy implementation, other components like mutual cooperation between organizations operating in an industry as well as between the organization and the stakeholders are significant in facilitating competitive advantage creation. Conclusion From the above discussion and analysis it can be concluded that that strategy is a necessary component of management but not a sufficient component of the same. It can also be identified that strategy is not a one-time action. But strategy has to evolve on a continuous basis depending on the changing internal and external situations of the organization. The formulation and implementation of beneficial strategies may ensure that the company is empowered to meet its objectives. However, it does not mean that having suitable strategies would ensure that the organization is fail proof. This is because effective management is not only dependent on strategy. There are a number of other management components that are necessary to ensure that the organization is capable and successful in a long term. The management of different resources like technology, people, finance etc. is an example of a management component that is mandatory for organizational success. Thus, it can be concluded that strategies are much needed for running any organization properly. But at the same time, strategy is not a stand-alone concept and needs to be supported by other management components to ensure complete success for the organization. References Banerjee, S. B., 2008. Corporate Social Responsibility: The Good, Bad and the Ugly. Critical sociology, 34(1), pp.51-79. Jackall, R., 1988. Moral Mazes: The world of Corporate Managers. Oxford: Oxford University Press. Knights, D., and Morgan, G., 1990. The Concept of Strategy in Sociology: A Note of Dissent. Sociology, 24(3), pp.475-483. Knights, D., and Morgan, G., 1991. Corporate Strategy, Organizations, and Subjectivity: A Critique. Organization Studies, 12(2), pp.251-273. Meindl, J.R., Ehrlich, S.B., and Dukerich, J.M., 1985., The Romance of Leadership. Administrative Science Quarterly. 30(1), pp.78-102. Mintzberg, H., 1971. Managerial Work: Analysis from observation. Management Science, 18(2), pp.B97-B110. Mintzberg, H., 1987. The Strategy Concept I: Five Ps for Strategy. California Management Review, 30(1), pp.11-24. Pfeffer, J., 1977. The Ambiguity of Leadership. Academy of Management Review, 12(1). pp.104-112. Whittington, R., 2001. What is Strategy and does it matter? Boston: Cengage. Read More