BMP6002 STRATEGIC

MANAGEMENT
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Section 1: Answer 1

Strategy is a comprehensive action plan that is formulated to identify long term direction for
a company and guide resource utilization to accomplish organizational goals with a
sustainable competitive advantage. Strategies can be developed by two approaches namely
prescriptive and emergent. Prescriptive emergent to strategic planning implies intentional
planning and formulating of a deliberate and rational strategy by the management based on
pre-determined objectives and organizational priorities. On the other hand emergent strategy
is a sequential pattern of action which is developed overtime in an organization in the
absence of specific goals or mission. The following essay will compare and contrast between
these two approaches and discuss their contribution towards the above stated aims.

Strategy is a crucial organizational subject which defines the success, failure and
development of all kinds of organizations from entrepreneurial start-ups to multinationals,
from government agencies to charitable organizations. It is a common component in all
organizations necessary for their sustenance (Svatošová, 2019). However, approaches to
strategic planning differ from organization to organizations. As stated above Prescriptive and
emergent and two approaches towards strategic planning. A prescriptive strategy can be
defined as a strategy whose objective has been defined in advance and whose primary
elements are developed before the strategy is developed (Lynch, 2018). Prescriptive approach
towards strategic planning is a deterministic and systematized process where analysis of an
organization, its performance and impact of external environment by the management results
in the creation of long-term rational plan which is focussed to make the organization achieve
its goals (Lynch, 2018). On the other hand an emergent strategy can be defined as a strategy
whose final objective is unclear and the primary elements are developed during the course of
its life. It is an approach whose ultimate objective is undecided (Lynch, 2018).

There has been raging debates in the literature over the value of emergent versus prescriptive
approach to strategic planning. Comparisons have been made between these approaches to
draw out which of these can be more advantageous for organizations. These debates and
arguments were supported by influential scholars like Mintzberg. It has been argued in the
literature that prescriptive strategic planning does not address environmental uncertainty
which prevails around the operations of an organization (Shah et al., 2015). On the other hand
emergent strategy offers a more flexible approach towards environmental uncertainty.
Emergent approach towards strategy is focussed with strategic thinking and organizational
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learning (Maritz, 2018). These strategies are typically considered to be dynamic and evolve
during the course of business while the formulation and execution being intertwined
processes. However, the rational or prescriptive approach towards strategy and planning
which is although considered to be “unfashionable” is still a dominant approach in both
textbooks and in organizations (Maritz, 2018). It has been argued that this approach defines
clearly the organizational objectives which are to be achieved. This provides it with a plan to
channelize all the efforts towards the define objective. However, this characteristic of a
prescriptive approach is also argued to be its demerit. As a clear ultimate objective is already
set, the organization has no scope to consider any unexpected change which can occur
impacting the entire organizational process to allow a different final outcome (Shah et al.,
2015).

Strategy development and implementation in a prescriptive approach is rational which

follows a rational selection of the options from criteria identified. In almost every case the
selection is done after consideration of necessary controls and others matters which are
critical in practice. This is done by top level management. The decisions are then fed back
into resources and the environment of an organization (Coffie and Blankson, 2018). For
example resources can be the new factories and environment may include new customers
which will be attracted after the implementation of new strategy. On the other hand strategy
development and implementation in the emergent approach is experimental. There is no
agreed or final strategy but a sequence of experimental process identified by people who are
directly involved. Unlike in the prescriptive approach, both employees and management are
involved in an emergent approach (Lynch, 2018). Strategy development and implementation
stages are inter-related in this approach so there is no clear distinction between these
processes.

The primary advantage of a prescriptive approach is that it provides the management with
long term strategic thinking. In a prescriptive approach leadership and management
determine and communicate strategies to the sub-ordinates and teams which sets the tone for
the employees and guides them to work towards as long term objective. This approach
carefully crafts a strategy by utilizing various methods and techniques after considering
present and anticipated environment only to define an ultimate goal (Shah et al., 2015).
Therefore, it can be understood that prescriptive approach provides an organization with long
term objectives. In this type of approach organizational resources are clearly allocated
towards the accomplishment of certain objectives. Organizations vision, missions, goals and
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objectives are clearly stated in a prescriptive approach which channelizes the allocation of
resources in the direction which achieves the long term objectives.

Emergent approach focuses on the concept of a non-static business environment where

management perceives change and complexity to be normal. This kind of approach facilitates
strategic learning from the results and the strategy itself (James, 2018). It identifies
unforeseen circumstances and outcomes from the implementation of a strategy and then
enabling the organization to learn to incorporate those outcomes into future plans of the
company by adopting a bottom up approach to management. Long term of objectives for
organizations working with this approach is to sustain profitably in the long run. Therefore,
the businesses are focussed on providing what clients and customer actually want rather than
what organizations assumed what their customers want (James, 2018). Resource planning and
management in an emergent approach is done while the strategy is already being
implemented depending on the demands of the organizational objectives.

Conclusion

The above essay discusses in detail about two approaches to strategic planning which are
prevalent in today’s organizations. Emergent and prescriptive strategies are two approaches
to strategic planning. The essay presents a brief comparison of both the strategies and also
discusses how these approaches help organizations to guide resource allocation and achieve
long term objectives.
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Section 2: Answer 4

Businesses are influenced by a range of macro-environmental forces prevailing in a business

environment. The macro-environmental forces are dynamic component which are always
changing, opening up new opportunities or closing several, increasing competition, and
increasing complexity. Without an environmental scanning procedure, an organisation might
be considered blind and deaf in an ecosystem, which will inevitably result in financial losses.
Therefore, it is necessary for firms to keep a check on these factors in order to sustain in the
business environment (Babatunde and Adebisi, 2012). There are various models which help
managers to analyse business environment. PESTEL and Porter’s 5 forces framework are the
two most common management models which are used by managers. The following essay
will compare between these models and briefly describe benefits and limitation of each
model.

PESTLE framework is a popular strategic management method used by marketers and

decision makers to identify, locate, evaluate and monitor significant external variables that
may affect an organization in the present times or in the future. This framework which makes
an analysis of Political, Socio-cultural, Economic, Technological, Environmental, and Legal
factors provides an overview of the benefits and consequences that may surround a business
at the macro level (Alanzi, 2018). On the other hand Porter’s five forces model states that
there are five forces within an industry which influence the competitive pressure. Those five
forces are supplier power, competitive rivalry, threat of substitution, buyer power and threat
of new entrant. To sustain in increasing competition organizations need to keep a close eye
on their competitors. This could be done by looking beyond the actions of their competitors
and considering the forces at play in a larger business environment.

The PESTEL model enables managers to identify macroeconomic factors to look for to
ensure a company's growth. The study of those factors can include opportunities and possible
threats that are yet known to be materialized. The model begins with conceptualising various
possibilities depending on environmental factors only to anticipate the future and make best
decisions in the present for the future of the organization (Alanzi, 2018). On the other hand
Porter's five forces assist managers to figure out where the power lies in a business situation.
This model is advantageous for identifying the strengths of a company’s existing competitive
positioning. Porter's five forces model is frequently utilized by managers to determine the
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potential of new goods and services (Baburaj and Narayanan, 2016). This model is also
utilised to find the areas of strength, address the limitations, and avoid mistakes in future by
analysing with whom the power lies.

Both of these models are the most important strategic management tools which help
organisations in improving their competitive positioning. Porter’s five force model helps
decision makers within a company to analyse the five forces and determine the structure of
industry and profit margins within that specific industry. Porter’s analysis can be carried out
at any time in an organization to determine and compare its profitability. The model provides
valuable insights from the industry to determine where the company stands by determining
which buyers and suppliers carry huge influence. It highlights the strongest competitors of a
company within and outside the industry who are to be tackled to gain a competitive edge.
The model also determines the probability of new entrants entering into an industry to
become a competition in the future.

On the other hand the PESTEL framework does not focus on providing direct industry
insights to the managers but is rather focussed on analysing the macro-environmental forces
which can impact the business and the industry on a whole. Political stability of a country,
corruption, government structure, tax and economic policies etc are the examples of several
political factors. The economic environment of an economy is evaluated by taking into
account inflation, interest rates, unemployment, currency rates. There are social issues like
income and age distribution, ageing of population, disposable income, power of social
classes, religion, emigration and immigration rates, and public attitudes toward saving,
labour, investing, and leisure time etc. Technological aspects like life cycle of a technology,
online shopping, use of internet and digital infrastructure are all considered while formulating
PESTEL. A PESTEL analysis is generally done when an organization is entering into a new
market or industry. An analysis of all these factors determines the favourability of a country,
industry or a market for a company’s products and services.

Use of Porter’s framework and PESTLE models in strategic planning provides with various
advantages. However there are also several limitations associated with these frameworks. The
advantages and limitations of these frameworks will be discussed further. The usefulness of
the PESTEL framework lies in the ability to assist the managers thoroughly in investigating
all the aspects of a wide industrial environment. It is easy for decision makers and managers
to lose sight of critical aspects of macro-environment when a business is focusing too much
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on singular aspects like consumer or industrial technological developments. However, with

the use of this framework mangers can ensure that all the aspects of an environment like
social, political, ecological, economic and legal are taken into considerations. Another benefit
of this analysis is that it helps to see activities prevailing in the environment even before they
have leave a direct impact on an the performance of an organization. It helps to spot
emerging technologies which may have a direct influence on the company or social trends
and culture that can influence the profitability.

The PESTLE analysis is done by analysing six external elements. Unfortunately, there is a
need to consider more than just these six factors in strategic planning. Internal influences on
the organizations should not be overlooked while making strategic decisions. Mangers get
only one side of the story with this analysis. Therefore, it leaves holes in due to which the
need to make assumptions may creep in which keeps the manager guessing to fill the gaps
(Perera, 2017). Another limitation of the PESTLE analysis is that any of these factors can
significantly alter in a matter of hours. For example political parties are overthrown within
days and technology may become out dated. A new legislation may come into force
overnight. All these external factors are not in control of the managers; Hence, there arises an
urgent need to revise strategies (Perera, 2017).

Analysis of Porter’s five forces allows top level management to identify where the strengths
and dangers of their firm lie. It enables management to take preventative measures against
dangers while also making efforts to enhance the strengths. However, this model also has
several flaws. The first flaw lies with its structure (Bruijl, 2018). This framework gives a
snapshot of the broader industry which is beneficial for short-term planning and execution,
but the window of relevance for information derived after applying the framework has been
shortened due to fast and ever-changing external factors (Kreps, 2019). Globalization and
modern technological advancements, for example, were not prevalent when this framework
was created. Another advantage of this framework deals with peoples’ understanding of the
same. Many people have a rudimentary understanding this concept and the ways to apply it
(Dälken, 2014). At best this lack of proper understanding may result in analysis that is partial
in nature and useless to be applied in real world scenarios. In the worst-case scenario,
incorrect application might result in misinterpretation which may in turn lead to poor
strategic decision-making (Dälken, 2014).
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The above essay discusses the importance of environmental scanning for organizations. It
discusses two of the most popular strategic management frameworks which are PESTLE and
Porter’s five forces. The essay also compares between these two frameworks and discusses
about their advantages and limitations.
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Section 2: Answer 5

The development of an organization is directly related to the prevalence of innovation. It is

the commercialization of ideas and converting the same into a product or service to be
offered by a company. To sustain in the increasing competition it is important for
organizations. To sustain in the ever-increasing competition it is critical for 21 st century
organizations to be consistent with innovation (Ikeda and Marshall, 2016). Innovation acts as
both boon and curse for organization as there are benefits and costs associated with the use of
innovation. The following essay will discuss about the benefits, costs and risks associated
with the use of innovation. It will also discuss examples of how this approach can be used in
formulating and deploying strategy.

Leaders and innovators achieve long term organizational development of a business by

aligning innovation with the long-term business goals to make it an integral part of an
organization’s strategy. Innovation is a term that can be applied to every aspect of operating a
company with the innovation of new products from R&D and implementing new ideas for
marketing (Banerjee and Ceri, 2016). It is critical for firms as it allows an edge in penetrating
target market faster and also develops connections to developing markets which open up
better opportunities for future. Operating a business in the modern world deals with creation
of cutting-edge solutions to solve different operational challenges. Without these, success and
growth of an organization is not possible in the long term (Marincean, 2019). Therefore, it
can be considered that operating with an innovative approach could be adopted to ensure the
success of business ventures to achieve long term objectives.

Innovation is being highly practiced in the modern organizational sphere as it is highly

advantageous. Innovation offers organizations with innumerable advantages. Improve
productivity is one of them which ensure the long term development of an organization.
Innovation is not only represented by creating of new ideas or methods but in practice it also
deals with exploring newer ways to do traditional activities of the business (Kahn, 2018). It
also deals with changing the business models all together to achieve product and service
enhancements. For example car manufacturers have integrate AI, machine learning and the
use of collaborative robots in the process of automobile manufacturing which was previously
done manually on manually operating conveyer belts (Slansky, 2021). When people work
with newer technology or a newer method of production instead of a traditional approach, it
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ensures better performance and increased productivity. Increased productivity in turn

achieves improved efficiency of an organization and increases its profitability to operate for a
longer time (Kahn, 2018). Another benefit which ensures the long term development of an
organization is that innovation provides a company with newer market opportunities. It
provides a way to develop new product, or enhance the existing product. It also allows
companies to expand internationally thereby diversifying the markets. All these opportunities
open up doors for increased profitability (Bourke and Roper, 2017). Red Bull can be taken as
the best example of a company which diversified its markets by entering into international
markets with the use of innovative marketing practices.

Another major benefit of innovation is that it makes organizations change ready. As stated
earlier there is a need for organizations to be consistent with innovation to sustain in
increasing competition. Consumer preferences, industry trends and technological trends are
continuously evolving (Distanont and Khongmalai, 2020). Therefore to keep up with these
changes continuous innovation is itself one of the long term objectives of many modern
organizations. This ensures that these organizations are investing continuously on innovation
in different business aspects to achieve long term organizational development.

While it is necessary for organizations to be innovative, it is to be understood that innovation

also carries several costs and risks which can hinder long term organizational development.
One of the biggest risks of innovating is that there are huge investment costs associated in the
involvement of innovative practices Nechaev, Ognev and Antipina, 2017). This challenge is
significantly bigger for small firms and start-ups as these organizations may already be facing
the challenges of managing their funds. Another major risks associated with innovation is that
it companies may suffer huge losses if an innovative idea does not perform as proposed. It is
a two-sided coin which may provide with positive outcomes to companies if performed as
expected but if the idea does not get received well it can posed financial threats (McDonald,
2018).

The above essay discusses about innovation and how it it’s a crucial component for modern
organizations. The essay defines innovation and discusses the way it provides opportunities
for firm for their long term organizational development. It also discusses the benefits, costs
and risks of innovation.
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