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The Nature Of Strategic Management Journal Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 3337 words Published: 1st Jan 2015

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Strategic management is ideas and injunctions that enable the organization achieve its objective or long-term target to perform a better performance. The purpose of strategic management is to seek the opportunities for better future of the organization. Generally, good strategic management practices can improve the organization performance and achieve the organization target objectives. The strategies on an organization are made by the management itself to ensure the successful of the organization. The strategic management process consists of three stages which are strategy formulation, strategy implementation and strategy evaluation.


Today, there are many definitions of strategic defined by various authors and by refer to Mintzberg et al. (1998), the definition of strategic is universal and there is no single. The others author, Chandler (1962) as the American business historian is the first person that defined strategic as determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals. In the context of construction, Channon (1978) defined strategy in term of the extent of diversification, international activity and acquisition policy. Mintzberg (1994) portrays strategy as a plan – a direction, a guide or Strategic Management Practices in Malaysian Construction Industry 142 course of action into the future – and as a pattern, that is, consistent in behavior over time.

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Strategic management has evolved into a more sophisticated and potentially more powerful tool (Stoney, 2001). The strategic management stages need a person who is competent to handle this process more effectively and to make sure that its success (Stahl and Grigsby, 1992). To ensure firm success and can overcome any barriers that occur during strategic management process, the top management of an organization must play their roles through involvement in the process, through dialogue and participation. The aim purpose of the process is to achieve the understanding and commitment from top management and employees.

2. Strategic Management in General STRATEGIC MANAGEMENT IN GENERAL

There are many definitions that are defined by various authors. According to David (1997) strategic management is the art and science of formulating, implementing, evaluating cross functional decision that enable organization to achieve its objectives. Wheelen and Hunger (1984) say that strategic management is a set of managerial decisions and actions that determines the long-run performance of an organization. It includes environmental scanning (both external and internal), strategy formulation (strategic or long-range planning), strategy implementation and evaluation and control. Wheelen and Hunger (2003) noted that people at all levels, not just top management, need to be involve in strategic management; scanning the environment for critical information, suggesting changes to strategies and programs to take advantage of environment shifts, and working with others to continuously improve work methods, procedures, and evaluation techniques by working with other people in the organization.


Stages in Strategic Management

Strategy Formulation

The first phase is strategy formulation. Certo and Peter (1991) stated that strategy formulation want to ensure that the organization achieve the objectives that they have been made. David (1997) said that strategy formulation includes the decision on what business to conduct, how to allocate the resources, and whether want the business join or enter to international market. Besides, David also stated that strategy formulation phase includes developing a vision and mission, identifying an organization external opportunities and threats, determining internal strength and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing the best alternative strategy to be pursue. He also said that issues in strategic management includes deciding what new business to enter, what business to abandon, how to allocate resources without hostile takeovers, whether to expand operations or diversity, whether to merge or form a joint venture, whether to enter international markets and how to avoid a hostile takeover.


Good intelligence is not necessarily going to make a great strategy while successful strategies are derived from good intelligence concerning a company’s total business environment including the competition. There is some intelligence role in strategy formulation. Among them are: –

– Describing the Competitive Environment.

Intelligence analysis must to carry out their responsibilities, so that the company can compete with the challenging environment over time. Besides that, intelligence should also determine the causes of the company’s competitive environment, including competitors, customers, products, the structure of the industry in which they all perform, and the type of competition, such as price performance, and technology.

Forecasting the Future Competitive Environment

Intelligence department can provide predictions of future business for the company, especially in the competitive environment in which the company is likely to find itself. Business intelligence estimate is the most appropriate intelligence products to reflect the competitive environment in the future, as being one entirely different from the business environment that it competes in today.

Identifying and Compensating for Exposed Weaknesses.

Company’s own weaknesses and vulnerabilities can be identify and assess by using intelligence department. Usually when a company is about to launch a new strategy or enter a market or business that it has never participated in before, this ability is particularly valuable because the competition is likely to have assessed the newcomers strengths and weaknesses and will exploit those weaknesses that are truly vulnerabilities. Before entering the new business arena, companies must be aware of his own weaknesses before the occurrence of a competition. This is to ensure that the company is always ready to take corrective action or formulate new strategies so that the company is not affected.

Using Intelligence to Implement and Adjust Strategy to the Changing Competitive Environment.

After the new strategy have been designed and tested, then it goes through two distinct phases of implementation. Initial implementation of the first phase is when competitors began to detect and respond to the strategy’s salient features. While the second phase is developing a more complete and appropriate set of actions to counter your strategy. The intelligence that you gather during both distinct phases of implementation are critical to the long-term viability of your new strategy because comprehensiveness, timeliness, objectivity and analysis are required in these two phase. Few US companies are capable of managing such effective business intelligence operations and thus formulating the appropriate ongoing business plans necessary to continually adjust their strategy to the changing competitive environment.


When open innovation models are being introduced in the industry, innovative firms must taking more and more open forms, so that a firm can create the innovation process in a knowledge-based society. In addition, the firm also can  build porous borders to incorporate their own knowledge and competencies with others. The first step is to identify useful knowledge among employees and stakeholders of the NTBF (new technology based firm), so that they do not require further discussion. However, in the external environment, identify useful knowledge is not as easy as I thought. There are several questions that must be answered to proceed from knowledge identification to transfer knowledge :-

Who has the requested knowledge?

This question is more relevant when searching among the members of the NTBF but also a “who knows the whereabouts of the requested knowledge?” which is more relevant when the requested knowledge lies outside the firm.

What are our relations with the actor holding the requested knowledge?

Question like this is to identify ways to strengthen ties in the relation with the actor/partner holding the requested knowledge. What drives this relationship? Is it based on friendship, a strategic alliance, a mutually-beneficial business relationship, or a potential partnership etc.?

What is the nature of the requested knowledge?

The third question is related to the knowledge complexity that determines the ability to accomplish the knowledge transfer because it is has to be regarded within the framework of a specific knowledge transaction, between specific persons in a specific context.

How can we transfer this knowledge and what is the compensation requested for this transfer?

The fourth question related to the readiness of the “owner knowledge” to share knowledge because knowledge transfer process cannot be determined in advance, and this depends on the complexity of knowledge and the absorptive capacity of the recipient to make the transfer.

Apart from compensation, are there additional costs associated with the transfer?

The fifth question tries to examine the non-monetary cost associated with the transfer of knowledge. As mentioned earlier, a NTBF’s resources are limited and valuable and the cost to absorb a knowledge transfer might prove costly in terms of man days of key members of the NTBF.

Does this knowledge transaction contribute to the formation of a “collaborative” competitive advantage?

The final question concerns the examination of the probability that this knowledge transaction is part of the formation of a knowledge-based strategic alliance forming a sustainable competitive advantage that is difficult to imitate.

Strategy Implementation

The second phase is strategy implementation. In this phase, Sharplin (1995) said that all the organization activities or business strategies must be based on the strategic plan made. Organization must establish the objectives and policies of the company so that all the employees know what they should do to achieve the company objectives. Besides, the company also needs to do something to ensure that all the employees are motivated to do the job, and resources need to be allocating to execute formulated strategies. Effective strategy implementation is really important to the organization. Based to Certo and Peter (1991), effective strategy implementation is really important to get the benefits of performing an analysis of organizational, establishment of organizational direction and formulating.


They are various point of views to define and describe the strategy implementation. Strategy implementation may be define as a process inducing various forms of organizational learning, because both environmental threats and strategic responses can make something happen for organizational learning processes (Lehner, 2004). Strategy implementation is a combination process of implementing strategies, policies, programs and action plans that helps a firm to take the benefits of opportunities in the competitive environment by using wisely and usefully its resources (Harrington, 2006). Strategy implementation is also can be described that the companies can identify the future opportunities as a lively process (Schaap, 2006). On the field of studies in strategy implementation, it must be done with the international perspective. In Hrebiniak conceptual framework there are some suggestion about the key factor for strategy implementation which include of leadership, facilitating global learning, developing global managers, having a matrix structure and working with external companies for international environment. Besides that, there are other framework introduced by Yip, that involved organizational structure, culture, people and managerial process (Okumus, 2003). There are two groups of variables which is operational (budgeting, structure) and managerial (culture, leadership) that had been identify in this study of measuring the strategy implementation.


During an action, strategy implementation is a managing forces and focuses on efficiency. It is primarily an operational process, requires special motivation and leadership skills and requires the combination among many individual.

There are some several of issues that involve in strategy implementation which is :

Strategies are not lead to action and have to be activated through implementation.

Plan should be lead in strategies. Result of plan in different kind of programmes.

Formulation of projects must lead to programmes. Separate allocation of fund is requires and it must be completed within a time given.

The needed infrastructure for the day-to-day operations create of Projects create within an organization.

Strategies implementation is not limited to formulation of plans, programmes, and projects. Resources would require in projects. After it has been provided, it would be essential to see a proper organizational structure is designed, systems have been installed, devised the functional policies, and various behavioural inputs are provided to make sure the plans may work.

Below is the issues in strategy implementation that are to be considered :

Project implementation

Procedural implementation

Resource allocation

Structural implementation

Functional implementation

Behavioural implementation


The effectiveness and importance of strategy implementation

In some of organizations from South African, it was found that the strategy implementation is more important than strategy formulation and can be see that the ability to implement a strategy in an organisation is more likely important than the ability to formulate a strategy in an organisation. Strategy implementation can be more difficult than the strategy formulation. This study was founded that the effectiveness of strategy implementation in South African organizations can help the organisation to gain the effectiveness of organisation. It can show that, the strategy implementation more effectiveness to be used it within the organisation.

Barriers to effective strategy implementation

There are some barriers to achieve the effectiveness of strategy implementation :

The workforce are poorly to understanding of the strategy and the most of important barriers to effective strategy implementation is there are an ineffective communication of the strategy among the workforce

Another major barrier to an effective strategy implementation is strategic leadership is not perceived.

Drivers of strategy implementation

The importance of the drivers of strategy implementation :

The most important driver of strategy implementation is strategic leadership.

Strategic leadership contributes positively to the effective implementation of a strategy within an organization

Many all of authors stated that the key of strategy implementation is strategic leadership (Hrebiniak 2005; Collins 2001; Useem 1998, 2001; Locke & Kirkpatrick 1991; Freedman & Tregoe 2003; Hitt et al. 2007; Hsieh & Yik 2005; Bossidy & Charan 2002; Thompson & Strickland 2003; Hussey 1998; Kaplan & Norton 2004). In fact, the effectiveness of strategy implementation is based on the strategic leaders of the organisation and to get the effectiveness to implementing strategy within the organisation, it is only through effective strategic leadership. (Hitt et al. 2007).

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The role of strategic leadership actions in strategy implementation

The most important role in effective strategy implementation is the strategic leadership. The other of the important roles in strategy implementation is development of human capital, the exploitation and maintenance of core competencies. The development of social capital is the strategic leadership action is to play the least important role in effective strategy implementation.

Strategy Evaluation

The last phase of this management process is evaluation. Weiss (1972) define the purpose of evaluation as measuring the effects on given task whether it is according to the goals and objective of the organization. Thus, an improvement or corrective action should be taken after the evaluation has been made. It is really important to use a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats for both external and internal factors. This may require taking certain precautionary measures to change the entire strategy. Research methodologies need to be used to quantify the outcome from the evaluation against the goals that has been made to create a success. Weiss agree that goals are really important in an evaluation to improve the performance. Evaluation done by reviewing current strategies, measure the performance and take the corrective actions. The need of an evaluation is to know the success of the organization. Certo and Peter (1991) stated that the evaluation needs information about strategic performance to compare it with existing standards.

Balanced scorecard (BSC) is an example of one of the popular approaches to evaluate the organization performance. It was first introduced by Kaplan and Norton (1992. 1996a). The BSC typically is a method that allows an organization to indicate its vision, develop and communicate a strategy to achieve the established vision and convert the developed strategy into action.

4. Conclusion

In general, strategic management can be used to determine mission, vision, values, goals, objectives, roles and responsibilities. Strategic management is important in the organization to know the objectives and the aim of the organizations. The nature of strategic management also involve about the process or stages. This study was focused on the strategic management process. Strategic management process has three stages which is strategy formulation, strategy implementation and strategy evaluation. The strategic management process is becoming more widely used by small firms, large companies, nonprofit institutions, governmental organizations, and multinational conglomerates alike. It represents a logical, systematic, and objective approach for determining an organization’s future direction. All the three stages of the process were important for all the organization. This is because those process are more likely as a guideline to the organization to manage their organization. Without a proper strategy the successful and the effectiveness cannot be occur. A good strategist plans and controls his or her plans, whereas a bad strategist never plans and then tries to control people. We can conclude that the strategy is important within the organization which as a direction for organization to manage their management.

“Without a strategy, an organization is like a ship without a rudder, going around in circles. It’s like a tramp; it has no place to go. ” – Joel Ross and Michael Kami


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