Good Strategic Management Research Paper Example
According to (Zajac 2002:28) Strategic management is a field that involves implementation and formulation of the primary and probably minor goals as well as the various initiatives that any organization is supposed to, at any given time. The management of these strategies encourages organization to play a vital foundation for it, gives the owners and other major stakeholders a way to be able to be sure that the company is moving forward. The management can be in a position to assess whether they can be able to weigh themselves externally and internally and figure out if there is a guaranteed stability.
The notion of strategic management gives organizations some tangible and visible benchmarks. These parameters give an organization a way to envision all their objectives. In cases whereby these targets are not met, the organization will vet itself based on such a deliberation and come up with ways to step up (Berle & Means, 1932). A positive attainment of their overall objectives is an indication that they are on track, and there is room for newer objectives.
The whole concept of strategic management has been subject to a set of theories that will always try to idealize and lay foundation for the overall understanding of this form of control. It is crucial to note that despite the varying theories, a strategy has three principles. These include the creation of a plan, how to implement that strategy and how to reorganize the approach if need arises or there is a transition (Gregory 2011:23).
There are ten primary strategies that encompass strategic management. They are the resource-based theory, the knowledge-based theory, Network View, Agency Theory, transaction cost economics, institutional theory, resource dependence theory, game theory, strategic management process framework theory and the TOWS theory.
The theory, which comes into play, is the agency theory. The theory states that, there is some incongruence of goals that exists amongst all the stakeholders of an organization and the agents that it employs (Smith, 1976:54). The organization is what can be called an inter-link of contracts. The two sides of the divide are driven by self-interest and some bit of guile. This way, it means that they can share risks and the information that regards the component in question. For instance, in the Whirlpool case, the chief designer and his team can act and change the way that their company manufactures refrigerators.
The brief profile of the Whirlpool’s case shows one scenario of strategic management requirement in an organization. In the case, a chief graphic designer, Chuck Jones, in his capacity and good understanding of design realizes that he can improve ornamentation of a refrigerator. In his opinion, the refrigerator will bring better sales figures to the company. He does not base that argument on any data (for he is not a specialist in this term). However, his knowledge of design is good enough for him to assert that clients would buy a refrigerator for its esthetics and the quality of craftsmanship (Richard 2006). When the other set of experts that deal with the marketing and accounting (hard figures), they are of a different opinion. At first they indicate that, Whirlpool will incur an additional $5 in extra production cost. Their estimation is that they are not sure that the additional investment may not pay off. However, they decided to go into research and see how other corporate have fared in these terms. They looked at the design-centric firms in their survey, and they realized they too did not have any system to forecast the sales effect on the designs. The designs are only based their investment on the past successes in esthetics. Chuck decided that he would have to rely on the customers so as to get their opinions in terms of the right designs, and he and his team changed the company’s policy (Isenberg, 1984:56). The company moved from developing standard models to getting customer focus groups that were to help in selecting a set of designs that were detailed and in tune with the customers’ tastes. The approach transformed the company culture, and the clientele did respond more positively since that shift (Pankaj 2002).
The case above did yield much in terms of how the designs (ornamentation) would influence the sales figures for the refrigerators. The decision, which is made by the company is one that shows that there may be a problem with the way decision-making. However, the company has an open policy, and they allow an employee to take an initiative and as long as it has a good outcome for the enterprise. For instance, the chief designer has taken up the design of the refrigerator to a new level so as to figure out a way to have higher sales. In terms of strategic development, this is commendable for it divides responsibility of work to different teams as long as they are working on the same larger objective. In this case, the designer has taken a giant step, and the company is reaping from the step (Fama & Jensen, 1983).
Conclusively, strategic management is vital to every organization. There are different theories that seek to figure out how this concept implementation in an organization. The theory, which elaborates the case in question, is the agency theory.
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