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Reflective Report on Strategic Management

1. Key Tasks of Strategic Management and their Inter-relationship

Johnson et al,(2017) define strategy as a long term direction to be pursued by an organization. In essence, I understand strategy as a vital formula for ensuring the success of a firm, since sustainable business is a sort of competition among firms. In order to introduce and implement a strategy, a firm has to engage in strategic management. This is a process of formulating, planning and implementing the strategies identified. Strategic management involves engaging in three sets of managerial tasks; first, strategic analysis, also referred to as context. Analysis involves evaluating the business environment, stakeholders and culture in order to understand the position, situation and condition of the firm, in relation to the environment and its competitors. Second, managers have to undertake the second set of managerial task which is making strategic choice, also known as content. This task entails generating strategic options, evaluating the strategy based on prevailing value chain activities and then selecting the best strategy. The third managerial task associated with strategic management is strategy implementation or formation. It involves planning and allocating financial and non-financial resources through the introduction of business models for optimization after which the manager can invest into managing change. The three tasks are interrelated in the sense that the accomplishment of each step is dependent on the successful completion of the first step. For instance, a proper analysis of the environment, stakeholders and culture will enable making of informed strategic choice thus successful implementation of the strategy in the last stage.

1. Reasons for Strategic Management

Strategic management is the leading reason why some firms outperform others. This is because strategy involves making decisions based on justified and certified frameworks, theories and models of decision making and management such as Porter’s generic strategies on sustainable competitive advantage (Bercovitz & Mitchell, 2006). The proper application of these tools creates a competitive strategy which differentiates the firm’s value proposition. A unique value mix attracts customers who become loyal to the firm. To this point, I can allude that strategy is an important part of management since it directs the manager into attracting and exploring resources, planning, deciding and organizing as well as changing the firm towards a desirable future direction. Organizations need strategic management in order to create a sustainable future. This is evident in the fact that strategy guides managers into formulating strategy statements, which are communicated in form of vision, mission, values and strategy for the firm. All these statements enabled the stakeholders to focus their resources and energy towards achieving a future goals for the organization.

Personally, I can attest this to Google which is a highly reputable global technology brand that has managed to sustain its competitiveness by having an elaborate Google three-pronged enterprise strategy. The three-prongs of the enterprise strategy targets creating and sustaining a culture of innovation, working with enterprise developers, and shifting towards digital priorities. Having been greatly, interested in understanding what drives Google into being a competitive and sustainable firm against other tech firms, I noted that Google has a deeply embedded strategy that is dictated by Porter’s generic strategy (Mintzberg 1988). The firm uses differentiation strategy, as supported by the three prongs. In addition, it adopts intensive growth strategies such as market penetration as evident in its increasing market share in China, market development as seen in introduction of cable television and fiber internet in Kansas and Missouri states as well as product development as evident with the emphasis on new product lines such as driverless car and Google Glass. The achievement of these goals is pegged on the firm’s strategic statements where its vision is to provide access to world’s information in one click. Its mission statement is to organize world’s information in a manner that makes it not only universally accessible but also useful. The case of Google justifies why organizations need strategic management.

1. Key Challenges of Strategic Management in Current Environment

The identification of key strategic management challenges facing modern organizations can be identified through a PESTLE analysis. PESTLE is a strategic framework used to analyzed and evaluate an external environment and how it impacts on decision making in an organization. It is an acronym composed of Political, Economic, Social, Technology, and Legal as well as Ecological factors.

Political forces detail the involvement of the government in setting regulations, and policies for industries. The new policies impact on strategic management since managers have to revisit their strategies in order to compete effectively. This includes political stability of countries, foreign direct investment regulations and other politically motivated regulations, including corporate tax, equal pay, free trade and transpacific partnerships. Economic forces also influence strategic management. Economic dynamics, such as inflation, GDP, cash rate, unemployment and exchange rate impacts on cost of labor and cost of other resources, as well other factors of production. This requires managers to constantly formulate new strategies in order to survive. 

Sociocultural factors also challenge the formulation, planning and implementation of strategies for firms. These factors are highly dynamics and they include changes in style, demographics, cultural changes, values, educational levels and language among others. The current environment is also faced with challenges of unpredictable changes in technology which could either create competitive advantage or disadvantage for a firm. Technology determines innovativeness of a firm. For instance, firms are becoming smarter through the use of internet of things and mobile technologies. It is important that managers have an elaborate strategy to survive the turbulent global business environment. Legal factors have also made strategic management challenging especially; changes in corporation laws, consumer protection laws, trade practices and advertising laws among others. I have noted that the food industry has been the most affected with current changes in food labelling laws, GMO regulations and changes in food manufacturing practices. Ecological factors also create a major challenge for managers since they have to ensure they operate ethically in a manner that conserves the environment. Their strategies therefore have to encourage corporate social responsibility and environmental management. These initiatives create a challenge for strategic managers.

Importance of Strategic Management Discipline in Understanding Life Experiences

                From my interaction with the strategic management discipline, I have noted that the curriculum is influential in parting learners with practical skills that shapes the way they perceive businesses and other activities around them. In particular, the discipline has been of essence in helping me understand interactions with and between businesses. First, attending the class lectures and engaging in personal research and reading, with the support of learning databases such as IBIS world, Factiva and Ebscohost, as well as Google Scholar have helped shape my understanding of definitions, theories, models and concepts that relate to strategy formation. From the first lecture, I learnt the definition of strategy and strategic management. I have since built on this primary definition, to understand that strategic management involves undertaking three sets of managerial tasks; context, content and formation.

Apart from this, I have understood that strategic management helps in creating sustainable advantage. This is achieved through formulation of strategic statements as evident in the example of Google, Huawei, Alibaba in China and Amazon in the USA (Oh and Contractor, 2013). By interacting with the discipline, I now understand that strategies are formulated in levels; corporate strategies which give the bigger picture of where the organization wants to be, the business strategy level which details the company’s actions while operational strategy outlines operational activities to be undertaken by the firm. Through understanding the three levels, I learnt to connect the reasons why some firms consider strategic alliances and internationalization while others operate in the local markets (Rugman and Verbeke, 2004). I also found answers to why some firms produce low cost goods while others produce differentiated products. This is evident with Samsung mobile and iPhones where these two phones are charged differently based on the level on novelty and differentiation of features. IPhone is highly differentiated and this justifies its premium pricing for its iPhone X phone against Samsung Galaxy 8. I now understand that these differences in product and pricing are all but a strategy aimed at targeting and selling to their target customer segments.

Application of Strategic Management Discipline to Organizations and Industries

Prior to taking on this discipline, I undervalued the significance of strategy in life and in business. I could argue that as long as a firm can compete to be the best, then it needs not to invest in being unique. However, this discipline has made me realize that it is more important to be unique than the best. This is because being unique requires strategic positioning, which enables a firm to create not only a unique competitive position, but also sustainable. On the contrary, operational effectiveness, which was my initial idea is associated with; attaining, assimilating and extending best practices (Karlöf & Lövingsson, 2005). I now understand that in order to gain a strategic position as a manager, I have to analyze the external and internal environment, assess the strategic capabilities of my firm, have an organizational culture and formulate a purpose for the firm. Without balancing these factors, it becomes hard for an organization to position itself and compete effectively.

The vast skills that I have and will continue applying to organizations and industries include the Porter’s five forces and industry life cycle analysis which will help me assess the extent of competition and lucrativeness of an industry before making an investment decision (Kaplan & Norton, 2004). I will also apply the Ansoff matrix and BCG matrix in assessing the profitability of target markets. The tools will be helpful when making decisions on development of new products and markets. After identifying suitable industry and markets, I will apply value chain analysis, SWOT analysis and McKinsey 7s in assessing internal factors affecting the capability and sustainability of the firm (McKinsey Insights, 2011).  Using these tools is important in ensuring that the organizational is sustainable and profitable.

In addition, the discipline has chiseled my skills not only on corporate strategy but also on leadership and strategic change. Farkas, (2016) proposes consideration of either hard or soft approaches to change depending on the extent of change. I believe, I will take up leadership positions in future and the skills gained will help in deciding best leadership strategies, business strategies, and conducting analysis of strategies in order to achieve set performance goals (Goleman 2000).

Using Strategic Management in Future

I have come to understand that strategic management discipline is not only helpful in organizations and industries, but also in real life. First, the skills are important in understanding how businesses behave in the manner in which they do. For instance, the skills will help me evaluate organizations based on their prices, product quality and other factors. By this, I will be able to identity if their value proposition is worth the prices charged. This means that the skills will direct my consumer behavior and the way I react to different products when making decisions. Second, the skills are important when selecting a favorable organization to work with. The PESTLE analysis and industry life cycle tool is important in identifying industries that have a high chance for future growth (Nippa et al, 2011). I will therefore target employment opportunities in such firms since they will be sustainable and competitive in future. For instance, this discipline has helped me consider working with a technology firm as opposed to my earlier interest of working in hospitality industry which is highly seasonal and volatile.