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Strategic management and performance in the international environment

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 8th International Conference on Contemporary Marketing Issues, Virtual Conference, 11-13
September, 2020

Strategic management and performance in the international environment

Rossidis I.,1*,Belias D.,2 Papailias S.3

1
Lecturer in Administrative Science, University of the Peloponnese, Tripolis, Greece
2
Dept. of Business Administration, University of Thessaly, Greece
3
Dept. of Business Administration, University of Thessaly, Greece

*Corresponding author: Ioannis Rossidis, E-mail: i.rossidis@uop.gr

Abstract
This paper will provide an extensive bibliographic overview of the current trend of Strategic Management and
Performance Management partnerships, illustrating the prospect of improving business performance in order to
enhance business competitiveness in the international market. The ever changing conditions of the international
external environment are driving businesses to focus more and more on strategic management, prompting
immediate interventions at the level of organizational performance. The research will focus on the ways of adapting
performance management at a strategic level responding to changes in the international environment. Through the
analysis, modern strategic management tools will be used for the benefit of enhancing the organizational
performance of businesses. The paper will conclude on the need to bring these two important sectors together in the
interest of business efficiency and effectiveness.

Key words:Strategic Management, Performance Management, International Environment

JEL Classification:L1, M1, M16

1.INTRODUCTION

For companies today, the most important concern of their executives is to formulate their strategy. Strategy
formation is a key process of strategic management. Utilizes the elements of the previous stage of strategic
management which is the analysis of the environment and gives the direction for the implementation of the strategy,
creating a set of interrelated actions and processes (Steinbach et al, 2017). It should be noted that Strategy Formation
is the development of long-term plans for the effective management of opportunities and threats in the environment,
in the light of the strengths and weaknesses of the business. It includes defining the company's mission, adopting
achievable goals, developing strategies and setting policies, and the whole strategy-making process goes through
several key stages (Rothaermel, 2016).
For many, strategic management is about big business, especially multinationals. As a point there is a logic
at the base that most models have been applied mainly to large companies. But something we often forget is that the
backbone of the economy is small and medium-sized enterprises and industries such as construction. That's why this
paper looks at how businesses can use strategic management theorems to become more competitive in the midst of
the economic crisis and what practices can be used in order to achieve high performance. It is important to stress the
value of this paper as we know that the environment upon which the companies.

2. METHODOLOGY

The methodology used in the present paper is the critical review of the literature. The sources of relevant
literature investigation derived from high quality scientific journals, books, conference proceedings, business reports
etc. he authors have used a variety of sources based on their accessibility provided from the institutions where they
are working. The selection criteria of these literature sources were based on the relevance to the topic of the paper,
the date of the publishing (focusing on the most recent researches) and the validity of the bibliographic sources.

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3. LITERATURE REVIEW
3.1Corporate strategy in international environment - Definition of corporate strategy

The definitions of the strategy found in the literature are varied and interesting. Sun Tzu argued that
strategy-making depends on weighing the strengths of each side. The phrase "with many calculations one can win"
does not mean that one often does the same things in the same way and the same numbers will change the result and
turn the sure defeat into a victory, but it implies that if one has all the necessary data and make the right analyzes
and calculations can design a winning strategy. " This is also the first known description of a strategic planning
process from Sun Tzu's thoughts (Rothaermel,2016).
Overall, the strategy could be defined as the long-term goal of an organization. However, summarizing all
of the above, we could describe the strategy with a more complete definition as follows: Strategy is the direction and
scope of an organization in the long run, which provides it with an advantage in a changing environment through
harmonies. (resources) and competencies in order to meet the expectations of the stakeholders who serve the
interests of the organization (Gomez-Mejia et al, 2009).
Strategy in today's business is the necessary compass of political and business decisions and guidelines,
while at the same time supporting all other decisions and structures of its organization. In addition, the strategy
determines the direction and orientation of the organization as well as the methods of implementing these options.
Finally, the strategy can reduce the climate of uncertainty and through the correct arrangement of existing and
available resources to achieve wonderful results (Thompson et al, 2012).
Strategy does not guarantee success but it is the most important tool for it because it sets guidelines,
unanimously supports decisions, concentrates efforts and coordinates activities, while reducing uncertainty and
giving a sustainable character to the competitive advantage of any business. If we wanted to conclude from all of the
above, we could say that strategy leads to consistent decisions ensuring the coherence of a business, setting
directions at the same time, and it is what defines the business, reduces uncertainty and ultimately gives a
sustainable competitive advantage ( hompson et al, 2012).
Strategy is an important part of administrative science and for this reason it concerns all the activities of an
organization. For this reason, the levels of strategy in an organization will be examined.

3.2. Corporate strategy on the different organizational levels

Most organizations have three levels of management: the lower level, the middle level and the higher level
and at each level it has the appropriate executives. These executives are classified in a power hierarchy to perform
various tasks depending on their position. In many organisms, the number of strains at each level resembles a
pyramid.
The levels are:

Higher level

It consists of the board of directors, the chairman, the vice-chairman, and the CEOs, etc. These executives
are responsible for controlling and supervising the entire organization. They develop the company's goals, strategic
plans, policies, and make decisions about the direction of the business. In addition, these executives play an
important role in mobilizing external resources and are accountable to shareholders and the general public. The
skills they need to have are to be able to understand competition, the global economy as well as the political and
social impact of organizational efficiency trends (Gomez-Mejiha et al, 2009).

Medium level executives

It consists of the general managers, the store managers and the heads of the departments. They are
accountable to top executives for their services. A middle executive will devote more time to organizational
functions. Some of their functions are as follows:

The design and implementation of the strategic plan

Determining and monitoring at group level the performance indicators.

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Diagnosing and resolving problems within and between working groups.

The design and implementation of staff support systems (Gomez-Mejiha et al, 2008).

Lower level

It consists of supervisors, foremen, etc. and focuses on the control and supervision of daily operations.
Employees are assigned tasks while the lower executives guide and supervise the employees in their daily activities,
ensure the quality and quantity of production, make recommendations, suggestions, and manage the problems of the
employees, etc. The managers who belong to it the level is standards to be imitated for their employees (Gomez-
Mejiha et al, 2008). Their core skills are basic supervision, motivation performance, career planning and
performance feedback.
It is important to stress that regarding the performance of an organization, the performance of an
organization is achieved on all levels. Each level of organizational hierarchy needs to find ways to adjust its
operations so to achieve high performance. For example, the high ranks of the hierarchy need to establish the long-
term strategic targets and to define what is high performance for a company that operates in the global environment.
On the other hand, the lower layers of the hierarchy will cope with how they will achieve the targets set, probably by
setting short-term targets which will be adjust on the nature of the operation of each department (Johnson and
Scholes, 2009).

3.3. The implementation of strategic management in an effective way

In order for a strategy to be implemented properly, the management of an organization must be able to
coordinate the 3 levels of strategy. That is why it is important to have strategic planning, where there is coordination
of all levels of strategic management. To better understand it, we will analyze its usefulness for businesses.
An important element for the proper functioning of the levels of the strategy is to have the appropriate
distribution for the managers in relation to the organizational chart. The company's organizational chart usually
shows where the managers in the organization and the employees are. It also shows the relationships between
managers and their relationship to higher levels, external consultants and anyone else working in the organization. In
many large companies the organization chart can be large and complex and in many cases can be divided into small
sub-charts for each department. In the case of large organizations that operate in the international context, the
organization chart can operate on the basis of each branch or subsidiary so that it can be adapted to the needs of the
local market (Bergh, et al., 2019).
Every company, regardless of its size, can have its own organizational chart. In general, the organizational
chart shows the structure of the organization. In this way the organization chart defines the "command line" and sets
out the basic rules for who is collaborating with whom. A key distinction is as follow (Lasserre, 2017).

The hierarchical organization chart of the organization is divided into several levels, where the
command line follows a path down from the highest level to the lowest level.

In the matrix the organization chart is the division between the different groups that may have a different
object but must work together on different projects. In this way, the areas of cooperation and who is responsible are
identified.

There are few or no levels of hierarchy at the level of organizational charts. It can only present
managers and employees on a single level.

At this point, it is interesting to remind of the fact that an important :

Strategy is a term that has been used for a long time. It comes from the word general. He later referred to
the skills and knowledge of psychology and behavior that the commander of an army should have (Thompson et al,
2012).
Strategy is the general plan for dealing with an issue, for solving a problem. The strategy should have
tactics, goals, and objectives (Johnson and Scholes, 2009). Strategy is a coherent, unified and integrated decision-

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making system. Defines and reveals the purpose of the organization in terms of long-term goals, action plans and
priorities for determining resource allocation. Selects the areas in which the organization is active or is going to be
active. It strives for long-term maintenance of its advantageous position in each of its programs, responding to the
opportunities and threats from its environment and to its comparative advantages and weaknesses that stem from the
organization itself. It occupies all the hierarchical levels of the organism. It defines the nature of financial and non-
financial contributions to staff, management, the public etc (David & David, 2016).
Regarding the relation between strategic management and high performance in the global / international
environment, it needs to say that the strategy becomes a key framework through which the organisation confirms its
vital continuity, while facilitating the adaptation to the evolving environment. The existence of a strategic policy in a
modern organization is imperative due to:

1. The need to survive in a climate of constant change in the international environment. The consequence of this is
the inability to securely predict future trends in the international system.
2. Pressures on business financing, especially in emerging economies. The need has been created for the
measurement of efficiency, for rational management, for operation according to the market economy.
3. The existence of more demanding consumers at all levels for the goods and services provided. The increase in
disposable income, leisure, education and the largest exposure to the media made the consumer more sensitive to
quality issues.
4. Globalization, in the existence of products-services that present a very high degree of standardization-
homogenization around the world.
5. Of the massive increase in supply and capacity of most consumer goods, which surpassed the increase in demand
from visitors. This has led to intense competition between companies. Thus, trying to attract the same visitors, they
impose changes in the management of their organizations (Mullins, 2009)

The result is that the strategy has evolved in recent years into a panacea for all forms of business. Even in
companies that for many years were not the focus of interest, such as non-profit ones, strategic management is now
considered a panacea for them (Griffin, 2009).
We could say that the strategy is not about a single function of the organization, on the contrary it is a
school of thought that concerns the whole organism. Essentially, it starts with the vision of the organization or the
people who have created the organization and transforms into strategic actions. But in order to do that, that is, to
move from thinking to action, there must be a series of decisions, setting goals and managing available resources so
that the strategy can be implemented. In addition to the internal environment of the business, the strategy takes the
external environment as well. It essentially helps the organization to adapt to the demands of the environment in
which the organization operates. So it is reasonable to understand that the strategy does not only concern some
specific functions, persons or departments but the whole organization.

4.
INTERNATIONAL ENVIRONMENT THE USE OF BLUE OCEANS STRATEGY

4.1. The blue ocean strategy and effective performance

he term blue ocean strategy, or blue ocean strategy, was introduced into the literature by Kim and
Mauborgne (2005). Kim and Mauborgne's (2005) book is about the study of 150 strategic moves examined over a
period of 100 years in 30 disciplines.
Kim and Mauborgne (2005) show that businesses can benefit not from competing with their competitors
but from creating a "blue ocean" that is a non-competitive space. In short, it is a free space that the business can
move more easily. These strategic moves create an advantage for the company as well as give it innovative value.

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Figure 4-1:Valuable innovation: The cornerstone of the blue oceans

Value is also created for employees, buyers, the public, etc. through the creation of new markets and the
establishment of competition from scratch. For this reason, Kim and Mauborgne (2005) present a book that contains
the relevant methodology and tools so that a company can develop this strategy. In terms of the structure of Kim and
Mauborgne's book (2005), it consists of three parts. The first part presents the main concepts of the blue ocean
strategy, with an emphasis on value creation through innovation but also on other strategies such as cost leadership
and differentiation. The main tools such as the strategy canvas, four actions framework, etc. are also presented. The
second part of the book refers to the 4 principles of the blue oceans as well as the six paths to achieve it and a
number of other principles related to the blue oceans. For this reason the book uses relevant examples that are
extracted through case studies (Bhargava et al, 2018).

The aim is to be able to show n the stakeholders the need to break away from the traditional way of
thinking and to follow a more innovative way of thinking as the approach of the blue oceans.

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Figure 4-2:Red ocean vs Blue ocean strategy

In general, Kim and Mauborgne (2005) report that the strategy of the blue oceans is based on 4 basic
principles:

Creating new markets where there is no competition through border expansion

Emphasis on this whole new market
The company can reach beyond the existing demand
Strategic sequences can be correct.

The third part of the book deals with two basic concepts for the implementation of the strategy of the blue
oceans which are the leadership and the right procedures. These two concepts are necessary for the leadership of the
organization to overcome the obstacles presented in the 4 basic principles. For this reason, there should be a similar
leadership.
Kim and Mauborgne (2005) use the metaphorical meaning of blue and red oceans to describe a market.Red
oceans mean the existing markets that businesses are moving to today. In the Red Oceans there are specific limits to
purchases and these are accepted by all involved.
That is why companies are defined as operating in a very narrow context and the prospects are also limited.
As a result, there is a very limited space for a company to move, and the competition across its range of operations is
fierce, leading to the bloodshed of competing companies in terms of resources, cost and revenue (Hubbard. &
Beamish, 2011).On the other hand, there are the blue oceans. Blue oceans refer to a market that is unexplored. It is
an unknown field of action where there is no competition.
That is why the proposed strategy is due to the fact that the lack of competition leads to low-cost
investments, while the rules of the game will be demarcated by the company itself, which has entered this new
industry first. That is why the need to create blue oceans is mentioned as an approach that allows the company to
operate effectively and at low cost.

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4.4. he need to adopt such strategies

Especially since there is an
economic downturn, then this framework is particularly limited, as is any profitability they may have (Alam and
Majumbar, 2011). In the above case we refer to companies that move in the so-called red oceans. The use of "red"
has a metaphorical meaning and concerns the fact that companies will have to devalue themselves in order to gain a
competitive advantage (Burke et al, 2016).
The Red Oceans are characterized by the fact that the sectors have limited limits and the terms of the
competition are very specific. In fact, in many cases there are oligopolistic situations that do not allow small
businesses to grow or the entry of new businesses. Businesses wishing to stay in these markets will have to invest a
lot of money in actions that will help them stay in the markets (Thompson et al, 2012). If we consider the case of
Greece where the crisis has limited consumer action but has also eliminated sectors such as construction, then it is
understandable that a lot of capital should be invested and may never yield any results. So in this case the red ocean
is an area (market) that can't offer much to a business. It may be able to offer a few companies that have high stakes
and have established a strong presence, but these are a few companies (Hubbard and Beamish, 2011).
That is why there is an alternative to the blue oceans. This strategy stems from the need for businesses to be
able to find untapped markets that can export large and stable profits from them. In fact, in many cases, those
interested cannot look too far. They will be able to locate the blue oceans in the space they are moving. For example,
expanding the boundaries of an industry considered red ocean could ultimately lead to a blue ocean strategy solution
(Thompson et al, 2012).
In our effort to quantify how much the creation of a blue ocean affects the profits and revenues of a
company by studying the course of 108 new companies, we found that 86% of new companies see a 4-2 scheme
being launched are extensions of the red oceans, small improvements implemented within the already known market
space. However, these companies accounted for only 62% of total revenues and only 39% of total profits. In
contrast, the remaining 14% of new companies aimed to create blue oceans. This 14% of blue oceans is responsible
for 38% of total revenue and has a 61% impact on total profits. The benefits generated by blue oceans are obvious.
and features are shown in the following diagram (Kim and Mauborgne, 2006).

Figure 4-4 :The effect of blue ocean creation on profits and growth.

An additional factor that leads to the creation of strategic blue oceans is the changes in the mindsets of
companies in terms of competition. While until a few years ago companies saw each other as competing and hostile
to each other, there are now many cases where competing companies are collaborating or making alliances to open
up to new unexplored markets. Instead of competing, companies are making strategic alliances to enter unexplored
markets (Kim & Mauborgne, 2017). It should be noted that alliances and synergies can lead to the creation of new
products that are unique and competitive. For example, the iphone was the product that gave impetus to a market
that was unexplored until 2006, when it was the smartphone market (Mebert, A., & Lowe, 2017)
Any attempts to do so had failed and mobile phones were limited to purely communicative functions.
Apple not only designed something innovative and innovative, but also partnered with various companies - even
competitors - to produce the iPhone, which was the result of partnerships and collaborations to enable Apple to
create and market a mobile phone that would open an unexplored market (Agnihotri,2016)

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The iphone was largely based on the need to find a way out of the maturing PC market. At the same time,
Apple did not stay afloat in the smartphone market, but expanded into other markets such as the tablet with the iPad,
however with the same recipe that was the entry into virgin markets that Apple determined the way and structures of
competition, as a result, it still has the strategic advantage in these markets (Thompson et al, 2012).

5. DISCUSSION AND CONCLUSIONS

performance they will have not only to adjust all of the strategic levels so to meet its targets and achieve a high
performance. However, it is necessary to claim that in a global environment which has many threats and dangers, it
is necessary to develop a strategy which will be in a space where a company can develop new ideas and solutions
with the minimum risks so to maximize its performance. This can be done with the blue ocean strategies which can
create a safe strategic haven for companies operating in a global context. For this reason, there is a need to have
further empirical evidence on this issue by investigating cases studies of companies who have developed such
strategies and how they benefited.

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