Introduction to Strategic Management
It is important to understand what strategic management means prior to considering the different approaches used to analyse, develop and implement change. Johnson and Scholes (2002 cited Burnes 2009 pg. 250) provide a useful summary of the three key areas of strategic management as understanding the strategic position of the organisation, identifying strategic choices for the future and turning strategy into action. Initially, it is important to recognise where the company aspires to be in the future. For British Airways, this is communicated through their vision to be the world’s leading global premium airline (British Airways 2009). There is often a conflict between the vision that the company want to portray and what others perceive management’s real message to be (Crotts et al 2005). It is important to align strategic action with the overall vision in order to minimise confusion for all involved in implementing the strategy. To avoid any confusion, the distinction between decisions made at a strategic level and those at an operational level need to be made. Evans et al (2003) state that there are six areas in which each management type differ, which are level of seniority, focus, scope, time horizon, degree of certainty, and complexity of the decision. Firstly, strategic management concerns decisions at a top corporate level, which are normally the responsibility of company directors. The focus is on the long term vision for the business to ensure it maintains competitive advantage, decisions are often complex and are based on a thorough analysis of the internal and external environments. Although managers at an operational level may take their lead from decisions made at a corporate level, their responsibilities focus on the short term objectives for the company and day to day running of the business (Evans et al 2003. To summarise, Goldsmith (1996 pg.1431) defines the process as such, “Strategic management involves formal techniques for setting an organisations long term course, developing plans in the light of internal and external circumstances (including the interest of key constituencies), and undertaking appropriate action to reach those goals”. 1.1
Strategic analysis of the environment
When completing an analysis of the marketplace, one must consider both the internal and external environment. A SWOT analysis can be used to help generate potential strategies by considering internal strengths and weaknesses alongside the external opportunities and threats within the operating environment (Andrews 1980 cited Burnes 2009). The micro environment refers to the immediate environment that surrounds a business including competitors, suppliers and customers who may have an influence on the company. However, the macro environment is defined as the broad environment outside an organisations industry and markets (Evans et al 2003 pg. 156). The STEEP framework has been used to show the potential social, technological, economic, environmental and political influences on British Airways that remain outside of its control. The competitive forces model has been utilised to represent the microenvironment. Despite some criticisms regarding the use of this strategic tool, it is still recognised as one of vital importance that should be considered more by senior management when conducting an environmental analysis (Grundy 2006). A SWOT, STEEP framework and competitive forces model for British Airways can be found in the appendix. According to the five central factors for managing change, introduced by Pettigrew and Whipp (1993 cited Burnes 2009), environmental analysis should be the responsibility of those at all levels and departments within the company. This differs from the prescriptive approach to change that sees environmental analysis as the initial step in the strategic development and implementation process as opposed to a continuous activity. Many academics agree that change...
Please join StudyMode to read the full document