MGT302: Strategic Management - Analysis of Alternative Approaches

This report provides an analysis of alternative approaches to strategic management, specifically focusing on the stakeholder approach, the dynamic capabilities approach, and the sustainable approach. It discusses the theoretical underpinnings of each approach, including their origins and key proponents. The report assesses the viability, benefits, implementation issues, and limitations of each approach, using examples of companies like Amazon, Apple, and Coca-Cola to illustrate their practical application. The stakeholder approach emphasizes satisfying the needs of various stakeholders for long-term sustainability. The dynamic capabilities approach focuses on integrating and reconfiguring internal and external competencies to respond to changing environments. The sustainable approach integrates ethical, cultural, social, environmental, and economic dimensions for long-term profitability and reputation. The report concludes by highlighting the importance of considering these alternative approaches in developing effective strategic management frameworks.

Running head: ALTERNATIVE APPROACHES TO STRATEGIC MANAGEMENT
Alternative Approaches to Strategic Management
Name of the Student
Name of the University
Author Note

1ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
a. Stakeholder Approach
One of the primary and most popular approaches in the contemporary period, taken up
by the managements of different businesses, across the globe, in order to form a robust
strategic management framework of the operations of the concerned businesses, is that of the
stakeholder approach (Hitt, Ireland and Hoskisson 2012). The approach has its roots in the
“Stakeholder Theory” of organizational ethics and business management, which, in turn, was
originally proposed by Ian Mitroff, in 1983, in his book, named, “Stakeholders of the
Organizational Mind” (Cooper 2017). The notion behind the stakeholder approach of
strategic management, is that the managers of business organizations need to deign as well as
implement plans and business strategies, which can satisfy the needs and interests of different
stakeholders attached with the business processes of the companies, so as to ensure long-term
and robust relationship with all the stakeholder, thereby helping the companies to ensure
higher profit and sustainability though higher participation of all the stakeholders of the
business (Eden and Ackermann 2013). This approach of strategic management can be seen to
be present in Amazon Company.
Viability of the Stakeholder Approach
In the age of greater communication and customer awareness, as well as technological
and infrastructural development, communicating and interacting with different stakeholders
of a business has become considerably convenient as nowadays, with one click of the mouse
the whole world has become accessible (Asif et al. 2013). Also, the increase in the integration
of the global business scenario. the different stakeholders of business processes, like
customers, employees, investors and others, are becoming increasingly aware of the
operations and the outcomes of the same. This is turn, makes the stakeholder approach sound
and appear viable to be implemented in real world business scenario (Eskerod and Huemann
2013).

2ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
Benefits of Stakeholder Approach
The primary benefits of the stakeholder approach for strategic management of the
operational frameworks of business in general, can be seen to be as follows:
 The approach helps in creating robust and long-term link between the company and
its different stakeholders.
 This in turn, helps in creating competitive advantage for the firms, as long-term
symbiotic relationships help the business to understand the needs and interests of the
different stakeholders and work according to the same.
 The creation of productive and bilateral relationships with the different stakeholders,
helps the business to assemble and utilise important information about their
stakeholders, the markets and also to increase the goodwill and reputation of the
companies, thereby helping in creating stronger brand recognition (Minoja 2012).
 Lesser wastes are generated in terms of production and operational processes
 Co-creation of value takes place for these businesses.
 This process also helps the firms to attract high quality and more motivated labour
force and also leads to higher job satisfaction of the employees, which in turn will
lead to implementation of innovations in businesses, thereby creating value through
the same (Alkhafaji and Nelson 2013).
Implementation Issues of Stakeholder Approach
The approach, in spite of its benefits and positive aspects, have some issues regarding
the implementation of the same in the real operational frameworks of the businesses, the
primary ones being as follows:
 The stakeholders in businesses, usually have different aims and interests which vary
from one another. The interests of the customers are not in general the same as the

3ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
interests of the investors or the employees. Thus, one of the primary implementation
issues of the stakeholder approach of strategic management is that of the aspects of
catering to divergent interests of the stakeholders, such that the welfare of all the
stakeholders as well as the profitability of the business is maximised (Verbeke and
Tung 2013).
 The businesses, aiming to implement this approach, needs to strike a balance between
catering to the interests of the stakeholders and increasing the profits of the
businesses, both of which can, frequently becoming contradicting and competing
objectives.
Limitations of the Stakeholder Approach
The primary limitations of the concerned approach are that emphasizing too much on
the interests, needs and demands of the stakeholders, can often lead to allocation of excessive
attention as well as resources towards the same, thereby leading to the aspects of over-
valuation of the stakeholders. This may, in turn, hamper the productive and other operational
activities of the business, thereby hampering the profitability and competitiveness of the same
in the contemporary global business scenario (Verbeke and Tung 2013). The power of all the
stakeholders are not the same, which in turn may lead to distortions of the allocation of firms
profits to the different stakeholders, which is also one of the primary implementation issues
in this approach.
b. Dynamic Capabilities Approach
Another approach devised and commonly implemented for strategic management of
operational frameworks of different organizations across the globe, is that of the dynamic
capabilities approach, which was first proposed by David Teece, Amy Shuen and Gary
Pisano, in 1997. The primary working notion behind this approach of strategic management
is that the business organizations, should be able to integrate, reconfigure and also build their

4ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
competencies (both internal as well as external) with the help of the resources and capacities
present within their operational framework, so as to respond to the rapid changes in the
environment in which these organizations operate. The implementation of such approach
helps the firms to achieve competitive advantages by enhancing the innovations and flexible
operations of the firms.
The dynamic capabilities framework, in general consists of the following three
components:
Processes- This shows the operational frameworks, routines, practice and ways of doing
things in the businesses
Positions- This considers the existing endowments, like technology, complementary assts,
clients, external business relations and others, which are present with the companies in the
existing period
Paths- This shows the strategic alternatives which the businesses can implement in their
operational framework, depending upon the processes and the existing positions of the
business as well as the changes which take place in the market where the business ventures
This type of approach can be seen to be taken by the Apple company, in the
contemporary period.
Viability of the Dynamic Capabilities Approach
The Dynamic Capabilities Approach, being one of the most popular form of strategic
management tools, include the extensive study and analysis of the capabilities and
competencies of the firms, in the aspects of the organizational learnings, intellectual property,
manufacturing, product as well as process development, technological scenarios, human
resources and other aspects. Accounting and analysing these aspects in an organization is not
impossible and can be done with the help of proper and systematic approach. This is thus

5ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
viable and if done properly can help the firms to attain flexibility in their operational
frameworks, thereby helping the organizations to respond efficiently to the rapidly changing
environments, by changing their operational processes in accordance to the same.
Benefits of the Dynamic Capabilities Approach
There are considerable advantages of using the dynamic capabilities approach for the
purpose of strategic management of the organizations, the primary ones being as follows:
 The concerned approach of strategic management helps the firms to realise the
internal as well as external specific competencies which the firms have and also the
aspects in which they are unique and are in advantageous or disadvantageous
positions compared to their rivals (Wilden et al. 2013).
 It helps the firms not only to realise the internal and external competencies, but also to
exploit the same in the context of addressing the rapidly changing business
environments, especially in the aspects of changes in production processes, demands
of the customers, operational frameworks as well as incorporation of technological
and infrastructural innovations in their operational framework.
 This approach of strategic management helps in the development of the managerial
and organizational capacities of the firms which in turn also helps in developing
specific technological and functional skills which are not easy to imitate by other
organizations.
Implementation Issues
The concept of dynamic capabilities approach appears to be theoretically and
conceptually a robust and efficient approach for strategic management. However, while the
implementation of the theoretical approach to the real-life organizational operations, the
companies face several implementation issues, which are as follows:

6ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
 The concerned approach for strategic management is difficult to operationalize as
there remains doubts regarding what factors to include and what not to include.
 The external and internal competencies of businesses are highly subjective and varies
according to the perceptions of different people.
 It is also difficult to analyse the path dependency as well as the reconfiguration
processes in response to the changes in the business environments as there always lies
the aspect of cost effectiveness and risks
Limitations of the Dynamic Capabilities Approach
The primary limitation of the approach is that it is highly theoretical and the
implementation of the approach needs the development of a proper systematic and self-
monitoring framework. There also lies confusion regarding the very definition of the term
“Dynamic Capabilities”. The definition should not only include the aspects of routines and
competencies of the firms and should also incorporate the domains of readapting capabilities
of the firms, which is an abstract concept and cannot be easily materialised or cardinally
measured (Eriksson 2014). There also remains confusions regarding the point of time where,
a company decides on adapting to the dynamic capabilities and competencies instead of
consistently changing strategic and operational frameworks of the companies to respond to
the changing business scenarios.
c. Sustainable Approach for Strategic Management
A new and more inclusive form of strategic management in the business
organizations, is that of the sustainable approach, which mainly has its roots in the conceptual
framework of “Corporate Sustainability”, which again has its roots in the late 1990s. The
main notion behind the sustainable approach for strategic management is that the businesses
should form their operational framework and strategies in such a way that all the dimensions
of the business, that is, the ethical, cultural, social, environmental as well as economical

7ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
dimensions of the same are efficiently integrated and taken into consideration (Seuring and
Gold 2013). The aims of such approaches of strategic management are that of creation of a
sustainable, long-term profitable as well as reputable business operational framework, which
can be beneficial to not only the companies but also to the overall population as well as the
future generations of the businesses.
The sustainability approach for strategic management is a wide domain consisting of
various components, which can be primarily categorised under the following broad aspects of
the operational frameworks of the concerned companies, incorporating this approach: The
Coca Cola Company has been famous for implementation of this type of strategic
management framework in their overall operations.
Transparency in business operations- This component is one of the most significant parts of
the concerned strategic management approach, focussing on the idea of creation of an
engaging as well as open and liberal business environment in the company, thereby
improving the performance of the company due to lack of unfair activities, catering to vested
interest groups, which in the long run help the companies to stay profitable and sustainable
(Kindström, Kowalkowski and Sandberg 2013). Transparency in operations, help to increase
the trust of the community, thereby creating higher possibilities of co-creation of values.
Stakeholder engagements- For the purpose of brining sustainability in the operations of the
businesses, the companies need to assess the environmental, economic and social impacts of
the same, internally as well as externally, which in turn requires the engagement of different
stakeholders, for taking into consideration the needs and concerns of the same (Teece 2012).
Viability of the Sustainable Approach
In the contemporary period of increased dynamics and complexities in the operational
frameworks of any business, it becomes considerably difficult for the business to bring

8ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
complete transparency in their operational framework. However, the increased technological
and infrastructural development in the contemporary period, has been facilitating
communication, globally, which in turn may facilitate higher engagement of the stakeholders,
thereby making it viable for the companies to implement sustainable approach for strategic
management, in the aspects that it is feasible for the companies to analyse the impacts of their
operations on different ethical, cultural, social and economic aspects (Teece 2012).
Benefits of Sustainable Approach
The primary benefits of the sustainable approach can be seen to be as follows:
 The approach is a more integrated one, which takes into consideration not only the
present but also the future welfare.
 The approach not only considers the economic and profitability aspects but also the
social, ethical, cultural aspects of businesses, which in turn makes the business
operations more meaningful to the society as a whole.
 Incorporating a sustainable and pro-society business approach increases the popularity
and goodwill of the companies among the customers, investors and employees,
thereby contributing to the long-run sustainability and competitiveness of the
companies (Stead and Stead 2014).
Implementation Issues
There, however, remain confusions, in implementing this approach of strategic
management as there always remain several trade offs which the businesses face in this
aspect, particularly in the aspects of designing the strategies in such a way that the welfare of
both the present and the future generations are maximised (Eden and Ackermann 2013).
Limitations of Sustainable Approach
The primary shortcomings of this approach are as follows:

9ALTERNATIVE APPROAHCES TO STRATEGIC MANAGEMENT
 There remains a continuous trade off between the welfare maximization of the future
and the current generations.
 The ethical and social aspects and interests often go in opposite directions to that of
the profitability and personal interests of the owners of the companies, thereby
leading to creation of trade offs between the different stakeholders and the companies
(Asif et al. 2013).
 The sustainability approach for strategic management does not address the aspects of
competitiveness and efficiency of the operations of the companies, which are of
utmost importance in the era of an increasingly competitive global business
environment.

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