Important Business Concepts
Essay Preview: Important Business Concepts
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Important business concepts are utilised in every job we have. From creating the vision for a corporation or acquiring competitive advantage through to administrative roles and customer service, each has strategic components built in that provide the framework for completing these roles.
This essay attempts to identify the concept of strategic management, as well as give a cursory review of its evolution, and the relative importance of the concept to the overall development of strategic management. It then discusses the relative importance of the three levels of strategy that exist, and finally discuss differences between strategic decisions and other business decisions.
The evolution of strategic management has provided many challenges, not least of which is the inability for a single cohesive interpretation of the meanings behind the concepts that make up strategic management (Hussey, 1998).
Whatever the context, most views are that the concept of strategic management shares underlying themes including being future focused, environmental scanning, strategy formulation, strategy implementation and evaluation and control. A key issue is having a clear sense of an organisations goals and how it will achieve them.
Strategic management can be seen as an umbrella concept that covers almost all the functional areas of an organisation in that it “is an ongoing process which utilises a wide ranging set of tools/concepts in order to achieve the end goal, and these have been categorised into the three part model encompassing issues of context, content and process.” (Johnson, Whittington, Scholes, 2011, pg14).
Over its evolution, strategic management has also been known as business policy, corporate strategy or corporate planning and has been defined as by Gluek (1980, pg6) as …that set of decisions and actions which leads to the development of an effective strategy or strategies to help achieve corporate objectives.” Its a continuous process of shaping an organisations objectives and goals, taking into account internal and external factors and environments, creating and applying strategies to ensure goals are successfully attained.
The concept of strategic management has evolved through a combination of scholarly input and having to respond to and survive within the ever changing face of the business environment and the challenges this has raised.
It originated as a discipline in the 1950s where the emphasis was on budgeting. However in the 1960s this was replaced by a move towards long-range planning. Alfred Chandler (1962) recognised the importance of co-ordinating various aspects of management under one overall strategy (Wikipedia, sec 7). He also stressed the importance of future proofing by having a long-term view and that a long-term approach across an organisation was required in order to give a company structure, direction and focus. Initially the theory emphasised how market structure and the degree of rivalry between competitors could influence a companys performance. This work was further enhanced by Igor Ansoff (1965) who added a range of strategic concepts that supported a formalised process for strategic plans. As well as developing a strategy grid comparing