“Compare and contrast different perspectives of strategic management, and how and why is ‘context’ important?”

  1. Introduction

The assignment is written to provide argument over the statement mentioned above. To understand this statement fully it is crucial to understand the meaning of strategic management. Therefore, this assignment, first of all presented the definition of strategic management and its elaboration. Later, different perspectives of strategic management are discussed in the assignment. Final section elaborates on the importance of ‘Context’ for strategic management.

  1. Strategic Management

Johnson and Scholes (2005) stated that strategic management is the set of decisions and actions resulting in formulation and implementation of strategies designed to achieve the objective of an organization. It involves attention to no less than nine critical areas:

  1. Determining the mission of the company, including broad statements about its purpose, philosophy, and goals.
  2. Developing a company profile that reflects internal conditions and capabilities.
  3. Assessment of the company’s external environment, in terms of both competitive and general contextual factors.
  4. Analysis of possible options uncovered in the matching of the company profile with the external environment.
  5. Identifying the desired options uncovered when possibilities are considered in light of the company mission.
  6. Strategic choice of a particular set of long-term objectives and grand strategic needed to achieve the desired options.
  7. Development of annual objectives and short-term objectives and grand strategies needed to achieve the desired options.
  8. Implementing strategic choice decisions based on budgeted resource allocations and emphasizing the matching of tasks, people, structures, technologies, and reward systems.
  9. Review and evaluation of the success of the strategic process to serve as a basis for control and as input for future decision making.

As these nine areas indicate, strategic management involves the planning, directing, organizing, and controlling of the strategy-related decisions and actions of the business. According to Pearce & Robinson (1988) strategic management also means their large-scale, future-oriented plans for interacting with the competitive environment to optimize achievement of organization objectives. Thus, a strategy represents a firm’s “game plan.” Although it does not precisely detail all future deployments (people, financial, and material), it does provide a framework for managerial decisions. A strategy reflects a company’s awareness of how to compete, against whom, when, where, and for what.

  1. Importance of Strategic Management

It is important to understand the importance of strategic management. A variety of reasons may be adduced to justify business policy or strategic planning. One justification is that it has been found useful in practice. Research studies based on the experience of companies and executive viewpoints, have indicated that strategic planning contributes positively to the performance of enterprises. Studies made by Igor Ansoff and his associates (Ansoff et al, 1971) have revealed that companies which had undertaken formal strategic planning not only outperformed the non-planners on most measures of success (return on equity, growth of sales, earning per share, and value of the firm), but significantly outperformed their own past results as well; besides, the companies that used strategic planning were able to predict the outcome of planning much better than others.


  1. Perspective of Strategic Management

Each organization requires different strategic planning, as there is no single strategic planning model that suits all organizations.  Every organization has to develop model of strategic planning according to its own development, its nature of business and as per their own planning process. These models provide an extent of options on the basis of which different organizations might be able to select an approach and initiate to grow their own strategic planning process. Any organization might select to combine the models suitable to their planning process, for example, they can use a Basic model to recognize strategic issues and aims, and then they can select an issues-based model to develop approach to initiate the issues and grasp the aims. Few prominent models are explained as under.

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i. Basic Strategic Planning/Model

According to O'Regan and Ghobadian, (2002) basic strategic planning process is commonly adopted by the organizations which are very small, engaged, and those who have not executed basic planning earlier. The process is suitable to equip the company in initial years to get a reason of how planning is organized, and then geared up in subsequent period with increased planning stages and activities to secure selective direction. Top-level management usually carries out planning. The basic strategic planning process includes:

  1. Ascertain the identity of purpose (mission statement) – First of all the purpose ...

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