An Overview of Strategic Management Practices

Abstract

The paper reviewed relevant literatures on strategic management practice. Being a conceptual paper, we start by highlighting the origin and meaning of strategy and strategy planning. This was followed by discussions on factors that affect strategy formulation, strategy implementation as well as factors bedeviling strategy implementation. Essentiality of strategic management practices as a radical improvement method was equally highlighted.

Keywords: Strategic management; Strategy planning; Strategy implementation

Introduction

The term strategy originated from a Greek word “strategos”, meaning army guidance from the position of Commander General. The use of this concept dates to at least 400 years B.C. (Jeżak 1990). Prussian military general and theoretician Karl von Clausewitz argued that strategy is concerned of creation of the war plan and determination of war campaigns and individual undertakings under their scope (Pszczołowski 1976). The word “strategy” gains recognition in other fields of human activity, particularly in politics and, noticeably later, in economy. However, in the second half of the 19th century, down with development of the U.S. economy, phenomena of strategic element occurred. Business strategies caused speeding up of business development and resulted also in the changing of the modern management (Gliński, Kuc & Szczepankowski, 2000). This latter on led to the spread of the concept to corporate management.

There is no single definition of strategic management, which is generally acceptable (Markiewicz 2011). Despite all that, we present here some of the definitions found in the extant literatures. It is a top management activity, which deals with decisions making in, regards to the purpose of the organizational mission, vision, philosophies, objectives, strategies and well-designed policies. It also encompasses the development of long term plans for efficient management of environmental opportunities and threats in line with the organizational strengths and weaknesses (Sababu, 2007). According to Pearce and Robinson (1991), Strategic Management involves a combination of decisions and actions that guide toward the formulation and implementation of plans intended to achieve organizational objectives. Strategic management entails the planning, directing, organizing and controlling of firm’s strategies that reflects decisions and actions that enhances a company’s competitiveness. Irwin (1995) opined that strategic management is a business operating game plan game plan, for enhancing firm’s competitiveness, creating customer satisfaction and achieving targeted performances. Strategic management led to business continuous success, growth and competitive advantage brought about by implementing the predetermine plans efficiently and effectively. This action facilitates the means, through which organizations analyze the environment, create their desired position, fashion out appropriate strategies and implement them accordingly. Strategic management process entails understanding the strategic situation of an organization, making strategic options for the future and turning strategy into action. It involves strategic analysis, choice and execution. More so, Porter (1985) opined that strategy is the aspirations and practices an organization employ in order to stay afloat amidst severe competition. A well-managed organization should have the ability to seriously find a place for itself in the contemporary competitive business environment [1]. Strategy is a management technique which gives an organization direction. This refers to holistic actions that are tailored towards actualizing the future of the organization. Porter (1980) affirmed that analysis of strategy or strategic analysis is part of strategic management method that examines the forces of the external environment, organization capability and expectation of stakeholders. Strategy execution is the conversion of strategy plans into action. It entails implementation of strategies and managing the resulting changes.

Components of strategic management

Rahimnia, Castka, and Sharp (2005) argued that similar types of strategies have been established across basically different organizations (publishing firms, automotive industries, hospitals, administration, ICT companies, and tertiary institutions) because they are of facing related environmental conditions notwithstanding of their internal organizational differences.

Strategic planning

According to Bryson (2004, p. 6). defines strategic planning as “an effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it” Much wider than program, project, budget, or operation planning’s, strategic planning is ‘big picture’ approaches that solve the most serious issues facing an organization’s long-term efficiency and effectiveness (Kemp, Funk, & Eadie 1993; Poister & Streib, 1999). Its usage has grown reasonably over the past decades, at all levels of government and agencies as they have recognized the need to respond to emerging issues promptly. Again they need to adjust to changing circumstances, and move into the future in a resolute in order to ensure continued viability and fit with a changing environment (Berman & West, 1998; Berry & Wechsler, 1995; Poister & Streib, 2005). Several procedures for conducting formal strategicplanning attempts have been postulated (Bryson, 2004; Denhardt, 1985; Eadie, 1983; Gibson, 1993; Kauf man & Jacobs, 1987; Nutt & Backoff, 1992; Pindur, 1992), but all advocates of strategic planning give emphasis to the need for flexibility in fashioning the process to fit the circumstances and the organization’s needs at a specific time [2]. Nevertheless, strategic planning in the public organizations mostly incorporates the following common factors: identifying/clarifying mission and mandates, identifying core values, developing a vision of the future, assessing internal strengths and weaknesses, conducting an environmental scan and a situational analysis of how the agency relates to its environment. Furthermore, the organization need to identify the strategic issues facing the organization, establish strategic goals and objectives, develop and assess the feasibility of strategies for achieving those goals and objectives, create and implement action plans to move the strategies forward, and monitor and evaluate progress and update strategies as might be required.

Stages in strategic planning: According to [3] in Adeleke (2008), for proper formulation of strategic plans, the following stages are essential: According to [3] in Adeleke (2008), for proper formulation of strategic plans, the following stages are essential:

1. Environmental Analysis: this refers to an establishment of link between the internal and external environment that the organization need to do.

2. Resource Analysis: This connotes identifying the strength the strength of the organization and weakness of its rivals.

3. Determination of the Extent of the Required Strategy change: At the top management level, there should be a decision on to modify the existing strategy or not. Some scholars refer this as ‘performance gap’ (Owolabi & Makinde 2012).

4. Decision Making: This refers to what to do and how they should be done.

5. Implementation: Implementation entails resource allocation, adapting the organizational structure to suite the strategy as well as creating conducive environment appropriate for implementation the chose strategy implementation.

6. Control: For effective implementation, there must be proper control to ensure conformity.

Strategy formulation

Thompson and Strickland [4] define strategy formulation as a phase or sub-process of strategic management in which a firm creates its direction, defines its objectives and set a course for the organization to follow. In addition, [5] posited that there are two main approaches for strategy formulation: plan or deliberate (design) and process (emergent). The planning or deliberate approach is a style of strategy formulation that is intentional and proactive. It connotes a conscious planning and is a result of formal and calculated efforts. In his opinion, Porter (1980) looks at the planned change from a design perspective, arguing that strategy development is the deliberate positioning of an organization through a sound analytical structure and directive procedures. The emergent school of thought considers strategy formulation as a constant, open ended and changeable process of aligning and realigning an organization to its change environment. They recognize the importance for organizations to arrange their internal practices to the external conditions. Furthermore, Mintzberg (1994) claim that realized strategy in organizations entails both planned and emergent approaches. He argued that organizations start with planned strategies, but subsequently environmental conditions set in leading to doing away with some of the initial strategies and adopting some new strategies along the way resulting of combination of both approaches. It is obvious that a poor or unclear strategy can adversely affect implementation efforts severely. Good implementation cannot overcome the inadequacy of a bad strategy or a poor strategic planning effort (Hrebiniak, 2006).

Strategy implementation

Numerous studies confirmed that the type of strategy that is developed [6] and the actual method of strategy formulation that is, how a strategy is, developed [7] will certainly influence the result of its implementation. Alexander (1985) posited that the need to commence with a formulated strategy that involves a good idea or model is stated as the most often-in assisting successful implementation. Good execution naturally starts with good strategic input: the soup is only as good as the ingredients [6].

Factors affecting strategy implementation: From the extant literature, we can briefly highlight the following studies that discussed the factors associated with strategy implementation. One of the most popular and most cited is Waterman, Peters & Phillips [8] (implementation factors). From their findings, they suggest seven factors, namely strategy context, structure, system, style, staff, skills and subordinates as key implementation drivers. Even though Waterman et al. could define and explain these factors, they fail to clearly show how the factors co-relate and interact during the implementation process [14]. Strategy execution and implementation are sometimes interchangeably used in the literature of strategic management. Nevertheless, for the purpose of this research, the phrase ‘strategy implementation’ is considered synonymously with ‘strategy execution’. The latter is more predominantly used in business environment, while the former is mostly employed in academia [9].

Noble (1999) argued that several perspectives were taken by different strategy gurus to define strategy implementation. We present below some of these definitions as postulated by [10] and Laffan (1983). The following lists the different perspectives. From the above perspectives as presented by [10] describe strategy execution as strategic control; [11] opined that strategy is a process. Both Floyd and Woolride (1992) opined that strategy implementation is an execution process; while Cespedes (1991) and Lffan emphasize that importance of resources and operational issues. But on the other hand, Thompson & Strickland (2003, p 356) defined strategy execution as “.... implementation and executing strategy entails converting the organizations strategic plan into action and then into results”. For this study, this definition will be employed (Table 1).

  

    
AUTHORS 
    
DEFINITIONS 
  
  

    
Floyd & Woolridge [25] 
    
Strategy execution is the    managerial activity that align organizational actions with strategic    intentions or plans 
  
  

    
Cespedes 
    
Strategy execution or    implementation involves a good planning that encompasses resource allocation    and resolving of operational issues. 
  
  

    
Hrebiniak & Joyce [10] 
    
Strategy implementation is a    sequence of interventions concerning organizational structure, vital    personnel actions and control systems designed to control organizational    performance with respect to the set goals. 
  
  

    
Kotler [11] 
    
Strategy execution is the process    that change plans to actions assignment and make sure that such assignments    are implementation in a manner that attains than plans and the stated    objectives. 
  
  

    
Bonoma 
    
Strategy execution is turning the    drawing board strategy into marketplace reality 
  
  

    
Laffan  
    
At the execution stage, a policy    must be made clear non-operational details and resource s must be allocated    amount programmes. 
  
  

    
Favaro  
    
Strategy implementation consists    of all the decisions and activities required to turn the   strategic choices into reality. 
  
  

    
Aaker 
    
The strategy execution phase    involves converting strategy choices into an operational plan. 
  
  

    
Jalali 
    
It is a vibrant, iterative and    multifaceted process, which is comprised of a series of decisions and    activities by managers and subordinates that affected by a number of    interrelated internal and external factors to turn strategic formulated plans    into reality in order to achieve strategic objectives 
  

Table 1: Definition of strategy implementation.