Understanding Strategic Management: Definition, Principles, And Application Essay.

Question:

Discuss about the Strategic Management in the Era of Globalization.

Strategic management refers to the process of formulating and implementing the goals and initiatives taken by the companies’ top level management with an aim to achieve success. It refers to the process under which an organization successfully utilizes all its resources and capabilities in order to increase the production of the company. The outcomes of the strategic management are always positive for an organization as it provides them the opportunity to growth and gain competitive edge in the target market (Wheelen, Hunger, Hoffman, & Bamford, 2017). Further, this is a dynamic approach which provides overall growth to the company by developing policies, plans and procedures to achieve the defined objectives for the respective company. Michael E. Porter defined three principles under the concept of strategic management. These principles are,

• Creation of unique value and valuable market position.
• Making trade-offs by selecting what not to do
• And lastly, by creating a fit by aligning activities with one another to support the strategy chosen (Rothaermel, 2015).

A corporate strategy involves the process of answering the key question from the perspective of the portfolio, which is that in what business we should be. The business strategy involves a question which is how shall we compete in the external environment. It is the duty of the operational manager of a company to identify all the questions related to the company and provide strategies in such a way that all the questions are answered by them (Voegtlin, & Scherer, 2017). The strategic management process is defined by many individuals, Ansoff (1984) stated that strategic management is a systematic approach under which the manager position and relate the firm to its environment so that output is visible and success is attained by an organization. Further Vilijoen (1994) stated that strategic management is a process of identifying; choosing and initiating activities create a long term performance growth of the company.

 Further, it should be noted that the scope of strategic management is diversified due to which it take difficult challenges of globalization, innovation and sustainability into consideration. The strategic management activities in an organization provide direction to the future growth of the company. The strategic management activities provide assumptions to an organization on the basis of which they take future decisions (Lasserre, 2017). This type of future oriented growth strategy lays a long term positive impact on the productivity of the company. As stated above that the strategic management approach has a diverse scope, so it should be noted that the future oriented growth of the company welcomes the activities of innovation and globalization in an organization. This approach also focuses on the competition by initiating activities in the management which provide them extensive growth in the market (Schaltegger, & Wagner, 2017). The strategic management activities provide an opportunity to the organizations to gain competitiveness in the external market by using innovative technology in the process. Once competence is gained by the company, the next step of this approach is to initiate towards sustainability of the business in the environment. This approach focuses on many aspects at a time in an organization, like, long term growth plan, competitiveness in external market, sustainability, commitment to firm’s resources etc. Thus in order to maintain an impact of all these aspects in the strategic approach of business, the company needs to come forward to take the challenges of globalization, sustainability and innovation (Schaper, 2016).

The principles of strategic management

Relating strategic management with globalization, one of the major reasons due to which strategic management activities incorporate globalization in them is because they want the company to expand in the international market. The strategic management activities outshines itself when they face tough competition in the market and tough competition can only be achieved when the company is exposed to domestic as well as international market. There are optimum numbers of opportunities which an organization attains when they face the challenge of globalization in the market. Globalization refers to the process in which an organization develops international influence and start operating the business in the international market (Hörisch, Freeman, & Schaltegger, 2014). This challenge gives opportunities to the organizations to compete with the organizations which are beyond their geographical approach. Higher level of challenge gives higher level of success to the company as well. And the main motive of the process of strategic management is to gain success for the company due to which they apply the globalization activities in their business. The act of globalization in the industries provides them advantage to use the innovative technologies and gain information about the market and the target customers as well. The strategic management approach effectively deals with the process of globalization. This approach turns the risks into opportunities for the company to move ahead in the external market. Apart from looking after globalization as a challenge there are varied benefits which are provided to an organization such as connectivity to worldwide, use of hi-tech technology, decentralized system of business, large target market etc. These are some of the benefits due to which the strategic management approach of an organization takes up the challenge of globalization in their business (Silvestre, 2015).

With the use of globalization tactics in a business, the company gains the advantage to use innovative technologies as well. The process of innovation is taken as a challenge or a risk factor for many businesses but instead it should be looked as a way to attain growth in the business. It depends upon the type of approach which a business uses while implementing the innovative activities in their business. Combination of innovation and strategic management activities provides an efficient output to the success of business. Innovation and technology are the factors with the help of which strategic management process is initiated in an organization, thus it should not be treated as a challenge for the business (Stone, & Deadrick, 2015). A reason due to which the strategic management activities of any organization adopt is the use of innovation because this activity helps them to gain the competitive advantage and sustain their position the external market as well. With the effect of globalization, competition for the organizations increases which gives a threat of disappearance to the companies. Thus if an organization uses the innovative practices in their process then they would definitely achieve the desired position in the target market. Innovation can be destructive as well; it just depends upon the way in which an organization uses the innovation. The strategic management approach of the business should combine the innovation in such a way that positive outcomes are appeared for the business (Camillus, Bidanda, & Mohan, 2017). Further it should also be noted that the companies need to develop their business capabilities to use innovation practices in their business. The customers present in the target market also look for the companies that use innovative strategic management approach to initiate sales. Thus, innovation has become demand of the customers as well; so this one of the reason due to which companies initiate to use innovation in their strategic management approach (Dunning, 2014).

The scope of strategic management

While considering innovation as an important tool, one should not forget sustainability is one of the most important aspects for the growth of a business. The strategic management activities in a business are initiated with an aim to gain long term growth in the target market. This growth is provided by sustainability in the market. Sustainability of organization refers to the activity of initiating long term profitability of business in the external market. Sustainability is the basic aim for which organizations perform their activities in the market (Bartlett, & Beamish, 2018). Thus, sustainability should not be taken as a challenge instead it is an aim which should be achieved by all organizations. An organization being adequately placed in the global market and uses the innovative strategic management techniques to grow can gain sustainability by attain competitive edge in the market. Additionally it should also be noted that an organization cannot attain sustainability without challenging it in the external market. Thus, it is the duty of the strategic managerial approach of a business to operate their activities in such a way that sustainability is attained for them (Pucciarelli, & Kaplan, 2016). Further, it should be noted that it is difficult for an organization to apply sustainability, globalization and innovation together, but the strategic management approaches helps in accomplishment of this objective.

Thus, in the limelight of above mentioned events it should be noted that the strategic management approach of a business a combination of varied approach which are helpful in running a business successfully. This approaches uses globalization to expand their scope of business in the external market. Further it uses innovation as a challenge and uses them to create identification in the target market. Lastly, sustainability challenge is used by the strategic management approach to fulfill the going concern concept of the business. Thus, these aspects are used by management to successfully help a business to grow. The above mentioned information adequately talks about the reasons due to which strategic management approach of a business take challenges like globalization, innovation and sustainability into consideration.

There are many organizations worldwide which have gained competitive advantage in the market with the use of resource based view. The resource based view approach refers to the approach which helps an organization to evaluate their internal resources in order to attain the competitive advantage in the target market. This approach provides complete evaluation of the internal resources of the company which can help them to exploit the external opportunities and succeed in the target market. Further the talking about the company Apple Inc., it should be noted that the company adequately used their resources in such a way that they earned competitive edge in the target market (Grant, 2016). Apple Inc. is a computer software and hardware producing company which was founded in the year 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. Further relating the activities of the company with the resource based view, it should be noted that the Apple is successful in earning the top most position in the market.

Globalization and strategic management

Looking at the tangible assets of the company, it should be evaluated that the company has efficient land and machinery which effectively helps the management in the production process. The company has occupied the physical resources from the different part of world so as to gain efficiency against the rivals in the target market. Further the intangible resource of Apple is its brand reputation, trademark, goodwill etc. These resources successfully help the company in earning competitive advantage in the target market (Purkayastha, & Sharma, 2016). Goodwill and brand reputation of Apple promotes the customers to transact with the company and help the company to grow as well. Further under this approach there are two critical assumptions about resources that they must be heterogeneous or immobile. Heterogeneous refers to the skills and capabilities which an organization attains are different from the capabilities of another organization. Like, apple competes with Samsung with the same industry using same resources but Apple earned more profit even after selling the products are high prices. This is because the company has earned a brand reputation which Samsung does not have. Further, in the immobile assumption the resources are not mobile and they do not move from company to company so they cannot be replicated as well. Additionally under the resource based approach, the VRIO framework tells about the ways in which the company successfully earned the competitive advantage in the market (West, Ford, & Ibrahim, 2015). The VRIO framework is discussed below:

The value refers to the process of identification of resources that whether they are valuable for the organization or not. It also identifies that value which is provided to the customers with the use of these internal resources. The value of the resources shall be used by the company to increase the efficiency of the products offered to the customers by the company. The value of the products can be increased by either differentiating the products in the target market or by decreasing the cost of production (Dustin, Bharat, & Jitendra, 2014). Talking about the value provided by the products and services of the Apple Inc., it should be noted that the company produces iPhone series with an aim to incorporate the communication techniques with the facilities of data storage, internet, computer dissemination etc. The company aims to create the products which are fast and can be easily used by people all age groups in the market. Further, the reason due to which the company gained the competitive advantage is because they combined all the services at one place and presented it to the customers in the market. The iPhone includes the services of iPod photo view along with music playback as well. Thus, the company provides adequately value to the customers by providing all the capable resources which can be used by them in one product only. This process increased the satisfaction level of the customers. The Apple iPhone has combined all the services which a person requires from a portable device and inserted it in their product (Contractor, Kumar, & Dhanaraj, 2015).

Innovation and strategic management

Rareness refers to the resources which can only be acquired by few companies under their process. The resources which cannot be acquired by all organization and have tough handling are called rare. If all organization can easily acquire the resources then it is called competitive parity, whereas when the resources which are not feasible by all companies are called rare and give provide optimum contribution in making the products differentiated in the market. If an organization is able to attain the resources that are rare, then company can use to them in producing efficient products and gain competitive advantage in the target market. The products that compete to Apple’s iPhone are much cheaper and less worthy as well. The company Apple uses their brand reputation in providing trouble-free quality products to the customers in the market (Kozlenkova, Samaha, & Palmatier, 2014). Also, the organization efficiently advertises their products in the market with an identified status symbol which initiates sales for the company. Thus, this acts as an advantage for the company as they have the advantage of their brand image which is rare in the market. The company also has efficient and effective advertising agents who promote the product in the appropriate target market. This process helps the customers to identify the services rendered by the company due to which they get attracted towards the company and initiate sales. Apple has earned the advantage of rareness in the external market because the software which they provide in their computers and phone is rare and unique. People buy the products from the company because of its IOS software which is not available in any other phone (Kellermanns, et. al., 2016).

Imitability refers to the act which can be initiated by the rival firms of the company in order to earn the revenue of competitors firm. Under this process an organization imitates the resources, formation or process of any other organization with an aim to attract the customers of their organization. The resources of the company should costly enough that they cannot be easily imitated by any other competitor firm. Less imitability of the process provides more sustainable competitive advantage to the company in the external market. Further it should be noted that in the electronic market, the products served by Apple Company are different from the products served by other companies which gives an advantage to the company. Further, the software used by the company is very costly which makes it difficult for other organizations to purchase them from the manufacturer or create them (Bicen, & Johnson, 2016). The software requires efficient human resource to understand its complexity and in build them in the hardware devices. Due to which the IOS software is not approached by all which makes the activities of Apple sustainable. The camera quality which Apple provides cannot be provided by any other organization. With high prices, the company offers high quality products to the customers as well. Lastly, it should be noted that the company earned competitive advantage in the target market by providing efficient products which cannot be provided by any other competitive organization. This results in providing sustainable advantage to the company in the target market (Wu, & Chiu, 2015).

Lastly, organization factor of VRIO analysis talks about the component which captures the resources and organizes them in the production process of the company. The resources do not provide any advantage to the company on their own instead the organization needs to inculcate the value of resources under their production. So, it should be noted that if an organization is capable enough to exploit the value of resources and include it in the production process then they can easily achieve sustainable competitive edge in the target market. In the company Apple Inc. the company earned the competitive advantage of adequately exploiting the tangible and intangible resources present with them (Alguezaui, & Filieri, 2014).

The tangible resources were organized to use to in such a way the Apple products gain identification in the target market. Furthermore, talking about the intangible resources, the company used their image to influence the mindset of customers and provoke the customers to purchase the products from them. Definite brand reputation of Apple helped them to provide guarantee of the products offered by them in the market. The company used the tactics to influence the customers through branding and promotional activities. These activities were organized in such a way that the customer got to know about the qualitative services offered to the customers through their products in the market.  The organization feature talks about the aspect that whether the company is organized and readily exploits the resources and capabilities present with them. Thus it should be noted that the company Apple Inc. actively make use of the resources and capabilities available with them with a purpose to create competitive advantage in the market (Hitt, Xu, & Carnes, 2016).

Thus, it should be concluded with the resource based view that if an organization properly make use of the available resources and inculcate them in their product then they can easily earn competitive advantage in the target market. An organization earns advantage when they utilize the resources adequately like the company Apple Inc. did. This company used their brand image to successfully place their product in the adequate target market and earn competitive advantage as well.

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