Strategic Managment

Topics: Strategic management, Management, Organization Pages: 10 (2640 words) Published: May 21, 2012

Submitted By:
Moiz Ahmed
AHM 07396643

Submitted to :
Anthony Henry, Martin Brown
Martin Bowles



In today’s world the complexities in business are increasing day by day and due to the torrential amount of uncertainty and change taking place it is becoming far more difficult for the companies to gain edge over their competitors. According to Robert Pitts and David Lei Strategies are ideas and plans that help the firms to become effective and gain competitive advantage over their rivals (Pitts, R. & Lei, D. 2003). Robert grant a leading professor of Management states that “Strategy is not a detailed plan or program of instructions; it is unifying theme that gives coherence and direction to the actions and decisions of an individual or an organization” (Grant, R. 2005)

It is very important for the managers of the organizations to understand the changing nature of the competitive environment and dynamic complexities of it in order to cope with the uncertainties. According to Henry Mintzberg unplanned strategies often have a high rate of success than planned strategies (Hill, C. & Jones, G. 2004).

(Pitts, R. & Lei, D. 2003) “A process which is designed to achieve firm’s vision and mission is known as Strategic Management process” and it is very important to understand the dynamic nature of these processes because mostly they are unplanned. These processes covers four important things about strategy i.e. Analysis, Formulation, Evaluation and Implementation.

Strategic Management can be categorized into two different approaches the traditional approach which means doing things in a linear manner in which various tools and techniques are used to make decisions to achieve competitive advantage and the dynamic approach refers to the organization itself which comprises of shadow and other factors that prepares the organization face the uncertainties. As we go further we would discuss several models that provide managers with rational means to analyze the dynamics in which their companies compete and help to identify the opportunities and threats that are inherent in them. Evaluation of Contemporary approaches to Strategic Management

Traditional Approach:

The traditional approach to strategic management is rational and it consists of tools such as PEST, Porter’s 5 Forces, SWOT and Scenario Planning. Rational approach towards making a strategy is suitable for the environments which are stable and it tends to overlook the cultural or political complexities which can make the environment dynamic or uncertain.

PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

The factors which are considered while scanning the macro environment are Political, Economic, Social and Technological factors and these factors are strongly related to micro environment and helps to detect the trends which effects the industries competitiveness for e.g. Inflation in the country can influence the labour cost of the industry and could also effect the buying power of the customer which can have a direct effect on the demand and supply (Henry, A. 2008).

Ideally it is a tool which serves as basis for providing information to assist those responsible for strategy development and decision making and according to Hoberberg and Reiple it assess the strategic factors that determines whether firm would be able to survive the competition or not in the industry and leads to superior performance (Hoberberg, A. & Reiple, A. 2001).

Although PEST analysis can be seen as an effective tool for business and strategic planning its pitfalls could be comprised as it does not guarantee success, it cannot foretell the future, sometimes timely and relevant information is difficult to obtain and...
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