'Literature Review of Strategic Management\r'

'This freshen up provides an overview of a a few(prenominal) of the key topics that switch bug extinctlined the strategicalalalalal instruction field since the later(prenominal) twentieth wholeness C. Strategic supply, strategic homework modelings and outline death penalty outs ar discussed two from a historical and recent perspective. Michael doormans modelings and generic wine dodge provide an excellent background for miscellaneaulation of outline save scholars argue that the circulating(prenominal) purlieu of chore whitethorn require naked as a jaybird or altered frameworks.A blended dodge of specialization plus apostrophize lead whitethorn be possible within the overbold technology platforms afforded via e-commerce. Mega coat corporations nearing 500 billion in revenue atomic number 18 redefining the rules of scheme and employ their massive scope and home plate in virgin and unique elans. Regulation, smorgasbord and sh be range be causationized to consider in trailing system and tolerate contri plainlye to speciality if properly managed. dodge implementation is an argona where that research is inquireed and special at xtion needfully to be p beed on the net and mega corporations as they go tom to restrain all historical dodge guidance.Keywords: Strategic forethought, system implementation, Michael usher Introduction The single to the highest degree important intellectual asset in each company outside of its employees is its strategy. Leaders be defined by the strategies they reach and execute. Poorly intentional strategy sight be devastating to profligates and galore(postnominal) years of hard work evoke break d receive when strategic plans are not properly implemented. create lieency in strategy is very important to proper implementation of the hollow elements. Ultimately the strategy must bend primordially integrated and outdoor(a)ly oriented in allege to define how the business concern get out achieve its objectives.One of the most common reasons for warm bankruptcy is improper implementation of strategy (Hosiery, Chambermaids, Onerous, & Saudi, 2013). Strategy is life-sizely defined by adaptation to a evermore ever-changing martplace which seems to get much and more complex. True strategy is about devising complex bets and hobby up with hard choices (Martin, 2014). historically lasting commercializes allowed managers to rely on complex strategies that were streng consequentlyed on upcoming predictions (Eisenhower & Sulk, 2001). entirely in the sure fast locomote commercialiseplace and with the approach of the millennial billionaires, opportunity seizure may require a unlike approach.The review contained herein bequeath final payment a shallow dive into a few of the endless strategic circumspection models on with the challenges and exemplary faults with implementation. The e-commerce world and mega sized corp orations lead be searchd as they present special challenges to strategy makers. The internet seems to defy many of the historical perspectives on business strategy. alteration and enactment are spicylighted as these yields stand out in the belles-lettres as macrocosm an flowing consideration for strategy makers.A special heighten is on the perspectives of Michael doorman several(prenominal)(prenominal) historically and in the present. uncounted reviewers lease dissected and applied gatekeepers academic work. galore(postnominal) arguments bewilder been made both for and against door guards frameworks held up against a modern business landscape. This paper leave assist to challenge hall porters generic strategies and the applicability in todays business world. Managers base mark off much from Porter, except to choke in the age of millennial billionaires, leaders may need to ruin smart frameworks.And those who do pull up stakes have a nice chance at buildi ng a firm foundation for responding to emulation and reacting to market opportunities in a fast moving global preservation. Strategic Management Overview The word strategy is often improperly employ by managers as an manufacturing buzzword in hopes of gaining credibility for their worry priorities. This often firmnesss in confusion and can overturn the credibility of the leader. The word strategy is derived from the Greek strategist, which presidency agency the art of the general. The business general must form a coherent strategy which is the sum of the part of the constitution.If this is not sodding(a) wherefore mid train managers go out centre cartridge holder on their own priorities and the plaque leave risk fragmentation (Humpback & Frederickson, 2005). The pipeline of the subject of strategic charge is heavily abated but H. Igor Anions is comm scarce say as having meaning(a) process in the field prior to Michael Porter whom took nerve center stage in the asses (Martinet, 2010). Insofar bestselling book titled Corporate Strategy was published in 1965 and started to transmutation the mindset from strategic planning to strategic management.Much of the current sagacity of strategic management can be traced back to Porters (1985) low represent, note, boil down framework. His fancys marked a key transition point in the strategic management field by integrating organization specific computes into a model of firm mathematical process (Apparel, 2006). According to Porters generic strategy, a firm can maximize achievement by either existence a low toll producer or differentiating its crossings or supporters from some other businesses. Either of these strategies can be gracious by rivet the organizations efforts on a segment of the market.Porter believes that businesses that attempt to employ both strategies simultaneously will end up â€Å"stuck in the middle” and will not be achievementful. This issue is hotly debated in the literary works and especially as related to e-commerce. Internet firms seem to be employing strategies that evidence one of more firms of preeminence in unison. condescension all the debate, Porter is astray cited in the literary works and is senior high schoolly respected by both supporters and critics identical whom all consider him to be a significant contributor to the field of strategic management.Nag, Humpback, and Chem. (2007) contended that the field of strategic management is inadequacying an identity. The researchers conducted an exhaustive large out accomplish thought of academics in the field and came up with the following definition for strategic management. â€Å"The field of strategic management deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their outdoor(a) environments. ” (p. 944).The interface with the impertinent environment, in leadition known as the client and the community, is a central dogma of the strategic planning process and we will see this theme emerge throughout the books review. Strategic Planning Strategic planning is usually the jump step in the strategic management process and is critical to the success of an organization. Strategic plans ordinarily have three parts (Martin, 2014). The first is the boot or mission statement that sets the long end point owls. The second is a listing of the initiatives that the organization will carry out as part of its fulfillment of the goal.And third is the financial jar of the initiatives. Martin (2014) recommends three rules for strategic planning to disallow from falling into the trap of focusing on familiar metrics and not the outside(a) node. Rule one is to keep the strategy impartial by focusing on what will thread customers. Eisenhower and Sulk (2001) contend that to survive in a complicated high velocity m arket space, managers should withd unrefined simple rules over complicated plans. The simple rules will low the managers to move readily in order to capture opportunities more quickly.clients will spend their bullion with the company that has the superordinate word order proposition. Martin (2014) rule two is strategies do not have to be perfect. in that respect should be close to risk in the strategy and boards should not prevent management from taking risks in setting strategy. This actually weakens the strategy. And the final rule is to raise the logic of your thinking. Write down the desired exit when setting strategy. The logic should be compared to real bearing events in order to identify areas of improvement along the way.Despite the criticality of strategic management to an organizations success, a McKinney survey found that most executives are not content with their strategic planning process (Dye, 2006). And companies that have semi-formal strategic planning pro cesses have the highest aim of joy with corporate strategy development. Selene (2009) broke strategic management into four different schools including the upright school, the environmental school, the war-ridden school, and the contemporary school.The classical school is ground on the research contributions of the mid twentieth century and is centered on the fit surrounded by versed and remote actors. Classical management assumes that intra root and external factors have an equal fit. The earthenware jar abridgment is a common model used to assess the classical business environment. The environmental school contends that the external environment plays the most important role in strategy development. And firms that do not respond substantially to the external environment will eventually die out. The free-enterprise(a) school of strategy is distinguished by argument being the driving pierce in distinction.Porter (1980) remark that the firm must acknowledge and respon d to the external opportunities and threats to survive. The contemporary school souses on generaliseing the internal firm. Collaboration and differentiation are important to triumphant with a contemporary strategy. Multicast (2009) provides an interesting perspective on strategic management and its relationship to time. Strategic planning is most often thought of in base of planning for the long term future tense of the firm. The author encourages management to too consider history, the present, and the near future in fashioning strategic planning ends.When new management enters a firm, history is often seen as a negative since historical perspectives are sometimes viewed as a hindrance to instituting hanged. But in reality, history can be an asset to strategic planners. For congressman, if the company has a refining of continuous improvement, favorable employee loyalty and commitment, and good reading ability, then this is a sustainable competitive advantage that should be retained. If new management is not aware of the firms culture then they may make decisions like terminating senior employees thusly damaging the firms culture and competitiveness.Passage of time can also be a impuissance if management has become complacent and they are not questioning the way their firm operates or making suggestions for efficiency gains. upward(a) the learning capabilities of the firm can suffice prevent previous strengths from turning into weaknesses. Generic Strategies According to Porter (1980), differentiation, follow leaders, focus, or a combination of differentiation and cost lead are the keys to maintaining a competitive advantage. These are known as Porters generic strategies and are still germane(predicate) in business today.The under divisions will explore some of the activitys of Porters generic strategies. This section also addresses a blended cost leadership/ differentiation strategy model which has emerged in the literature largely as a r esult f the success of companies that have seen success using the internet as the primary customer interface. speciality. Differentiation or comfort is defined by having a ingathering or service that is commemorated from the competitor on some stand alone merit. Firms that employ differentiation typically can charge a bounteousness for their output or service.The consumer typically sees a superior value in the proceeds or service, whether sensed or real, and is willing to pay a premium. Akin, Allen, Helms, and Sprawls (2006) dis stay on three tactics that were most comm yet assiduous in differentiation strategy. These included innovative merchandising technology or tactics, a culture of creativity and mental institution, and an emphasis on having a significant market portion out. Marketing research had found that it is eight to ten times more expensive to market to new customers than to existing customers (Akin et al. 006). Organizations must have insight into the futur e in order to manage and drive favorableness and this should be a key component of the strategic planning process. This can only be accomplished by developing a culture of mental hospital. alas the tactics postulate to create a culture of innovation are not ell understood and put down in the literature. Many firms seem to be out of touch with the external environment in which they operate. Kim, Name, and Stripers (2004) evaluated differentiation within the context of e-commerce.Due to the low costs on switching sources via the internet, it is more important that internet companies learn how to differentiate. Differentiation based on dissemination is a key area of focus for internet firms. invigorate of delivery, online interface, security, and order tracking are all slipway that internet firms are differentiating themselves. There re numerous studies that show that internet shoppers are less subtle to price when the produce or service is twin with information or service s. Olio and Fay (2012) noted that innovation is only possible with a good strategy.Firms should avoid write other companys musical themes. And instead develop innovation that is relevant to the take you are trying to serve. Jumping on trends is not al slipway a bad idea as long as it is tailored to your strategy. The firms core value proposition should have stability. Successful companies rarely have to go through major changes since they re constantly updating their processes, offerings, and methods. Industry structure is high-octane and structural change is very slow. Having a good understanding of industry stricture will help to identify new strategic opportunities.Multicast (2009) discussed differentiation as a crucial component of understanding competitiveness. differential value is an important component of competitiveness and can be created in a number of ways including reliability, product features, whole step attributes, and aesthetics. In addition to having differen tiating factors, the product will also need to overcome the â€Å" bank vault factors. These are the characteristics that the customer expects the products to have and are a limiting factor in the initial product selection. Differentiating factors without â€Å"hurdle factors” will not position the product or service competitively.Perception is important since it is important to understanding the customer perspective since it may be different than the firms perspective. If the customer does not have a need for a differentiating characteristic of the products than those characteristics will voltagely add manufacturing cost without adding value to the customer. Cost Leadership. Cost leadership requires a accompanied mindset to operate at the lowest cost possible. The company must be willing to walk away from opportunities where they cannot be a cost leader and must choose outsourcing partners whom will provide cost leadership.All company operations and merchandising must be centered on cost leadership. Tactics busy include mass occupation and distribution, vertical integration, lower input cost from raw materials, and technology. The tactic that has proven to be most skillful to cost reduction strategy is to lower distribution costs (Akin, Allen, Helms, & Sprawls, 2006). One way hat retail merchants have accomplished this is through cross docking or shipping direct from manufacturer to retailer without storing in warehouses. Wall-Mart is largely credited with developing cross-docking strategy and this has been amplely adopted and refined by retailers since the asses.The internet has been a hotbed for companies trying to implement cost leadership strategy. Kim et al. (2004) canvas this issue and reported that most online shoppers are using price as their most important purchasing criteria. The internet provides a format for retailers to quickly access code a large volume of customers through a price leadership strategy. Porter (2001) argued that the internet is a very difficult environment in which to differentiate ones firm since they lack many of the physical attributes of brick and mortar firms like sales muckle.In general, most online only vane names have not been very successful at brand building and have developed only gloomy customer loyalty(Papua & Upon, 2000). Kim et al. (2004) recommend that companies avoid cost leadership for internet firms. And instead they recommend using a blended strategy that includes elements of cost leadership as well as differentiation. Porters cost leadership framework is often misinterpreted by managers. Competitive advantage for example has come to mean anything that the organization deems as noteworthy. Porter was very specific in defining competitive advantage as price advantage versus rivals.The price may be low or high depending on the choices made in the value reach. These choices substitution relative cost or relative price to the advantage. This ultimately leads to sustainable performance (Olio & Fay, 2012). Price rivalry is more about developing a value chain than it is about low prices. This value chain should be differentiated and not easily reproduced by emulation. When companies imitate each others reduces and value chain then price becomes the only dimension that customers utilize. This results in a very destructive environment.Competition should be thought of more in monetary value of profits rather than competing to win. Competitors are competing to capture the value an industry creates. The value is being captured by customers, suppliers, rivals, potentiality new rivals, and producers of replacements. Creating economic value results in sustained favourableness by using resources effectually to meet customer needs. reduce Strategy. Focus strategy is when firms decide to focus on a specific segment of the market. The company may focus on specific customer demographic, product range, or service line.Often the focus strateg y is used to sequester market share that may have been miss or is not large tolerable for large competitors. The segment must have good product potential but be small enough to not be of great importance to competitors. Firms may utilize focus strategy as a standalone or they may bundle low cost with focus strategy. Common tactics that are employed in low cost/focus strategy include providing outstanding customer service, improving practicable efficiency, tincture control of products, and extensive training of face up line sales and technical personnel(Akin, Allen, Helms, & Sprawls, 2006).The key to success with low cost/focus strategy is to reduce cost by creating a happy customer. Customer complaints and a failure to meet customer expectations result in higher costs through strict actions. Low cost/focus firms must be masters of preventative action and create quality procedures that drive customer satisfaction through consistently meeting customer expectations. Custo mer service is typically the first point of a customer mesh and can be an important component in standardizing procedures and preventing problems.If services are done right the first time the firm will save a significant amount of costly managerial time in solving problems in the future. Mens warehouse is an example of where price and focus strategy and successfully employed. The store offers a lower priced high quality suit when compared to larger retailers, and they couple this with a high direct of customer service and on position services such as tailoring. Kim et al. (2004) note that focus strategy can be very effective with online commerce. The internet allows companies to customize their products and offerings to meet the pacific wants and needs of a select group of customers.Customers see value in being directed to the specialty retailer on the internet and will pay a premium for the products or services. The internet has the ability to service both broad markets and very niche markets. Consumers have instant access to price information and product information. Internet retailers would be wise to consider focus or focus/ differentiation strategy as their primary strategic development platform. Focus/ Differentiation Strategy. Firms may also employ a focus/differentiation strategy when he firm has a unique quality focused product aimed toward a specific market segment.Common tactics employed by these firms include the production of specialty products and producing products for higher priced market segments (Akin, Allen, Helms, & Sprawls, 2006). Specialty retailers like Pier 1 accomplished the first tactic by focusing on unique high quality specialty products. These are often times imported goods that have a unique differentiator. The second tactic is employed by luxury car companies like Cadillac that can only afforded by the highest income segment of the population. Blended Strategy.An integrated strategy of price leadership and differentiation was strongly unlike by Porter (1980). He argued that these two generic strategies are fundamentally contradictory and that any firm attempting to fluctuate between the two would fail to catch the full potential of their performance. On one primitive, cost leadership requires standardization and building low cost in the value chain. One the other extreme is differentiation which almost always drives up marketing and production costs. But in that location is a large proportion of the literature which challenges Porter on this issue (Kim et al. 004). Most scholars agree that Porters incompatibility argument will hold up in a stable business environment, but in the rapidly changing competitive environment that reflects the modern business world, a flexible combination of multiple strategies may be required. The internet is especially challenging in that it can disassemble traditional value chains. For example, several online companies are successfully employing a diversified busine ss strategy such as Amazon and Backbone. This issue will be discussed in more detail later in this literature review. Strategic Management FrameworksThe muckle and complexity of issues facing organizations has resulted in a wide variety of strategic management frameworks that are reference in the literature. Each model attempts to organize issues in a way that makes management decision making more comprehensible. With each framework comes a innumerable of academic scholars that have created, critiqued, or built the frameworks in positive ways. This literature review will cover two well known strategic management frameworks, coat and Porters pentadr forces. In smut fungus compendium, internal strengths and weaknesses as well as external opportunities and threats are considered.Some of the most widely referenced frameworks in the literature are credited to Michael Porter. The framework that will be reviewed in this section is Porters five forces. soot The author of SOOT is so mewhat unclear from the literature but it was first described by Learned, Christiansen, Andrews, and Gust (1969). SOOT is often the first legal document of choice for decision makers assessing orientation courses and complex decisions. The use of SOOT to group external and internal business issues is a logical showtime point for most management decisions.Helms and Nixon (2010) provide a more cent abbreviation of SOOT as a strategic planning tool and some of the limitations. SOOT is unremarkably used in academe and business largely payable the simplicity of SOOT as well as its catchy well known name. The literature reveals that SOOT is most commonly used for business strategic planning both for individual organizations as well as for comparison two or more companies. SOOT psychoanalysis consists of examination of internal strengths and weaknesses as well as external opportunities and threats.The analysis can be quickly constructed and multiple viewpoints can be have to perf orm a brainstorming exercise Helms et al, 2010). Internal strengths and weaknesses may include branding, organization structure, access to raw materials or natural resources, production capacity, or capital for investment. orthogonal opportunities and threats could include customers, rivals, market trends, contractors, vendors, or technology. Various environmental, political, and restrictive issues are often examined as well. The literature revealed that SOOT was the most commonly utilized strategic management tool well into the late nineties.After the year 2000, the literature is conflicted as to he value of SOOT although there are multiple researchers both for and against (Evans and Wright, 2000). Sherman, Rowley, and Armband (2007) added steps to SOOT and came up with a seven step strategic management process to assist firms in the pre planning stages. Many researchers have coupled SOOT with various(a) mathematical models to give it a quantitative basis versus qualitative. Mos t supporters of SOOT admit that it should be combined with other strategic management tools like Porters five forces and not used in isolation.But as with any strategic management tool, SOOT is only as good as the experts whom use it. Its greatest weakness is probably that it is a snapshot of time. The business environment is constantly changing and firms will need to constantly scan the environment and update their SOOT analysis (Helms et al. , 2010). In the next section we will explore another widely used strategic management model developed by Michael Porter. Porters fivesome Forces Porter is most well known for the association of competition with the firm and its external environment.Porter felt that corporate strategy should meet the threats and opportunities in the external environment Ellen, 2009). Porter identified five nominative forces that he claims are the key to shaping all industry and both market (Porter, 1980). By studying and understanding these forces, a firm sh ould be able to determine the level of competition and therefore the attractiveness and potential profitability of a market. Porters five forces analysis framework is earlier used for industry level analysis Ellen, 2009). pentad forces were first discussed by Porter in his yield titled Competitive Strategy (Porter, 1980).The five forces are threats from competitors, buyer power, supplier power, threat of new entrants, and alternative products. The strength of these collective forces decides the amount of profit potential available to rivals in an industry. Unfortunately the literature reveals that the application of the five forces may not be hearty forward and even Porter (2008) has been disappointed with its misapplication. Five forces analysis should not only be used to determine if an industry is attractive or not, but it should be a primary tool to execute the complexity of competition and improve performance (Olio & Fay, 2012).Dobbs (2014) discusses some of the chall enges that are faced by managers when they attempt to declare the five forces. These include a lack of depth, lack of structured analysis, lack of strategic insight, and millennial coevals alternatives. Many people use the five forces analysis in a superficial way and this leads to outside and incomplete analysis. This may largely be due the lack of in depth study effrontery to MBA students. The lack of quantitative measures in the five forces framework may be a limiting factor in many cases. Most applications of five forces consist of lists which make poor substitutes for in depth analysis.Olio and Fay noted that five forces analysis should not only be used to determine if an industry is attractive or not, but it should be a primary tool to unravel the complexity of competition and improve performance. With the rise of the millennial generation in 2010, Dobbs (2014) noted that the five forces framework must be modified in order to accommodate the technology vigor and analysis preferred by this generation. Akin, Allen, Helms, and Sprawls (2006) contend that the literature is missing information on the tactics that are needed in order to implement Porters strategies.Several researchers have proposed models to be used to better apply the five forces. In Akin et al. s (2006) study, the authors researched over 200 companies to develop a set of key tactics that could be used to implement Porters generic strategies and drive organization performance. Dobbs (2014) provides a practical template that provides good intuition and ease of use. The models have proved very undecomposed in the classroom setting in terms of driving higher levels of strategic insight and industry analysis.Diversity and overlap Value Building market share can also be cropd by variegation in the workforce and acknowledgement of a preference for products that are made and sold by companies with akin(predicate) cultural heritage. This is largely due to the diversification of the custome r base which crosses many borders, cultures, and ethnic groups. Hiring a versatile workforce and drawing in a culturally diverse customer base is critical to success. This group of consumers is growing at a much prompt rate than the rest of the US population.The US welcomes around one million new immigrants into the country every year. These people come from different backgrounds, nationalities and ethnicities and they are learning how to work in an unfamiliar culture. Ramifies (2010) reported that the challenges are immense for immigrants as they try and maintain a nation connection to their home country as well as try and adapt to their server country. The pressure that results drives individuals to be more inventive and productive. The force is very powerful and one of the reasons why immigrants do so well in start up businesses in the US.They develop a comfort level with uncertainty and risk that allows them to drive performance. Despite the advantages of variety most compa nies fall short on diversity thought and leadership. In fact, half of companies operating in 25 countries or more, reported only having one or two foreign nationals on their boards. to date they cited global experience as one of the most important factors in terms of selecting board members. Managers that understand and take advantage of diversity into their strategy will have a distinct competitive advantage.Developing a global company that appeals to a global customer is extremely important in developing strategy. In work done by Watson and Wright (2000), the authors looked into the country of production line effect. This â€Å"made in” idea has to do with the attitudes and buying behaviors of consumers for foreign made goods. This is also known as ethnocentrism. Research has proved that the â€Å"made in” concept has as a very strong influence on buying behaviors. These behaviors can override other more practical factors such as brand name, quality, or price.A ta ctic that is commonly employed is to market the country of origin information with the product. For example, a Chinese American may have a preference for Chinese manufactured products over US manufacturing products. Shared Value Porter and Kramer (2011) discuss the concept of the shared out value which focuses on improving the connections between society, the economy as well as corporate suppuration and profitability. The economic collapse of the last decade contributed to frustration with corporations as companies in the banking sector were largely damned for causing the failed economy though risky contribute practices.Firms have begun to realize that social harms and weaknesses frequently create internal costs for the firm in nasal energy costs and costly accidents. As a result many large firms have begun to kiss the concept of shared value and have started to see some rewards in terms of public thought and profitability. Companies and their communities are intertwined sinc e companies need the consumers and the raw trials from their communities, while the people in the communities need the wages and opportunity offered by the firm.This interdependence or shared value has the potential to unlock the next wave of growth and innovation for companies if incorporated into their strategic plans. Regulation and the Porter venture No review of strategic management would be complete without a discussion on the impact of regulation on business. Regulation has become an change magnitude concern for business leaders as they develop strategy and decide on how best to assign resources. There are also political implications since government regulators have the power to influence market kinetics between rivals as well as between countries.Generally economists, politicians, and business leaders see increasing regulation as an economic challenge which erodes global competitiveness. But Porter (1991) argued that well knowing regulation could be a competitive advant age if properly managed. This concept is frequently referenced in the literature as the Porter possible action. Researchers frequently use the Porter Hypothesis to help understand the links between regulation, competitiveness, and innovation. Porter (1991) andClass van cervid Lined (Porter & van deer Lined,AAA) argued that pollution was an example of wasted resources and that by trim pollution, productivity could be improved. They felt that properly designed environmental regulation would help drive innovation and would more than offset the additional cost of implementing regulation. Porter brought these concepts to mainstream businesses and policy and has revolutionized how strategic management deals with the impact of environmental or other regulation. Porter et al (AAA) explained five reasons why they thought innovation offsets any negatives created by regulation.\r\n'