Strategic Management (Essay Sample)

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Strategic Management
Strategic management as component of business education and practice has become an important organizational management tool in the twenty first century. Unlike in the past century where strategies focused on long term planning, managers and leaders of the twenty first century have found strategic management efficient especially with the ever dynamic business environment CITATION Bru06 \l 1033 (Bruce & Zaiyong, 2006). This paper seeks to give a critical, historical account of strategic management and assess its significance for managerial practice in differing institutional contexts.
The field of strategic management has grown considerably in the last forty years although according to Whittington et al research in strategic management has not yet produced the volume of useful results expected by managers (Whittington et al 2006, p 31). Whittington et al argue that the birth of strategic management can be traced to middle 1950s and early 1960s to leading researchers such as Peter Drucker, Alfred Chandler and Philip Selznick. Drucker in 1954 pioneered the theory of management by objectives (Howard, et al 2008) and according to Drejer, Chandler in 1962 recognized the importance of a corporate level strategy that gives business its structure and direction in his work Strategy and structure CITATION Dre02 \l 1033 (Drejer, 2002). Brice and Zaiyong note that Selznick 1n 1957 established the ground work of marching a company’s internal attributes with external factors CITATION Bru06 \p 3 \l 1033 (Bruce & Zaiyong, 2006, p. 3).
Howard et al assert that with these authors, strategic management research shifted from deterministic one way approach to a more contingent perspective where organization needed to adapt to their external environment CITATION The08 \l 1033 (Howard, Furrer, & Goussevskaia, 2008). Drejer supports Howard et al assertion noting that the fielded of strategic management began to be more formalized and academic after these publications. Drejer adds that strategic planning school of thought began to develop in 1960s as a result of more dynamic economy of the 1960s where the future was no longer stable but dynamic CITATION Dre02 \p 3 \l 1033 (Drejer, 2002, p. 3). According to Drejer, the strategic planning emphasized on taking consideration into the present and anticipating the future and it is here that SWOT analysis was first used CITATION Dre02 \p 3 \l 1033 (Drejer, 2002, p. 3). Ansoff, as Howard et al point out, came up with the corporate strategy in 1965 emphasizing on market penetration, and product and market development strategies (Howard et al 2008).
Bruce and Zaiyong argue that by 1970s, strategic management theories primarily focused on growth, market share and portfolio analysis. Both assert that, a long-term study aimed at understanding the Profit Impact of Marketing strategies (PIMS) was carried out between 1960s and 1970s CITATION Bru06 \p 3 \l 1033 (Bruce & Zaiyong, 2006, p. 3). The study as Bruce and Zaiyong note concluded that a company’s profit rate is positively correlated with its market share CITATION Bru06 \p 3 \l 1033 (Bruce & Zaiyong, 2006, p. 3). Drejer concurs with Bruce and Zaiyong argument pointing further that the product market strategy emerged as a result of the Japanese challenge which proved capable of combining high performance in areas of productivity, timelessness, and quality with high degree of motivation and commitment from their employees CITATION Dre02 \p 3 \l 1033 (Drejer, 2002, p. 3).
From 1980 onwards strategic management researches focused on firm’s internal structure and were as Bruce and Zaiyong note, largely geared towards gaining competitive advantage CITATION Bru06 \p 3 \l 1033 (Bruce & Zaiyong, 2006, p. 3). Drejer notes that it the productive marketing strategy which emphasizes on the dynamics of completion emerged during this time. According to Drejer, techniques explaining product or market cost behavior and the dynamics of international business competition were developed and refined CITATION Dre02 \p 3 \l 1033 (Drejer, 2002, p. 3).
Strategic management implemented effectively in different parts of the world owing to different cultural and business environment. According to Mazzucato and Open University, strategic management implementation in different countries can be influenced strongly by different cultural traditions and thus national approaches to strategic management can be heavily distorted by what is locally regarded as culturally legitimate (Mazzucato & Open University, 2002, p. 50). Mazzucato and Open University argue that the Anglo- Saxon capitalism strategies of the United States and United Kingdom are biased towards an individualistic free enterprise model of strategy that denigrates explicit reliance upon state (Mazzucato & Open University, 2002, p. 50). In contrast, Yan argues that the China strategy approach differs substantially from the Anglo- Saxon approach in which enlisting of state resources is seen as natural and important part of strategic management. Yan adds that the Classical and Evolutionary approaches emphasizes on markets profitability, to the exclusion of state and national interest are the products of very particular historical and social development CITATION Yan00 \p 236 \l 1033 (Yan, 2000, p. 236).
Clarke supportsYan’s assertion noting that Classic theorist emphasizes on a top down management and profit maximization as an ultimate unifying goal that serves to introduce the conditions of a hierarchically organized capitalist theory CITATION Cla09 \p 148 \l 1033 (Clarke, 2009, p. 148). Mazzucuto and Open University argue that Anglo-Saxon capitalist classical technique of environmental analysis takes the existing structures of the society for granted and tend to focus specifically on market factors while downplaying the relevance of social, cultural and political demands of the organization (Mazzucato & Open University, 2002, p. 50). While quoting from Shrivastava, Mazzucato and Open University further emphasize that the orthodox strategic management of the west is not neutral, objective, scientific discipline, but an ideology that seeks to normalize the existing structures o Anglo-Saxon societies and universalize the goals of its dominant elite (Mazzucato & Open University, 2002, p. 50).
Richter notes that, besides the United States and the Western world having set benchmarks for management practices, Asia firms have been different and will be different in the future CITATION Ric02 \p 3 \l 1033 (Richter, 2002, p. 3). According to Richter, the Anglo-Saxon capitalism is a combination of technological input, open markets, and deregulation which are aimed at creating organizations that expand rapidly along sustainable path of growth and wealth. On the other hand, Richter argues that the Asian management is geared towards a specific frame of interlinked economic agents, a high degree of trust among these agents, and collective enhancement of society in general CITATION Ric02 \p 3 \l 1033 (Richter, 2002, p. 3).
According to White and Kwok, the Anglo-Saxon tendency towards arm’s length decision making, shot-term profit making, and frequent change of employment sharply contrasts the Asian Confucianism ideology CITATION Whi041 \p 74 \l 1033 (White & Kwok, 2004, p. 74). Richter points out that when Asian economies are growing faster, government and firms pay little attention to returns on capital investments and as long as labor is cheap and export markets widely receptive the labor efficiency remains an insignificant issues. White and Kwok concur that Asian management focuses on creating growth and less on share holder value as highly perceived by the Western capitalism CITATION Whi041 \p 71 \l 1033 (White & Kwok, 2004, p. 71).
In drawing a comparison between the Anglo-Saxon capitalism of the west and the continental European management approach, Clarke noted that the Continental system considers not only the interest of the shareholder but also input from the relevant stakeholders CITATION Cla09 \p 148 \l 1033 (Clarke, 2009, p. 148). Unlike the Anglo-Saxon management practices, Clarke argues that the European Continental system provides a two-tier board; the executive board of directors and the supervisory board CITATION Cla09 \p 148 \l 1033 (Clarke, 2009, p. 148). Whittington et al posit that the shareholder capitalism associated with the continental Europe and Asia tends to promote higher levels of diversification than the Anglo-Saxon shareholder capitalism in corporate strategy (Whittington et al 2006, p. 79). The Asian management approach is highly dependent upon the unique ethics and culture of Asian societies and therefore the Anglo-Saxon strategic management has not been applicable. Richter points out that management practices are culturally dependent and what works in one country does not necessarily have to work in another CITATION Ric02 \p 4 \l 1033 (Richter, 2002, p. 4).
Yan in elaborating on cultural differences that brings about different management approaches asserts that differences in cultural values, rather than in material and structural conditions are the ultimate determinants of human organizations and behavior, and thus of economic growth CITATION Yan00 \p 92 \l 1033 (Yan, 2000, p. 92). Clarke notes that even managers focusing on domestic markets are under immense pressure to think globally and to manage different cultural settings effectively CITATION Cla09 \p 159 \l 1033 (Clarke, 2009, p. 159). In highlighting the difference between China’s and Anglo-Saxon management strategies, Richter asserts that it is imperative to recognize that there is no c...