Term Paper on Modern Strategic Management
Today, strategic management is extremely important for the successful business development because strategic management defines the framework, in which companies develop their business along with methods and tools they use to reach their strategic goals. At the same time, the effective development of strategic management is possible on the condition of adequate understanding of the contemporary business environment, management as well as needs of stakeholders involved in the management process and organizational performance. Studies dedicated to the problem of strategic management are very important because they help to uncover major trends in the development of modern strategic management, its milestones, along with future prospects of the development of strategic management. In this respect, it is possible to refer to Chapter 5 “Analyzing Resources and Capabilities” (2007) and the article “Modern Strategic Management: Balancing Strategic Thinking and Strategic Planning for Internal and External Stakeholders” by O’Shannassy (2003), which help to understand the essence of strategic management and basic trends in its current development.
In fact, Chapter 5 “Analyzing Resources and Capabilities” focuses on the major sources, which maintain the organizational development, growth and taking competitive advantage in the market. Obviously, these issues are strategically important for any organization and the use of the full potential of organization’s resources and capabilities should be the primary concern of managers. In fact, Chapter 5 views resources and capabilities as the basis for growth of organizations and their business development. At this point, it is possible to refer to the experience of Walt Disney (Chapter 5, 2007, 130). In fact the revival at Walt Disney can be explained by the use of the available resources and the full potential of capabilities of professionals working in the company. At the same time, Chapter 5 places emphasis on the fact that resources and capabilities give strategic competitive advantage to companies, which can use the full potential of their resources and capabilities.
In such a context, Chapter 5 helps to understand major resource and capabilities and how they can provide companies with a competitive advantage in the contemporary business environment. In this regard, it is possible to distinguish tangible resource, which include financial resources and assets of organizations (Chapter 5, 2007, 131). In fact, tangible resources lay the material ground on the basis of which organizations can gain the competitive advantage over their rivals.
However, tangible resources alone are not enough to gain a competitive advantage in the market. In fact, organizations need to improve their tangible resources but they also need intangible resources, which are difficult to define but their potential can be enormous. In this regard, it is important to place emphasis on the fact that intangible resources, such as brand, can have a considerable impact on the development of modern organizations and allow them to take a competitive advantage over their rivals (Chapter 5, 2007, 132). Intangible resources can create additional market value of organizations and attract customers improving the competitive position of organizations.
Furthermore, it is impossible to ignore human resources, which maintain the effective organizational performance and define the strategic development of modern organizations (Chapter 5, 2007, 133). Human resources are strategically important for organizations because they can introduce innovations and accelerate the development of organizations that will put them into an advantageous position compared to their rivals.
At the same time, Chapter 5 focuses on the importance of capabilities to realize the full competitive potential of modern organizations. In this regard, it is possible to distinguish the hierarchy of capabilities, which include the following capabilities: single-task; specialized; activity-related; broad functional; cross-functional (Chapter 5, 2007, 138). In fact, this hierarchy reveals how capabilities of the organization evolve in the course of its development. The higher are the capabilities of an organization the better is its competitive position. At this point, it is possible to refer to the positive experience of Gucci. In fact, Gucci gained competitive advantage of its capabilities and resources (Chapter 5, 2007, 142). In such a way, organizations can improve their competitive position through the use of their capabilities and uncovering the full potential of their capabilities.
At the same time, the modern strategic management cannot be narrowed down to resources and capabilities of organizations alone. In this regard, it is possible to refer to O’Shannassy’s article “Modern Strategic Management: Balancing Strategic Thinking and Strategic Planning for Internal and External Stakeholders” (2003), which reveals the essence of the modern strategic management and its effective development.
First of all, the author argues that modern organizations tend to the autonomy and responsibility of the staff at all levels of the organizational structure. Modern organizations and, therefore, modern strategic management cannot be successful, if they stick to the rigid organizational structure and conservative hierarchy, which limits autonomy of employees and managers. The author insists on the development of the combination of thought analysis and action to elaborate strategic management and effective approaches to business development. At the same time, O’Shannasssy points out that the interaction between internal and external stakeholders from the board of directors down to line managers is crucial for the effective business development and comprises an integral part of the modern strategic management (O’Shannassy, 2003, 54).
Furthermore, the author distinguishes three milestones of the modern strategic management, including strategic thinking, strategic planning, and their close interaction. At this point, it is important to dwell upon each element, which makes the modern strategic management effective. In fact, the strategic thinking is defined by the author as addressing high level mission and vision of the organization, solving strategic problems at the individual and institutional level combining rational and generative thought process (O’Shannassy, 2003, 55). Obviously, this broad concept may be defined in different ways but the definition given by O’Shannassy helps to understand the essence of the strategic thinking.
At the same time, the author argues that the strategic thinking is inseparable from the strategic planning, which involves the codification, elaboration and conversion of strategies (O’Shannassy, 2003, 57). O’Shannassy suggests the model of strategic planning integrated into the strategic management: First, the organization deals with flexible inputs, for instance, available technologies. Next, the strategic thinking comes into play and the available technologies and other resources are evaluated and integrated in the organizational context. The next step is output, for instance solving strategic problems, which derives from the strategic thinking and evaluation of resources available to the organization. After that the stage of the strategic planning begins. In such a way, organizations can develop their strategic management and run it successfully.
Modern strategic management includes the close interaction between strategic thinking and strategic planning. The model developed by O’Shannassy suggests the close interaction between strategic thinking through conceptualization of organization’s future direction scope for thought and action to strategic thinking and back to strategic thinking through programming and operationalization of organization’s future direction option of thought then action (O’Shannassy, 2003, 59). In fact, the author stands on the ground that the close interaction between strategic thinking and strategic planning is crucial for the overall success of strategic management because strategic thinking or strategic planning alone cannot make organizations work effectively and use their resources and capabilities to the full extent.
Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the articles discussed above are relevant to the modern strategic management and closely intertwined with each other. In fact, on the ground of these articles, it is possible to conclude that the development of modern organizations and strategic management should include strategic thinking, strategic planning and their interaction. Organizations should assess available resources and capabilities in the course of strategic thinking and, on the basis of information obtained in the course of the strategic thinking, they can elaborate strategic plan of their development to gain a competitive advantage of their rivals.
