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Sample essay topic, essay writing: Benefits Of Strategic Management - 1408 words
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.. sence of the environmental analysis can lead a successful business to a decline.According to Sull (1999), founded in the 1950s, with the designs inspired by the English country side, Laura Ashley expanded to over 500 retail outlets and enjoyed the international brand recognition throughout the 1970s. By the 1980s, the socio-economic context has changed and many women entered the workforce requiring more professional and functional wear rather than traditional garments produced at Laura Ashley. The company, however, continued unchanged, which in effect, caused a serious downturn of the initially successful business. Originated in economics, the Resource Based View theory argues that "sustainable competitive advantage is built on the unique resources that the organisation has within it" (Hubbard, 2000, p.
11). In alignment with this postulate, strategic management offers a mechanism to build competitive advantage and out-perform competitors. It is the Strengths and Weaknesses component of the SWOT model that analyses financial, material, human and intellectual assets of a company.Woolridge (1999) notes that since its entry into the Australian telecommunication market in 1992, Cable and Wireless Optus, succeeded through the quality of its platform and secured 33% of the market in 2002. Research indicates that price oriented telecommunication industry will soon exhaust business growth opportunities. Thus, Optus' management turned to the valuable resources the company has created for identifying new strategic possibilities
Optus has a substantial subscriber base which could be used to attract customers to Optus' mobile portal. However, Optus has no real capability in operating mobile portals and many of those have been already offered by other carriers. Optus' existing billing and credit control systems could facilitate developing further sales through mobile commerce. As it is not certain which strategic direction Optus will follow, its strategic management activities will certainly equip the organisation for the future. Strategic management is about making decisions that "have long term impact on the activities of the organisation and are directed to out-perform competitors" (Hubbard, 2000, p. 14).
These decisions, therefore, must be focused on the future. In the face of unpredictable and highly competitive market place "a capacity for divergent strategic thinking which takes place at multiple organisational levels is central to creating and sustaining competitive advantage" (Eisenhardt & Brown, 1998, p. 787). Strategic thinking, imposed by strategic management, is a dynamic and intuitive process, which responds to undefined future by creativity and capitalises on opportunities provided by unexpected situations.Success of Honda's entry on the US motorcycle market provides evidence of how strategic thinking leads to performing better than competitors.Honda's initial strategy to enter US market, as depicted by Hubbard (2000), was to target its big bike end since that was the main segment of this market. Big Japanese bikes, however, failed to perform in the US climatic conditions.
Honda's marketers observed a considerable interest in the small 50cc machines, which they rode around to get to their customers. Their observation, then, was used as an opportunity to market small bikes as "fun" bikes to those who were not serious bikers. Subsequently, Honda developed a new market for 125cc machines. By the time US manufacturers discovered them as serious competitors, the Japanese gained credibility and market position.Strategic management can be thought of as managing "the pattern or plan that integrates organisations' major goals, policies and action sequences into a cohesive whole" (Quinn, 1980). Thus, it is an integration mechanism that forces all organisational functions and processes to progress into one direction. Strategic decisions affect systemically all departments and present the potential to increase a firm's competitive advantage in two ways. Firstly, it can establish a strong cohesive team of people producing greater outcome than the sum of the individual efforts, and secondly, it can ensure synchronised work towards organisational objectives.Burgelman and Doz inform that when Carly Fiorina was appointed the new Chief Executive Officer of Hewlett-Packard in1999, she recognised that the lack of a clear, overarching, corporate strategy was the cause of HP experiencing disappointing profit growth between 1996 and 1999. The company consisted of autonomous business units, all serving different markets causing delays and confusion among customers.
Fiorina understood that to survive on a highly competitive market HP needed strategic integration. In August 1999, the HP senior executives, representing all departments and regions, developed strategies based on co-operation and inter-dependence of organisational functions. In 2001 HP was still facing its strategic challenge to be number one in each of its core businesses against high performing competitors. Its performance, however, showed improvement in comparison to "unfocused and wide years" (Burgelman & Doz, 2001, p. 32).Once a strategy is formulated it serves as guidance for all organisational activities enabling fulfilling plans and achieving goals.
It acts like a binding substance which penetrates to each area through procedures, job design and culture, transforming organisations into solid market players.The Body Shop's strategy of product differentiation through the commitment to social and environmental issues described by Wheelen and Hunger (2004), defines the company's product development, packaging, supplier relations, human resource management and customer service. All products are made from natural ingredients, packaging is re-usable to minimise the exploitation of natural resources and suppliers are chosen on the basis of their contribution to the local economies and business ethics. The Body Shop empowers its human resources by sophisticated training not only in the company products but also key social and environmental issues; its customer service is based on friendliness and honesty. The holistic implementation of the strategy secured a lasting success for the Body Shop also laid a foundation for a world-wide recognised image. Do the organisations, which engage in strategic management, out-perform those that do not? The affirmative answer to this question presented in the above paragraphs has been constructed around general benefits of strategic management rather than statistical comparison.
Cases described prove that application of the strategic management concepts is a superior performance factor while the historical review emphasises its incremental value in identifying competitive advantage as a performance determinant. The main strength of strategic management, as discussed in this essay, originates in its integrative qualities. In his article on the emergence of the organic perspective on strategy, Farjoun (2002) offers a solution to the traditional mechanistic approach to strategic management by defining strategy as "continuous co-aligning sustained through actions aimed at creating, re-defining and integrating the firm's domains" (Farjourn, 2002). It is in the sense of continuous awareness of internal and external dynamics and co-ordinated adaptation to it, that strategic management empowers its practitioners to out-perform others. REFERENCES:Bartol, K., Martin, D., Tein, M. & Matthews, G.
(1998), "Management: A Pacific Rim Focus", The McGraw-Hill Australia, Roseville.Burgelman, R. A. & Doz, Y. L. (2001), "The power of strategic integration", Sloan Management Review, Spring, pp.
28-38. In Graetz, F., Rimmer, M., Lawrence, A. & Smith, A. (2002), "Managing organisational change", John Wiley & Sons, Milton.Davidson, P. & Griffin, R.
W. (2003), "Management: An Australasian Perspective", John Wiley & Sons Australia, LTD, Milton.Eisenhardt, K. M. & Brown, S. L. (1998), "Competing on the edge: strategy as structured chaos", Long Range Planning, 31, pp.
786 - 789.Farjoun, M. (2002), "Towards an organic perspective on strategy", Strategic Management Journal, vol. 23, pp. 561-594.Hubbard, G. (2000), "Strategic Management: Thinking, Analysis and Action", Prentice Hall, Frenchs Forest.Miller, J.R. & Feldman, H.
(1986), "Management Science - theory, relevance and practice in the 1980s", Interfaces, October, pp. 55-60.Quinn, J. (1980), "Strategies for change: Logical Incrementalism", Richard D. Irwin, Homewood, IL.Robbins, S. P., Millett, B., Cacioppe, R. &Waters-Marsh, T.
(2001), "Organisational Behaviour: Leading and Managing in Australia and New Zealand", Prentice Hall, Frenchs Forest.Sull, D.N. (1999),"Why good companies go bad", Harvard Business Review, July-August, pp.42-52.Taylor, F. (1903), "Shope Management", Harper and Row, New York. In Davidson, P. & Griffin, R.
W. (2003), "Management: An Australasian Perspective", John Wiley & Sons Australia, LTD, Milton.Wheelen, T. L. & Hunger, D. J. (2004), "Strategic Management and Business Policy", Prentice & Hall, New Jersey.Wooldridge, A.
(1999), "The world in your pocket", The Economist, 353, 8140, supplement 1-26. In Davidson, P. & Griffin, R. W. (2003), "Management: An Australasian Perspective", John Wiley & Sons Australia, LTD, Milton.BIBLIOGRAPHYBartol, K.,Martin, D., Tein, M.
& Matthews, G. (1998), "Management: A Pacific Rim Focus", The McGraw-Hill Australia, Roseville.Connor, T. (2002), "The resource-based view of strategy and its value to practising managers", Strategic Change, Sep-Oct, pp. 307 - 316.Davidson, P. & Griffin, R.
W. (2003), "Management: An Australasian Perspective", John Wiley & Sons Australia, LTD, Milton.Graetz, F., Rimmer, M., Lawrence, A. & Smith, A. (2002), "Managing organisational change", John Wiley & Sons, Milton.Hubbard, G. (2000), "Strategic Management: Thinking, Analysis and Action", Prentice Hall, Frenchs Forest.Powell, T. C. (2001), "Competitive Advantage: Logical and Philosophical Considerations", Strategic Management Journal, Vol.
22, pp. 875 - 888.Wheelen, T. L. & Hunger, D. J.
(2004), "Strategic Management and Business Policy", Prentice & Hall, New Jersey.
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