Strategic Management Theory: An Integrated Approach - Essay Example

? Strategic management (you can change the topic depends on the essay) Table of Contents Table of Contents 2 Introduction 3 Strategic Position 4 Strategic Choice 5 Converting strategy into action 7 Explaining the Interrelationship 8 Reference 10 Introduction The world of the 21st century presents a highly changing environment, which is powered by rapid development and ever evolving needs of the masses all over the world. The fast penetration of the internet in various corners of the world, along with the great level of acceptance of the various kinds of technology based sophisticated gadgets has initiated a massive change in regards to the connectivity and communication of places all over the world. As a result of this massive level of connectivity, the globe has become a highly connected single entity. It is important to mention that the high level of connectivity has paved the way for faster diffusion of various kinds of new trends that are emerging in the developed and established markets to all corners of the world. The ease of connectivity, backed by the internet has played a huge catalytic role in reducing the challenge that was previously associated with gaining access to various kinds of information. It is highly relevant to mention that the faster diffusion of the global trends have resulted in the emergence of new kinds of consumer demands from various new markets. This is creating the scenario of emergence of new markets around the world. The opening up of the new markets along with the ease of gaining information is opening up new opportunities in the young markets around the world. Various international and multinational companies that are facing low growth prospects in their own domestic regions are increasingly looking forward to capitalize on the growth opportunities emerging from the new markets. This creates an upshot of increase of competition in the highly connected global market. Thus, it has become increasingly important for the firms and business organizations around the world to focus on the process of developing their core competencies and competitive advantage. For the purpose of building their competitive advantage, it is very important for the business organizations to focus on the arenas of strategic position and strategic choice. Finally, the firms also need to focus on converting their designed strategies into action, so as to leverage the maximum advantage available in the marketplace. Strategic Position It has to be the said that the strategic position of a company highlights the position of the company in regards to its existing competitors in a specific market. The strategic and competitive position of a company can be best explained by using the broad differentiation business model. Source: Hill & Jones, 2012, p. 181 It has to be said that this model categorizes companies into three groups like differentiators, broad differentiators as well as cost leaders. Talking in a detailed manner, it has to be said that the companies that belong to the differentiator category tries to gain the maximum amount of advantage from the market by trying to distinguish its product and service offerings in regards to its competitors. While talking about broad differentiators, it is of high relevance to mention the fact that these group of companies fall in the middle region of the model. It has to be said that the typical behaviour of these group of companies comprises of designing of business strategies that helps in better discrimination of their products as well as effective lowering of the cost structures (Hill & Jones, 2012, p. 180). These category of companies focuses on operating on a specific region since it provides the companies with a significant competitive advantage in regards to designing their strategies on the lines of effective segmentation, targeting and positioning. This particular fact also helps the company to attain a decrease in the price of its products and services. Finally, while commenting on the companies that fall in the category of cost leaders, it can be said that the companies in most of the cases are large multinational organization who can afford to lower their price structure for the products and services to the maximum extent. The companies which compete in the market on the lines of low cost leadership, focuses on reducing their costs at all possible points of manufacturing as well as conduction of business operations (Lynch, 2007, p. 486). It also has to be said that these The companies who try to focus on cost leadership essentially try to generate profits by attaining an increase in the sales volume, or by increasing the prices of the products and services of the companies at a later stage once they have a huge number of desired captive consumers. Strategic Choice While the firm for the purpose of leveraging significant amount of competitive advantage needs to position itself in the market in regards to its competitors in a strategic manner on the boundaries of value proposition, it also has to make significant decision on the lines of strategic choices. However, it is important to mention that the strategic choice of a company is largely dependent on a number of factors. The factors comprises of issues like government policy, critical success factors, dedication towards previously implemented strategies as well as the strategy designers attitude towards risk. Talking in a descriptive manner, it has to be said that the multiple policies that are designed by the government plays a major and significant role in the process of choosing and framing the right organizational strategies. While designing the strategies, the top level management needs to focus on the government policies, as they might play a major role in the form of various macroeconomic factors that can impact the business processes as well as operating modes of the organization. It is to be mentioned that every business has some key critical factors which are highly essential for the purpose of smooth conduction of business operations in the highly competitive global as well as domestic markets. While talking on the lines of critical factors for a business, focus has to be given on the organization’s processes that denote its core competencies. The strategic decision makers while evaluating their strategic choices increasingly needs to focus on maintaining a linkup between the critical success factors of the business as well as the organization’s core competencies. It has to be said that by synchronizing the core competencies along with the strategic choices will help the organization to significantly develop its strength while leveraging growth from the new and emerging market based opportunities (Kazmi, 2008, p. 295). The focus and approach of previously implemented strategies of the businesses also has to be taken into consideration for the purpose of designing of new strategic choices for the company. The previously implemented business strategies has to be given considerable importance since an in depth analysis of the old strategies reveals the success rate as well as the effectiveness of the strategy in regards to solving the intended organizational issues or problems. It is also highly instrumental in outlining the previous trends that existed in a particular market as help the strategic decision makers to study the changing patterns of the market. Hence, by analyzing the past strategic choices made by the organization, the top level management will be able to enhance the effectiveness of the new strategic moves of the company. The strategic choices are subjected to a considerable amount of influence in regards to the organizational dynamics. It can be said that the amount of power possessed by the strategic decision makers within the organization plays a major role in making the final strategic choice for the organization. On a brief note, a relevant example can be highlighted. It can be said that organizations often face the critical task of choosing whether to individually manufacture a product or focus on external sourcing (Porter, 2008, p. 417). Now depending on the amount of power assigned to the strategic decision makers, the organization might go ahead with either of the options. It is important to mention the strategic choice made by the company as a result of imbalance of power within the individual may have resulted in opting for either right or the wrong choice. Converting strategy into action It has to be said that the process of converting a strategy into action implies the fact of triggering the designed strategy into a real time scenario. While trying to implement a organization strategy into a real time action scenario, a lot of factors have to be taken into consideration. It needs to be mentioned that various kinds of resources has to be initiated and utilised for the effective implementation of the strategy in the highly competitive and complicated business scenario. While allocating the key resources, the organizations needs to focus on the process of maximizing the returns in regards to the investments made to acquire and maintain them. Also, the organization needs to allocate the resources that will help it to capitalize on its core competencies and thereby generate significant returns in regards to the market opportunities (MacLennan, 2011, p. 8). For the implementation of a strategic plan in today’s highly competitive business environment, the most commonly required organizational resources comprises of manpower and finance. However, given the technological nature of today’s business environment, significant amount of resource allocation has to be done in the lines of information technology as well (Duke Corporate Education, 2005, p. 2). Explaining the Interrelationship The inter relation that exists between strategic position, strategic choice and the process of converting strategy into action can be best explained by discussing about US based organization Southwest Airlines. It can be said that the Dallas based carrier is highly popular in the domestic market of US because of its low cost pricing of its passenger aviation services (Ferrell and Hartline, 2008, p. 16). Talking about the strategic position of the company, it can be said that the company has positioned itself as the most efficient low cost carrier in the market of US. Hence, it can be said that the America based airline company has utilized the tactic of using cost leadership to gain a foothold in the market. Talking on the lines of strategic choices, it is highly interesting to mention that the approaches made by the airline organization contributed in a great way to the growth of the business. Talking in details, it can be said that the company in order to retain its competitive edge has focused on providing point to point services to various secondary airports. The analysis of this move of the organization reveals that the focus is largely on the lines to develop compatibility of core competency of the airline with regards to the critical success factors associated with the conduction of the business operations. Finally, while discussing the company’s method of implementing the low cost strategy in to action, attention has to be given to the nature of allocation and management of the essential resources of the company. In order to extract optimum utilization of the company’s high value assets, the company revised the frequency of flights to various routes on the basis of the consumer demand. Also, the company’s decision to cater to secondary airports resulted in reducing the ground time for the airlines, thereby boosting up both productivity as well as profitability (Hill and Jones, 2009, p. 105). Reference Ferrell, O.C., and Hartline, M.D., 2008.Marketing Strategy. 4 ed. USA: Thomson Higher Education. Hill, C., and Jones, G.R., 2009. Strategic Management Theory: An Integrated Approach. USA: South Western Cengage Learning. Duke Corporate Education, 2005. Translating Energy into Action. USA: Dearborn Trade Publishing. MacLennan, A., 2011. Strategy Execution: Translating Strategy into Action in Complex Organizations. USA: Routledge. Porter, M., 2008. Competitive Advantage: Creating and Sustaining Superior Performance. USA: Simon and Schuster. Lynch, R., 2007.Corporate Strategy. 4th ed. India: Dorling Kindersley Pvt. Ltd. Hill, C.W.L & Jones, G.R., 2012. Strategic Management: An Integrated Approach. USA: Cengage Learning. Kazmi, A., 2008. Strategic Management and Business Policy.3rd ed. New Delhi: Tata McGraw Hill Read More