The Importance of Strategic Management and its Key Elements Essay

The Importance of Strategic Management and its Key Elements - Essay Example Strategy is formed at both corporate level (what industries/markets should we operate in) and business unit level (in what segments should we compete - and how). In their research, Strategic Management: Awareness, Analysis and Change, they focus on corporate level strategic considerations. The pace of change has significantly increased in recent years and the competitive arena has enlarged, driven by, for example, larger international corporates with an appetite for new markets, reduced barriers to international trade, and technology. It is possible to say that it will be difficult to apply these strategies because they focus on the process of strategy and analysis of the environment but do not involve recommendations and clear structure of strategy development. Thompson & Martin (2005) summarize some of the key shifts' in strategic management. Both researches state that the structure of the industry will significantly effect the profit potential of the business operating in that industry. The strategy and actions of a business operating in the industry may improve or destroy the industry structure. Each business (and the relevant decision takers) must recognize and evaluate the impact, short term and long term, of actions taken on the overall industry structure and attractiveness. The resource based view of the firm is currently the dominant conceptual paradigm in strategic management, and as such would appear to offer great potential to the study of the modern organization (Dobson & Starkey 2004; Gardiner, 2005). It argues that under certain conditions a firm's unique bundle of resources and capabilities can generate competitive advantage (Cole, 1998). There are also related schools of thought that focus on the development of dynamic capabilities and knowledge as drivers of competitive advantage. Curiously, there has been little explicit attention given to the resource based view of the firm in the literature, though Pittengrew et al (2000) are recent exceptions. "The multi-business firm has the potential to create the efficient sharing and transfer of core competences across divisions so that the divisions can accommodate new strategic management tools" (Pittengrew et al 2000, p. 21t of the reason for this is again the level of analysis. The resource based v iew implicitly assumes that resources and capabilities are developed and held in a monolithic firm, whereas the reality in the organization is that some are likely to be held at a firm level while others are held at a corporate level. Thus, rather than simply analyzing corporate-level resources in terms of their potential for competitive advantage, the issue is more one of combining or leveraging them on a global basis. Strategic thinking is defined as the positioning of the firm vis--vis its competitors and its customers, and with regard to its underlying resources and capabilities. For Whittington (2000), strategy is about how those two components are brought together. The organization is a value-adding unit. Thus, it is important to realize that many of the customers and even competitors will be other units within the