Evolution and Phases of Strategic Management

Evolution of strategic management
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Abstract
Strategic management has a direct impact on the long-run performance of a corporation and is affected by managerial actions and decisions. Industry analyses in one of the aspects that affects strategic management allowing the management to make decisions through planning. The four phases of strategic management delve into the typical evolution of strategic management in an organization from basic financial planning to strategic management. The phases occur as the external environment changes and corporation becomes more complex. Besides focusing on internal and external factors, Porter’s competitive strategies highlight on the competitive factors that affect a corporation. Additionally, focusing on sustainable competitive advantage allows a firm to perform better than rivals within a competitive industry. Overall, the value- chain approach should be put into perspective, as the approach allows corporations to identify core strengths and minimize the impact of core strengths, while also encouraging the management to improve on a corporation’s competitiveness. Table of Contents
Abstract 2 Introduction 4 Analysis 4 Phases of strategic management 4 PESTL 5 Porter’s competitive strategies 6 Sustainable competitive advantage 7 Conclusion 8 Recommendations 9 References 10
Introduction
Strategic management relates to the managerial decisions, guidelines and actions that influence a corporation’s long run performance (Wheelen & Hunger, 2012). External and internal analyses are important aspects of strategic management as are strategy formulation implementation, evaluation and control. Managers used to rely on day to day planning before evolution of strategic management, with use of budgets and control system being relied upon for future use from the 1930’s. Long- range planning was the precursor to strategic planning and strategic management, whereby planning has increasingly played a prominent role in decision making in corporations (Rabin & Miller, 2000). It is pertinent to understand the evolution of strategic management which is related to complex interaction of functional areas over time. This paper delves into how strategy management typically evolves in corporations, specifically touching on phases of strategic management, PESTL analysis, Porter’s competitive strategies, sustainable competitive advantage and highlights on recommendations.
Analysis
Phases of strategic management
Evolution of strategic management in a corporation seems to follow four sequential phases from basic financial planning, forecast-based planning, externally oriented strategic planning and strategic management. A corporation first utilizes budgets to gain better operational control, and then there is effective planning to predict future growth and increase responsiveness. Equally, strategic planning seeks to increase responsiveness with strategic management then building upon competitive advantages that would ensure success of a corporation. Corporations are more likely to go through the four phases as they become more complex in line with the changing external environment. Essentially, corporations change from inward-looking orientations to outside-looking perspective; then becoming more integrative and focusing on both internal and external environments.
PESTL
The PESTL acronym stands for political, legal, social, technological and legal factors that mainly affect the external environment. Essentially, the external macro environment is the main focus of this tool, as businesses are typically affected by factors that are beyond the control of a corporation. Both the SWOT analysis and PESTL are important tools for understanding the environment, and though they may change over time PESTL gives a snapshot of the situation (Cooke, 2012). Hence, it is necessary to make PESTL a regular feature of businesses in business planning strategy. Additionally, there is a need to utilize the tool as it provides a snapshot of the risk that may cause market growth or decline, allowing the management to make strategic decisions on an organization’s business direction.
Key political drivers in a country affect the economic situation including trade policies, regional and government policies. At other times, negative political trends including wars, conflicts and instability have a far reaching negative impact than the economic situation (Cooke, 2012). In doing business, investors typically have confidence in countries that are stable and seem to respect the rule of law and transparency. Similarly, the economic situation in a country affects the business performance of organizations directly. Both the national and world economies affect business as economic activities depend on the prevailing trends, but there are other specific industry factors that may affect different organization depending on the type of business.
Societal and cultural factors influence business activities because they are related to choices to attitudes that influence buyers purchasing options and preferences (Cooke, 2012). One of the major social factors affecting corporations is education which is in turn related to the level of skills and employment opportunities. Additionally, the prevailing and changing demographics affects the demand for certain goods and services, and hence business operations are more profitable if they take into account distribution. Culture affects how business is conducted and attitudes towards diverse business activities. On the other hand, technological impact depends on the level of innovations available in an industry and country, showing that both teaching and research are important components for the growth of different industries. Legislations that affect industries also have a direct impact on business operations as businesses need to comply, with ease in restri...