Towards strategic management - Marketing Strategy

Over a period of some thirty years, we have seen the concept of strategy evolve. Aaker (1995) provides a historical perspective showing how this evolution has progressed and acknowledges that strategic activity has been described over the years as:

• Budgeting: Early strategic activity was concerned with budgetary and control mechanisms. Structured methods of allocating, monitoring and investigating variances from budget provided a means of managing complex processes. The process was often based on past trends and assumed incremental development.
• Long-range planning:Here greater emphasis was placed on forecasting. Planning systems and processes tended to extrapolate current trends(with varying degrees of sophistication) and predict factors such as sales,profits and cost. Management could use such forecasts as a basis for decision making.
• Strategic planning: The 1970s and 1980s were the era of strategic planning, with emphasis placed on:
  1. specifying the overall direction, and
  2. centralized control of planning activities. While still based around forecasting and extrapolation of past trends, far greater attention was paid to understanding the business environment. Managers hoped to be able to anticipate events via a detailed analysis of cause -and - effect relationships .Planning systems aimed to provide data and logic as a means of decision support. While promoting more awareness of strategic issues in terms of the external environment, the process still tended to focus on the preparation of corporate-wide plans. This was often achieved in a highly bureaucratic,centralized fashion.
• Strategic management: We are currently in the age of strategic management. Strategic management concerns both the formulation of strategy and how such strategy is put into practice. While still undertaking analysis and forecasting, far greater prominence is placed on implementation. The concern is with managing change and transforming the organization within an increasingly turbulent business environment.

Johnson and Sc holes (1999) provide a useful model (see Figure below) summarizing the main elements of strategic management. Strategic problems can be viewed as having three distinct components. Firstly analysis:we need to understand the business environment and the resource capabilities of the organization. This needs to be considered in the context of the organization’s culture and the aspirations and expectations of the stakeholders. (‘Stakeholders’ are taken to be anyone with as take in the organization, for example, customers, employees, suppliers.)Secondly, managers need to make strategic choices. This is achieved via process of identifying, evaluating and selecting options. The organization needs to define:

1. what is the basis of our strategy –so-called ‘generic’strategy,
2. what product/market areas will we operate in, and
3. the specific strategies to achieve corporate goals. Finally, the issue of implementation must be considered. There is the need to plan actions, allocate resources and, where appropriate, restructure to achieve strategic change.

Elements of strategic management

It is important to remember that strategic management is not the orderly, logical sequence of events/activities that managers wish for. Practical reality means that processes are interlinked and overlapping. For example,strategic analysis does not stop (or at least should not stop) when other stages take place. Analysis is an ongoing activity. Equally, creativity, vision and leadership are required to turn analysis into successful strategy. Given the volatility in today’s business world, a contingency approach may be required. This provides flexibility by developing contingencies for a range of future scenarios.

Porter (1998) provides an interesting perspective and views strategy in terms of:

1. developing a unique position by choosing to perform differently from the opposition;
2. making ‘trade-offs’ with other possible competitive positions, in order to protect the organization’s competitive advantage;
3. combining activities to fit into, and reinforce, an overall competitive position;
4. ensuring operational effectiveness when executing activities.