Alternative Approaches to Strategic Management †Free Samples

Question: Discuss about the Alternative Approaches to Strategic Management. Answer: Introduction Managementpractices have undergone a series of transformations on the last few decades. During this period, companies have been downsized and hallowed out. At the moment some employees have found it unattainable to remain in major leadership positions in companies, newly trained and empowered workers have entered the field and implement numerous innovativemanagement practices such as just-in-time manufacturing, continuous improvement, and total quality management. These innovations have significantly influenced the development of new strategicmanagement approaches including stakeholder, dynamic capabilities, and sustainable approach (15 Steps of Strategic Management 2015). Though all of these management approaches are viable and have several benefits, they also have several disadvantages and limitations. Organizations, therefore, need to read between the lines and consider implementing the most viable elements in all of them and cushion themselves from the risks involved. Approaches to Strategic Management: Stakeholder Approach Stakeholder approach has developed to become an alternative way of managing organizations. This approach ensures that company directors have to put more consideration on various stakeholder groups than on shareholders interest. Stakeholder approach was first raised by Freeman (2009) who opposed to the concept that company directors are solely accountable to shareholders. He argued that they are accountable to employees, suppliers, credit providers, local communities, customers, environmental groups, and the government. According this expert, each of these groups has an absolute right to be treated as an end to a just means. Benefits of Stakeholder Approach Stakeholder approach has become incredibly popular because of its enormous benefits. This approach is an effective tool for improving the level of corporate governance in organizations. According to Parkinson, if the internal mechanism of managements such as non-executive director and general meeting and the external form such as hostile takeover bid are ineffective, an organization can suffer incredibly. With stakeholder approach, however, organizations are safe from such a risk (Freeman 2009). The other benefit of this approach is that it can reconcile the relationship between organizations and non-shareholder groups. When an organization views employees a partnership, for example, rather than instruments for reaching a particular goal, that makes it possible to have a productive relationship between the employer and the employee. When the company hires qualified and well-motivated staff, it is able to succeed in the current intensive competition world (Boutilier 2011). This approach can also help companies to strengthen their brand image. Since the approach requires companies to include the local community, the organization will have to focus on meeting long-term goals. If organizations focus of short-term financial goals that would be detrimental to its success and the local community cannot accept to ether into agreements that cannot preserve the environment and meet other critical societal needs. Regulations such as environmental protection laws reflect what the society demands from the organization and the laws suggest that abiding by them actively rather than passively would help to build the reputation of the company and benefit it in many other ways (Boutilier 2011). The final benefit of stakeholder approach is that it gives directors of organizations the freedom to be visionary and develop strategies for achieving the strategic long-term plans. As they have to consider a wide range of things before arriving at a conclusion, directors are able to be more practical in the way they approach leadership issues. Directors are the agents of the organization, according to this approach, rather than agents of shareholders (Boutilier 2011). Limitations and Demerits Critics of the stakeholder approach consider that is not a useful management theory. They consider that it takes away shareholder primacy, and, for that reason, directors can operate the organization so they so wish. Additionally, they consider that under this theory, it is hard to judge the performance of directors. A good way to illustrate what they mean is a director who chooses to take account of the interest of the local community, but when an opportunity to move the company to a country with cheap labor where they can make more profits, they choose to stay put. When a director does this, a problem can arise given that shareholders invest their resources to make profit. If the company does not make profit, they can choose to take their shares and invest else which, which in effect can affect lead to closure of the business (Waal (2013). Some experts consider that stakeholders approach can result to disagreements between the investors and the directors to a small extent. They suggest that this can be sorted out amicably. According to Waal (2013), organizations that use this approach can prevent the occurrence of similar problems by setting up two-tier board structures. The supervisory board oversees the operations of the executive board and helps them to deliver on their mandate. Further, this method also enables all other stakeholders to monitor the directors more closely. To large extent, this approach would improve the level of supervision and prevent directors from mismanaging organizations under their care (Freeman 2009). The stakeholder approach may also have an effect on investment. Its opponents say that directors would be discouraged from pouring their money into the company due to the unethical behavior of the directors. For example, one study has blamed inadequately operated stakeholder performance measures for the current corporate decline in the U.S. Other experts, however, say with the increasingly more roles that shareholders play on boards, their interests would be obviously catered for. With the above analysis, it could attract more investors (Waal 2013). Another possible demerit is that the existence of many factors to consider can affect the efficiency of the organization. With these many objectives, the directors might be forced to trade-off different demands of some stakeholder groups. While it is true that this approach requires organizations to spend a lot of time on balancing different sorts of demands, some experts say this on not necessarily a bad thing. They consider that it makes great sense to sacrifice some efficiency for detailed and far-sighted evaluation (Freeman 2009). Dynamic Capabilities The theory of dynamic capabilities is increasingly providing the intellectual infrastructure fir strategic management. This term refers to the ability of the firm to integrate, create, and reconfigure both internal and external competences so as to solve issues relating to rapidly changing environments. Dynamic capabilities are different from operational capabilities. The latter pertains to current operations of a company. The main assumption of this management approach is that organizations should use core competencies to modify short-term completive positions that they can use to build longer-term competitive advantage (Hutterer 2012). Benefits of Dynamic Capabilities The dynamic capabilities approach enables organizations to perform strategically important activities in a better way than their competitors do. This element makes it an effective tool for sustaining competitive advantage. According to Porter and Crammer (2012), this approach can ensure competitive advantage comes from any activity along the value chain and not just from great products or services. He says competitive advantage is not just about money or primary about customer value for money. Organizations should know that it is about the culture, the quality, and the value of innovation (Hutterer 2012). Apple and IBM are just a few examples of corporations that have benefited incredibly from dynamic capabilities. These management approaches have enabled these two companies to evolve with rapid change. Apple is not a technological leader. However, through this strategy, it has proven its ability to market technologically-based products by developing features that people value. IBM, on the other hand, is a true technological innovator. This company successfully transaction from electromechanical tabulating devices to mainframe computers. IBM is currently a market leader in IT-based services and cloud computing business. The leadership of these companies has played a significant role in determining the types of dynamic abilities that suit their growth. Apple and IBM have essentially been able to sense and shape opportunities and threats, seize opportunities as well as maintain competitiveness by improving, integrating, securing, and, occasionally, reconfiguring the intangible and tangi ble assets of the business enterprises (Helfat 2013; Eckert 2016). The dynamic capacities management approach also creates learning opportunities. When organizations accept that knowledge generated exists in new patterns of activity or new logics of organization, they are able to succeed. Patterns of interaction are found in group behavior and certain sub-routines can be found in individual behavior. Through partnerships and collaboration, firms are able to learn how to recognize dysfunctional routines and avoid falling prey to strategic blind spots. Another essential dynamic capability is building strategic assets. Organizations with alliances and acquisition routines are able to bring new strategic assets into their system from external sources (Levinthal Marino 2016). Dynamic capabilities approach also enables effective and efficient internal coordination and integration of strategic assets, which, in the long run, can help to determine the forms performance. Research has indicated that special organizational routines for collecting and processing various pieces of information and coordinating factories and component suppliers are the key drivers of quality performance. Competitive advantage also calls for the integration of external activities and technologies in various forms including alliances and the virtual corporation (Levinthal Marino 2016). Limitations and Demerits While the dynamic capabilities approach can help organizations to reconfigure their assets and accomplish both internal and external transformation, the process is difficult to realize. Implementing the change process is incredibly costly. For this reason, firms are forced to develop processes to try to find high-payoff changes at an affordable rate. In addition, the capability to change relies on the firms ability to do several things effectively. A firm must be able to scan is business environment, evaluate the markets and be able to carry out reconfiguration and transformation far ahead of its competitors. If a firm fails to do these things quickly and at the right time, it cannot benefit from this approach (Framework for Dynamic Governance 2007; Weske 2012). If a company depends on assets that are uniquely valuable in combination, co-specialized assets, it might encounter a lot of problems with this approach. In this case, the coordination of tasks of management becomes extremely difficult; this requires managerial decisions to take the optimal configuration of all its assets into account. Sustainability Approach Sustainability management synthesizes the concept of sustainability with concepts of management. Sustainability is made up of three components, which are the environment, the economy, and the needs of both the present and future generations. Sustainability uses these three aspects to create the ability of a system to operate efficiently and maintain economic viability and also limit resource depletion with the aim of flourishing the needs of the present and future generations. With the definition of these concepts at hand, it can evident that the sustainable approach to management is the application of sustainable practices in the society, environment, personal life, agriculture, and business by in a way that take care of the needs of the current and future generations (The Oxford Handbook 2015). Benefits of Sustainable Approach This management approach is considered appropriate because of its ability to help maintain the quality of life on life. The sustainable approach is applicable in all spheres of life. For example, modern-day businesses need to implement systems that can enable to be sustainable. If this is not the case, just as the definition of sustainability goes, they will get out of business due to competition (Genus 2014; Morana 2013). Communities also need this management approach to be able to thrive. Communities need it because if they are to prosper, only sustainable management can work in their favor. Okumus (2010) says for natural resources such as forest and natural resources to continually cater for the needs of the future and current generations, they also need sustainable management. Peoples personal lives also need to be managed sustainably. For any organization, or individual, or society to succeed, they must make decisions that will sustain their immediate surroundings or managing individual emotional and physical well-being (On Competitiveness 2015). Help Control Issues and Plan Issues Sustainable approach creates the right platform for managers to be able to plan things in a proper way to ensure the things will benefit the situation that they are in-charge of. The manager is able to control issues and plan solutions that are sustainable. In this way, whatever the managers put in place will be for the benefit of not only the current generation but the future generations as well. The job of a sustainable manager, unlike other managers, involves managing systems that will support and sustain themselves (Cooper 2016). Limitations and Demerits Sustainability managers have a greater responsibility to take care of the needs of the current and future generations, a duty that other managers are often shy of taking. These managers must have many practical skills including seeing problems clearly, setting strategic goals, ability to plan, thinking outside the box, being proactive, and organizational skills. Additionally, sustainability managers should be able to teach and train their own teams, make tough decisions, take responsibility, and possess whole systems thinking (Cooper 2016). Boundaries of Accountability Too Fast In the current business world, businesses have to face off with environmentalist and these two groups often fail to reach a compromise. The tradeoffs are common because the boundaries of accountability are moving so fast. Business have to begin to implement system wide approaches that link in the numerous sections of the business with environmental needs (Baker Filbeck 2013: Alas Gao 2012). Since companies are socially based institutions, they struggle to project sustainability responsibility image for the public to see. This behavior can be a double-edged sword. Sometimes, these organizations focus too much on their image than implementing what they are communicating to the public. This behavior is referred to as green washing. Since it is essential that the execution of sustainable management practices should be embraces instead of an organization making strong attempt to appeal to the public, it is clear that this management approach is desirable but difficult to catch up with (Sustainable Development 2008). Conclusion The three major alternative approaches to strategic management, stakeholder approach, dynamic capabilities, and sustainable approach have many advantages as has been illustrated above using studies and examples. They can help improve organizational management. Shareholder primacy can generate opportunism and create some room for company directors to prefer making short-term maximized profits. The stakeholder approach is able to solve this problem. In addition, it can create a productive relationship between all the stakeholders. The dynamic capabilities approach is also useful for the success of organization as has been demonstrated by Apple and IBM. The successful implementation of the learning stage, acquisition of news assets, and transformation of existing assets are some of the most critical ways of developing corporate agility. Sustainability approach, other than taking care of all the other factors that other approaches do, it focuses on securing the future of the world. Notwi thstanding their limitations, organization should integrate all of them into their systems to reap the most benefits. Sustainability approach appears to be the most practical approach out of the three alternatives discussed in this paper. This management approach takes care of all stakeholders and also the future generation. 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