Postgraduate Program

Department of Masters of Business Administration

Individual Assignment

“Business Policy & Strategic Management”

Conceptual Framework for the Strategic Management

Name: Wubalem Asfaw Dubale

ID No: GRS/MBA/0457/14

Sec: J

Submission date: October 2022

Submitted to:
Abstract
The objective of this work is to review the literature of the main concepts that lead to determining
the strategic approach, creation of strategies, organizational structures, strategy formulation, and
strategic evaluation as a guide for the organizational management, taking into account the effects
produced by the different types of strategies on the performance of organizations. In this article,
the systemic literature review method was used to synthesize the result of multiple investigations
and scientific literature. The process of reading and analysis of the literature was carried out
through digital search engines with keywords in areas related to the strategic management. This
research reveals the lack of scientific literature containing important theoretical concepts that serve
the strategists as a guide in the creation, formulation, and evaluation of strategies. This review
contributes to the existing literature by examining the impact of the strategic management on the
organizational performance.

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Table of Contents
Introduction ..................................................................................................................................... 1
Methodology ................................................................................................................................... 1
Strategy Creation ............................................................................................................................ 2
Organizational Structures................................................................................................................ 3
Corporative Strategy ....................................................................................................................... 4
Business Strategy ............................................................................................................................ 4
Functional Strategy ......................................................................................................................... 5
Operation Strategy .......................................................................................................................... 5
Formulation of Strategies ................................................................................................................ 6
Evaluation of Strategies .................................................................................................................. 6
Conclusions ..................................................................................................................................... 7
References ....................................................................................................................................... 9

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Introduction

“Strategy” is the main concept of the contemporary era that has come to replace previous
management activities such as “administration” or “planification.” Accordingly, the meaning of
the word strategy originated in the military field and comes from the word “strategos” meaning
general in Greek. Through time, its meaning has been evolving, being applied to other human
activities and, in particular, to business strategies. One of the main problems for their business
strategists is the understanding of the competitive environment and the interpretation of the effects
of the competition in a business [4]; in consequence for the research studies the time to strengthen
again the study of the categories and the competition in the investigation of the strategic
management (SM) has come.

The concept of strategy over time has been addressed by several authors. One of them is Chandler
who proposes that the strategy is the definition of the long-term goals and objectives of a company,
the adoptions of actions, and the allocation of necessary resources for the achievement of the
objectives. For Andrews the strategy is the model of the objectives, policies, purposes, goals, and
plans to achieve them addressed in such a way that they define in which business the company is
or will be. According to Porter the strategy is to select the set of activities in which a company
stands out to establish a sustainable difference in the market; the differentiation arises of the
activities chosen and how they are the carried out.

The review of literature of the current study is divided into four sections. In Section 1, a review is
made in the time of the definition of strategy. Section 2 describes the methodology used.
Section 3 defines and describes the strategic approaches. Section 4 describes the general
characteristics for the creation of the main strategies and defines the importance of the
organizational structures for the definition of the strategies. Section 5 defines the concept of
formulation of strategies through the strategic planning and its classification. Section 6 inquires
about the strategic evaluation, the Balanced ScoreCard (BSC) model, and its benefits and
problems. Finally, Section 7 concludes the study.

Methodology

A systematic review of literature has been carried out as appropriate methodology, in order to
produce a reliable knowledge inventory, according to what is proposed by Several authors have
used systematic review of literature to carry out their research, for example, Crossan and Apaydin
proposed to synthesize several perspectives through an integral multidimensional framework on

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organizational innovation; Peres and Fogliatto [showed the current state of the integration of the
methods of selection of variables for the multivariate statistical process control; Nguyen et al.
studied the behavior on online consumer and order fulfilment operations; Charband and
Navimipour provided a comprehensive and detailed review of the state-of-the-art mechanisms of
knowledge sharing in the education field as well as directions for future research; and Pashazadeh
and Navimipour provide a comprehensive and detailed and systematic study of the state-of-the-art
mechanisms in the big data related to healthcare applications until year 2016.

For this research, the searching process is limited to published literature, including books,
conference proceedings, and literature obtained from electronic sources, mainly databases of
scientific data. The searching engines used were Proquest, Scopus, EmeraldInsight, Science
Direct, and Google Scholar. The keywords used are industrial organizations, organizational
behavior, strategic administration (SA), strategic approaches, and strategic evaluation. The articles
reviewed are in the area of organizational structures, SM, management control, and strategic
planning. This research covered the review of 5,400 publications from which 69 books, 7
conference articles, and 140 journals made major contributions.

competes Thus, it should have at least five attributes to be a business strategy) be measurable,
clarity in the objectives, resource consumption, assignment of responsible, and that it can be
checked. Companies now focus more on exploitation of external resources such as customers,
rather than internal efficiency, to gain new competitive advantages. People’s ideas are fed by
brands, and this exercise provides the opportunity to cocreate products in collaboration with
customers

The adequacy of the strategies can be defined from various approaches, each of which reflects
different indicators; these indicators are based on the profit impact of market strategy (PIMS)
structure in order to define the strategic potential

Strategy Creation

According to Peppard and Ward any organizational strategy must define where the company wants
to be in the future and evaluate objectively where it is now to decide how to get there; taking into
account the options, alternatives, available resources, and the needed changes. A company
achieves a superior profitability in its industry when achieving higher prices or lower costs than
its competitors; this is achieved through the operative effectiveness or the strategic positioning For
Rumelt a good strategy is a coherent set of analysis, concepts, policies, arguments, and actions that

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give responses to a high-risk challenge. The strategies based on the costs have been considered
among the generic forms of strategic positioning

According to Reitzig and Maciejovsky the creation of a strategy is not only a task for the
executives; on the contrary, the definition of the business approaches and new measures to initiate,
involve all the hierarchy levels of the organization (head of business unit, heads of products, heads
of functional areas within a business or division, administrators, and supervisors). The academics
and professionals are more and more interested in the concept of sustainability (integrated measure
of the economic, social, and environmental performance) For Iazzolino and Laise the strategies
must be socially sustainable, creating value not only for the shareholder but also for the other
interested, for the employees. According to Radomska the sustainability issues in the strategies are
becoming a natural element of the business policies, and their actions are important for the business
of the company and for the financial result, as to cost reduction, cleaner production, gas reduction,
and so on. For supply change management, the sustainability is an important issue, creating a new
age of business thinking and a source of competitive advantage.

In general, to create strategies, authors such as Král and Králová suggest that all starts from the
analysis of the environment surrounding the company, pretending with it the proposition of action
plans, aimed at improving competitiveness. According to Nikulin and Becker in order to analyze
the situation in which a company is found, the most commonly used is the SWOT analysis, which
allows to determine strengths and opportunities of the company as well as the weaknesses and
threats that the market offers in the scope of its business. According to Hill et alZ. in order for a
strategy to be successful, it must be designed in the following way: simple, coherent, and long-
term goals;deep knowledge of the competitive environment; objective evaluation of the resources;
and effective implantation.

The organizations change through the transformation and restructuring of the resources and
capacities One of these transformations implies to decide what kind of organizational structure is
the most propitious to achieve a competitive advantage.

Organizational Structures

Good organizational structures act as moderators for improving the influence that leaders have
about the behavior, performance, and work of their subordinates, in search of the satisfaction of
the client Different authors have defined the concept of organizational structure. For Mintzberg all
are the patterns of design to organize a company, taking into account all the forms in which work
is divided and the subsequent coordination of the same, searching to meet the proposed goals and
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to achieve the objectives set. For Strategor and Anastassopoulos an organizational structure is the
set of responsibilities and relations that formally determine the functions that each unit must
accomplish and the way of communication between each work team. Chin made an evaluation of
how the leadership of men and women influence in the organizational structures, this author states
that skills of men and women gain similar legitimacy, but when an organization fails, the
perception of competence of women leaders, the status, and the interpersonal skills fall more than
those of men.

The following are the requirements for the implementation of an organizational structure:
hierarchy of power and authority for the establishment of responsibilities and goals, which must
be verifiable, accurate, and achievable for them to be precise they must be quantitative and for
being verifiable they must be qualitative. There must be a clear definition of the duties, rights, and
activities of each person. The area of authority of each person must be set, that everyone must do
to achieve the goals To know how and where to get the necessary information for each activity,
each person must know where to get the information and it must be provided

Corporative Strategy

The objective of this strategy is to add value to the business portfolio of the companies reaching
to overcome its competitors. If an organization is in more than one line of business, a strategy at a
corporative level will be needed (diversify company). The corporative strategy can be understood
as the possibilities that an organization has to define its future positioning. The way to announce
this positioning can go from simple motivation messages until reaching to strict objectives and
deeply detailed of the business, relating the indicators and the variables of business, with a rigid
methodological approach. Examples of that are the competitive priorities, which are translated
from the operative decisions derived from the corporative strategies and the client requirements

Business Strategy
The strategy at business level generally is the same that the corporative strategy of the organization.
Action plan for the small organization with only one line of business or the big organization has
not diversified in different products or markets. The business strategies have potential to make an
impact of first order about the risk of financial accident, a direct economic consequence for the
owners, and investors of the companies. These strategies are approaches and measurements created
by the administration with the aim of producing a successful performance in a specific business
line. The main importance of the business strategy consists on how to create and reinforce the

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competitive position of the company on a long term in the market. According to Bentley et al.
different authors provide typologies that describe how companies compete in their respective
market environments. Porter describes the business strategies in terms of leadership in costs and
differentiation of products; March in terms of exploration and exploitation; Treacy and Wiersema
in terms of operational excellence, leadership of product and trust with the client; Miles and Snow
and Dekoulou and Trivellas in terms of innovation to identify and explore of new products and
market opportunities; and Quezada et al. they describe a methodology to formulate business
strategies in small and medium manufacturing companies. These authors evaluate and generate
action plans to improve the competitiveness, taking into account the owner preferences.

Functional Strategy

For Dubey and Ali this strategy is close to the definition of processes and actions, that is, it
responds to how things must be done or how must be used and applied to the resources. The
functional strategy depends and must be well defined and aligned with the corporative and the
business strategies. According to Sharma and Fisher the main types of functional strategies are:
production strategies I + D strategies marketing strategies [human resources strategies
technological strategies organizational strategies and financial strategies It is considered that the
production strategy has been the most effective in the past and will continue to receive the
maximum priority in the next years. In general, continuing with the order of importance are the
technological strategy and the human resources strategy. The I + D strategy is the second highest
in importance in the last few years.

Operation Strategy

Within the two functions is the configuration of a reference framework for the planning, the control
of the production and fixation of guidelines to evaluate the contribution of the operation
management to the general objectives of the company. The operation strategy starts from an
analysis of the environment, the market and the competitors, as well as a study of the available
internal resources, to fix objectives and plans of route. The corporative values serve as guide when
planning the operation strategy. The final objective of the operation strategy is to find competitive
advantages that clearly difference the company from its competitors It is that the value added to
the product or service offered justifies a higher price in the final product that the customer is not
only willing to pay, but satisfied to do it. This advantage must be sustainable overtime and difficult
to imitate, among other qualities. The main responsibility of this strategy is delegated to the
director of the operations area, subject to revision and approval for administrators of higher rank
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(general director or directive board). According to Wheelwright it is necessary to design and
implement operation strategies coherent with the business mission, always supporting the
corporative objectives This strategy must provide the objectives of production to achieve
competitive advantages, focusing in a uniform decision making model within the category of the
key resources of production Moreover, to announce the way in which the business units develops
or deploys the production resources,

Formulation of Strategies

The main thing is to detect if there is or not a strategic problem or also called strategic GAP. There
is a strategic GAP when the objectives set forth in the future cannot be achieved with the current
strategy. According to Chang and Huang the SM process consists of three stages: formulation of
strategies, implementation of the strategy, and evaluation of the strategy.

In order to generate strategies, a previous analysis of the organizations that evaluate the definition
of goals, the analysis of the situation and the planning must be carried out. Any company,
regardless of the size, kind of industry, business segment, or country where its activities are
developed, must have a process that allows the disposition of a methodology to formulate
strategies. According to Sadler this methodology initiates with the formulation of the strategic
planning (FSP), defined as the way to diagnose and analyze the current competitive position and
strategic problems that are affecting the company. FSP must be the guide to visualize what is
wanted to be achieved and how the companies will achieve it. A correct FSP must start by
identifying the current competitive position and market of the company, which allows guiding in
a better way the destiny of the company. According to Masoud through the FSP, it is possible to
identify the areas that require improvements in its strategies and, at the same time, align them with
the functional competences and compare them with the initial strategy, if it exists.

Evaluation of Strategies
According to Uhl and Gollenia the strategic evaluation consists of measuring the impact that has
had the strategic planning, opening the possibility of taking the necessary corrective actions. This
process serves the organizations for knowing and analyzing if the proposed actions are really
directing the company in the right direction. The processes of strategic evaluation are made
through the analysis of quantitative and qualitative data The quantitative approach allows
understanding the results in light of the investment and the growth forecasts; the numerical part of
the results is measured starting from the key performance indicators (KPI). The qualitative

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approach allows to understand causes and consequences and interpretation of situations beyond
numbers; this type of analysis will serve to know the effectiveness of the strategy and the
departments of the organization that need corrective actions.

For the strategic evaluation, according to Cokins all those factors coming from the environment,
being threats or opportunities, that directly affect the operation of the strategy and that require an
effective response must be considered. To identify these factors, it must be analyzed that the
objectives set are the right ones that the observable results are consistent with the initial states, and
the analysis of the plans and politics implemented are the right ones.

Conclusions

The strategies define the efficiency by which an organization reaches its objectives satisfying the
needs of the customer, for that great part of the responsibility depends on how well administrators
do their work. The skills learned for high direction are essential to assure the maintenance and
successful growth of the competitive strengths of the companies in the long term. The top manager
is in charge of making critical decisions in the assignment of personnel and financial resources;
this kind of decisions determine the fate of the companies and, often, all the country industry.

SM offers companies to add value, create, find, reinforce, and overcome its competitive position,
indicating what actions must be adopted to achieve this position. The formulation of strategies
allows companies to stand out the addresses or course of action in the future, indicating the action
guidelines, marking a behavior in time, defining the internal management of the company with the
objective of placing the organization in the best competitive environment to achieve the success.

Business success demands a continuous adaptation of the company to its environment. The
competitiveness becomes the economic criteria by excellence to orient and evaluate the
performance inside and out of the company. The business success depends in great measure on the
kind of strategy adopted by the company; the companies are required to define strategies that allow
the access to the actual competitive world, and if these strategies are not accompanied of the
management tools that guarantee their materialization, the efforts are useless. There are several
strategies and many tools that support each of them, however, the strategist must know and define,
based on internal and external diagnostics which are the most indicated strategies that allow to
arrive to a competitive advantage over the competitors of the same branch. This paper proposes a
guide through a systematic literature review, which allows administrators and researchers to know
general concepts and steps that must be followed when doing SM within their industrial

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organizations, allowing to know their position in the market and from there, to define where they
want to go in the future.

Even though it is not a guarantee of success, SA allows organizations to make efficient decisions
in the long term, take them to practice efficiently, and start corrective actions as needed. A key for
the effective strategic evaluation is an integration of the intuition and the analysis.

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