Strategic Management for Efficiency and Effectiveness
Discuss About The Journal Of Work Organizational Psychology?
Strategic management helps the organizations to design methods according to their organizational needs and mange resources in appropriate ways. In order to set goals as well as objectives to guide the companies properly, the managers usually plan strategies that reduces time consumption and complete tasks in an efficient way (Daspit et al. 2017). Strategic management includes objective setting properly, analysing the internal structure of the organization, evaluating the effectiveness of the strategies and guarantee that the authority of the organization properly implements them in the organizations.
For the recent competitive business world, strategic management has become vital for every organization to survive. Every department of an organization focus on planning their own strategies to achieve their goals. Sales managers strategize marketing strategies and the operational managers explore strategies starting from research, development, raw material sourcing to distributors connects. The chief priority is given to these strategies as they assist to identify the methods which are essential for the companies to stack up more than their competitors in the same market. Strategic management involves the proper recognition of the opportunities along with threats which put the companies at risk (Simsek et al. 2015). These can be come from the internal culture of the organization as well as from the competitors.
In an organization, there are different levels of management among which strategic one is most important because this cater all the departments of a firm. It assists the management of the corporations to maintain the overall direction by specifying their objectives and develop business models so that the companies can build core competencies. The chief aim of the strategies to develop the strength of the companies so they can have more competitive advantage and maintain unique position. Strategies also help to solve the emerging issues that may be the cause of the company’s deterioration of the business. The stakeholder approach defines the importance of the stakeholders in the company’s management strategies. It assures only by satisfying the demands of the stakeholders, the company will be getting proper competitive advantages.
In management, thi paproach defines that the managers of an organisation must formulate as well as implement such strategies that satisfy all the needs of the stakeholders of the company and ensure the reputation and long term success of the organization. To follow the most successful paths and increase degree of participation of different groups in the competitive market, the company will be gaining advantage of the market imperfections so that it can create all valuable opportunities (Tarakci, Ates and Wooldridge 2015). The stakeholders approach of strategic management emphasises the dynamic management of the business ambience, improved relationship as well as promotion of the shared interests. This approach is purely based on the theory of stakeholders that arises as the counterpart to the most dominant way of considering and realisation of the business as well as market. Based on these research, the management are to focus on the stakeholders’ satisfaction. Proper implementation of this approach can strengthen the value of the corporations as well as create competitive advantages in the market. However, some of the researchers have criticised this approach of strategic management stating that it puts overvaluation to the customers and stake holders therefore fail to reach the consensus (Short et al. 2016).
Importance of Strategic Management in Competitive Business World
The obligations of the stakeholders have been with the companies since the origin of the concept of corporate firms. The development of stakeholder theory not only cares for securing the interest of the stakeholders as the owners or investors but also for them who are responsible for providing the company all required materials to produce their goods or services. The ownership perspective in one hand is rooted in the property law and creates the base for the natural basis of primary stakeholders’ rights, it also claims for the fiduciary obligations of the corporate managers where the perspective to view the corporation as the bundle of contract permits (Xi et al. 2015). The stakeholder framework assists the manfhemnet to maximise the single objective function as one of the most useful ways to strategic management. It is a continuous process of balancing as well as integrating multiple relationships and diverse objectives. In an organization, the directors often face the situations where protecting the interest of any one of the stakeholders make others interests vulnerable and the companies feel impossible to avoid such situations (Pearson, Bergiel and Barnett 2014). In such cases, the theories of the stakeholder approach successfully guide to solve these problems. This approach creates room for the rights of the stakeholders of a company by allowing the shareholders, creditors as well as other constituencies in the management concerns of the company. This enhance the competitive advantage and creates numerous benefits including market penetration.
Competitive advantage: stakeholder approach to strategic management is able to create more competitive advantage compare to the other strategic approaches. It creates link between the stakeholders and the company where the stakeholders perceive the clear application of the institutional values first and then relate those values with their own interests (O’Neill 2016). Through this theory the companies get the appropriate information about their values stakeholders based on which they treat them accordingly as well as develop essential initiatives. This is the process through which the companies create stronger brad recognition in the market. It also helps to gain reputation along with loyalty or trust from the customers and the other stakeholders (Moura-Leite, Padgett and Galán 2014). Thus gain huge competitive advantage in the market. The elements of loyalty and reputation earned by a particular company largely affect the competitors as they create barriers for others who want to know about the stakeholder utility programs. The companies who fool stakeholder approach to form its management strategies are the first to have facilities like getting information about the market trends and stakeholders’ requirements. Based on these issues, the companies are able to satisfy the market in one hand and develop unique expertise (Marvel, Davis and Sproul 2016). These acquired skills can be practised transmitted, supported as well as reinforced in the organizations’ operations to create core competencies. According to the researchers, this approach has become indispensable for every organizational culture to gain competitive advantage in the market.
Stakeholder Approach to Strategic Management
Innovation to create value: the stakeholders of some corporate firm include their employees. These firms who follow the stakeholder approach, become efficient to attract more eligible and high quality workforce. The job satisfaction among the employees also has impact on the capability of the companies as the employees are responsible to foster innovation. The employees of a firm think about long term engagement with their firm as well as generate valuable ad potential ideas for development of the companies (Mahto and Khanin 2015). These firms can access to the information from their stakeholders which they employ in innovating new products or customise existing products for more profit. Reciprocity is one of the key aspects in stakeholder’s approach where the satisfied customer sand employees provide assistance and reveal more information about the utility functions as they stand in benefit. This create opportunity for the firm owners and the managers to meet the consumer requirements through proper knowledge of their suppliers and customers as well as other stakeholders. They utilise the information more flexibly and strategically.
Implementing the stakeholder approach in the strategies of an organization faces problems both interminably as well as externally. As mentioned above, the management needs to cater for all the stakeholders without any discrimination but they come across numerous issues while implementing as all of them have different interests. Beside this, the researchers reveal that the stakeholders of a company practically do not have any power to initiate the corporation actions (Kramar 2014). Moreover, they are more vulnerable to the management misconduct than any non-shareholder constituencies
Overvaluing stakeholders: according to the researchers, the companies gather information from their stakeholders in utility functions to gain more competence but it proves to increase cost that exceed benefits. This is how, the mangers’ intention to generate value with the help of the stakeholders, ends up in allotting too many resources that increase cost.
Divergent interests: the implication any policy in the company aiming to satisfy the stakeholders may produce different perspectives and make it difficult to reach consensus because different stakeholders play for different internets (Hill, Jones and Schilling 2014). Moreover, the it is also necessary to notice that not every stakeholder have equal power. The more powerful actors get much benefits from the firms’ profitability. Therefore, with distribution of value, the stakeholders cannot assume for maximization of returns.
Starbucks is one of the leading beverage company that has been offering ready-made coffee in its outlets across the world. Therefore, it can be stated that they have their stakeholders in all over the world whose interests are to be catered by the company efficiently (Starbucks.com, 2018).
Benefits of Stakeholder Approach to Strategic Management
Employees are the chief stakeholders of the company as they are the main driving forces of the company’s growth in international markets. The company terms their employees as their partners and try to build an open a direct relationship with them. It has more than 200,000 employees working in various outlets in various continents. The employees are providing with health care facilities which is the chief reason of their satisfaction. Mangers of every outlets act as the coaches, entrepreneurs, community ambassadors finally boss to the employees. They have scope for working part-time for which they get proper salaries. Starbucks also have allowed the labour union to speak for the interest of the employees and negotiate with the company policies in any matter. The employees are allowing to have active participation in the decision making procedure as well as reformation of the company. Starbucks presses most in the trading procedure of the managers as they handle the front line workers. They also play crucial role in maintaining the employee relation. Through them the company directly mountains good relation with its most important stakeholder.
Shareholders: Starbucks polishes the list of their shareholders annually since its establishment in 1992. They maintain best relationship with their shareholders that no other companies in similar sector have done before. Starbucks have more than 25,000 shareholders in all over the world. The company provides necessary information and quart ion and answer for their investors and communicate with them through mailing documents if the shareholders choose to receive the information through electronic medium. They arrange annual meetings with shareholders and biennial investor conference. The company has proved itself to be a public trade firm and properly utilise the digital media to communicate with their stakeholders. Moreover, the company has sections that assist the investors with all the information’s of the company in detail. These sections are efficient to clarify the roars about the company. Starbucks use emails and other digital modes to keep updating their activities o that the shareholders have proper information at proper time.
Customers: according to the company updates it has a huge group of loyal customers in all over the world. It claims that they have successfully established the unique coffee culture which have led the company to have great customer satisfaction as well as brand recognition. The aim of the company is to gather knowledge’s from the social and economic trend of a market and introduce their product in right time. As the theory discloses that stakeholder approach helps the companies to innovate new products that generate more returns. This great relationship with the customers have created scope for learning new things from the market and cater services accordingly. The company is engaged in communication with their customers mainly through below the line promotional activities rather than above the line advertisements. The customers do not get information from any newspapers, posters or from traditional media but they have the largest chain of loyal customers by creating a successful brand in these decades. It also does not comply with the method of advertising through direct communication with the customers.
Challenges in Implementing Stakeholder Approach
In the retail stores, the company has adopted the method of experiential advertising by creating an unmatchable customer experience. They also use the concept of sense marketing through their exceptional coffee aroma or designing interior iOS that adds to the atmosphere of the stores an aesthetic value therefore, the customers feel attracted to and the employees also feel satisfied while working (Ghezzi, Cortimiglia and Frank 2015). The company utilizes the internet most in connecting with their customers as most of their customers belong to a socially higher class and have preference on the social media updates. In the websites of the company they ate allowed to provide feedbacks so that the company get idea of the trends as well as the needs of the market (Hammond, Pearson and Holt 2016). This help a lot in gaining competitive advantage.
Franchises: as the company claims, more than 49% of the Starbucks are licences stores. These are completely operated by the franchisees. Through these franchisees, the company penetrate the foreign markets. These franchisees pay Starbucks as they use Starbucks logos, recipes and all other benefits from the corporate marketing campaigns. The company has both types of franchisees: domestic and international (Georgakakis and Ruigrok 2017). The company’s domestic franchisees work in the airports, colleges, universities, resorts and hospitals and the places where the company has some restrictions in operating. These franchisees enjoy autonomy as Starbucks does not interfere in their operations. The licensed Starbucks stores operating in forcing markets have full sovereignty in management and operations as this is the method how the company enters the foreign markets (Bergmann and Stephan 2013). They are offered support from the company and operate liberally as they have the best knowledge of the country’s regulations as well as markets. These franchisees operate freely abiding by the laws and demands of the countries but do not twist the chief principles of an ideal Starbucks store. They promote the brand and perform successfully. The company arranges proper monitoring of their franchisee stores in the fright locations as well as maintain good relation with them thus gain huge support from the stakeholders and competitive advantage.
Therefore, it can be concluded that this paper discusses the importance of strategic management in the growth of the business of the organizations. There are different approaches that are used by the authorities of any corporations mainly to achieve their goals as well as gaining more competitive advantages. The paper indicates that the strategic tactics have been employed by the eminent organizations to develop approaches which enhance their accuracy in focussing their objects, increase scopes, complexities and the market penetration. The importance of stakeholder approaches is discussed in detail with its viabilities, advantages and limitations. There are various implementation problems that the organization face while apply them in strengthening the organizations as different stakeholders have different interests. The paper discusses how costly the process of information gathering can be and how it affects the company’s benefits. The stakeholder approaches greatly supported the business of Starbucks that gain huge popularity as they compactly rely and depend o their stakeholders. They maintain a good relationship thus gain the scopes for innovation and competitive advantage.
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