ORGM5000 Strategy, Change & Innovation: Traditional vs Modern Essay

This essay explores the evolution of strategic management, contrasting traditional approaches with modern business models and value creation strategies. It begins by outlining traditional strategic management methods, highlighting their limitations in the face of increasing market instability and complexity. The essay then discusses the rise in popularity of business models as tools for strategic decision-making, referencing the introduction of strategic business units (SBUs) by General Electric and the alignment of marketing with strategic activities. It also touches upon gap analysis techniques and the shift towards management by objectives. Finally, the essay examines recent approaches to strategy formulation, emphasizing the importance of competitive advantage, industrial economics, and resource-based views in creating value for stakeholders. The essay concludes that business model analysis has become dominant in strategic action planning, enabling organizations to adapt to rapidly changing markets and make informed decisions based on value-based and differentiation concepts. Desklib provides solved assignments and past papers for students.

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Strategy, Change and
Innovation

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Table of Contents
Introduction ..................................................................................................................................... 3
Traditional Approaches of Strategy Management .......................................................................... 3
Limitations of Traditional Approaches ........................................................................................... 5
Popularity of Business Models with Strategic Management .......................................................... 6
Recent Approaches of Strategy Formulation for Value Creation ................................................... 7
Conclusion ...................................................................................................................................... 9
References ..................................................................................................................................... 10

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Introduction
Strategic management is the stream of management decision making, where actionable items and
relative decisions are formulated based on pre-defined goals. The goals of an organization can be
short term or long term, can result as an outcome of visions or missions decided by the
organization. Therefore, strategic actions are majorly the step by step approach towards attainment
of desired goals to meet the business expectations.
Business in todays scenario is a very complex procedure. It has many undefined and unknown
variables that are subjected to change very dynamically (Meyer, Neck and Meeks 2017). With the
changing scenarios the requirements, the strategies and the action plans become obsolete very
quickly. Therefore, a lot of strategic initiatives are taken keeping the change factor in mind. But it
was not always like that, in the earlier days of business and industrial revolution, when the people
started developing work streams of their own, the market instability was not that high and risks
factors were limited. The methods being followed during that time were relatively traditional
(Trigeorgis and Reuer 2017). The following part of the essay analysis the traditional business
strategy management in comparison to the modern approaches and business models being adopted
to reduce business risk parameters.
Traditional Approaches of Strategy Management
Strategic management is one of the crucial activities that business decision makers perform. They
visit and revisit the defined approaches and practices in use for business growth. With
modernization, globalization and multi-national business growth, the demand of business with
market risks have been rapidly flowing with unknown factors (Wheelen, et al. 2017). This scenario
is very common in recent times.
During the earlier days of business, when having and doing a business was not a very common
practice, there were only limited people intending to invest and perform a completely independent
activity of business and trade. The methods of business were not very evolved and there were not
many suggestions and models to analyze and check the dynamics of market. Also, the primary of
goal of any business in those times was to maximize profit and all other factors were less
significant and had less priority (Engert, et al. 2016). As time folded, the significance of
competencies, internal and external organizational analysis and value creation started taking roots

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in the business functioning. Gradually business models emerged to support and explain the
uncertainties and to act as theocratical framework to draw decision owner’s attention into relative
scenarios.
Majorly, the strategic management decision making process was a simpler and limited version. It
had factors that were relevant to business and sequential steps arranged in the order to ensure
correct decision outcome is attained. The flow of business was captures and mentioned in the
written format referred to as the business policies in current context (Barkema, et al. 2015). With
the mid 1990s, when business units tried expanding their wings the realization that performance
improvement was not only limited to business functions, but also had dependability on external
forces came into picture.
The debate of business strategic finesse came into existence and the traditional methods started
evolving, business models started surfacing and researches with innovation started framing the
foundation of more active methods of strategic movements to enhance the organizational
performance (Durand, et al. 2017). The most simplex traditional explanation is pictured as follows
–
Fig1: Traditional Decision Making - Strategy
Vision/Mi
ssion
Purpose
Market
Requirem
ent
Scanning
Internal
and
External
Analtysis
(SWOT)Staregic
Decisions
/
Directions
Goals and
Targets
Formulati
on
Implemen
tation
Evaluatio
n

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Limitations of Traditional Approaches
The traditional approach was relatable, optimal and relative at the time, but later it was realized
that the mechanism was insufficient and did not cover certain factors of business dependency. The
strategic management mechanism then took a turn to develop and conceptualize the solutions post
analyzing the shortcomings from existing mechanism (Homburg, et al. 2017). To do so, the
limitations of the business mechanism was curated, and mechanisms were later introduced to cover
the shortcomings in the form of business models and reflective strategies and principles.
Amongst the major limitations that the traditional approaches had, below are the summarized
postulates –
i. The standard procedures then were not sustainable for a fluctuating market and business
environment
ii. Rise in uncertainty shrunk the focus area of planned approaches as there ere no solutions
to mitigate the concerns
iii. The earlier developed strategies were concentrated only at productive outcomes with little
priority to future growth
iv. One size fits all strategy was no solution to the rising levels of complex business problems
v. Rise in technological costs and adaptability mechanism was not a part of strategic moves
in old times
vi. The older traditional approach was based on analysis of satiations and market environment,
by the time the analysis would lead to positive strategies the solutions would not suffice to
meet the new scenarios
vii. The processing of decision analysis was not dependent on deeper meta-data analysis, rather
the generic view available
Amongst these limitations the need of modern approaches, new business models and techniques
with adaptive principles surfaced as the necessary requirement. New arenas for core competencies
and value addition into business function with diversification of workforce in order to build
resource- based competency skills came into picture (Hansen, Jesper and Ferlie 2016). Later all
the business decision strategies started adapting the recommended and well-known approaches for
business strategic management.

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Popularity of Business Models with Strategic Management
The role of business models in strategic management has become very crucial in the recent times.
From the last two decades, the focus shift into business operations has been quite extensive with
organizations looking at all angles and turning all stones to empower business growth. The concept
of globalization and internationalization is rapidly covering the globe. Therefore, the business
models play a central role in delivering the right strategic action plan, with various principles of
backup, feedback, risk mitigation and contingency planning (Demil, et al. 2015).
The innovation into the strategic management process was introduced by the US giant General
Electric Co. (GE) in the year 1950, when they conceptualized the theoretical concept of strategic
business units or SBUs into reality. Later, although very early in time, the Harvard researcher,
Wickham Skinner, in year 1980 indicated the marketing and strategic activities to be aligned with
the overall management decision making process in strategic management (Pucciarelli, Francesca
and Kaplan 2016).
In the following years, the theories and analysis techniques founded by Igor Ansoff, in the form
of a matrix structure to understand the environment and perform a gap analysis, to evaluate the
shortcomings, started attracting business focus. As the gap analysis technique caught attention, the
data analysis became an extensive field and the mechanism became a shackle more than a
competency tool. The problem with the approach was that it was based on assumptions and data,
and despite faster analysis tools, the market was still very dynamic and modifying rapidly
(McIntyre, P. and Srinivasan 2017). The realization of techniques for better adaptability came up
and the concepts revised.
In last two and a half decade, the principles of management by objectives has become a key factor
in strategic management. The objectives are identified on various factors of internal and external
analysis with variables and limitations being kept in equation of analysis (Wirtz, et al. 2016). The
mode of business now plans the mission and vision of organization with differentiating factor,
attained with discrete competencies, market product differentiation, entry and exit factors in
services or through the value creation process. One of the two conflicting yet very extensively used
management decision process of strategies is choosing between the principles of value based or
resource based strategic planning (Saebi, Tina and Foss, Business models for open innovation:
Matching heterogeneous open innovation strategies with business model dimensions 2015).

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Recent Approaches of Strategy Formulation for Value Creation
With the dynamics of environment, the necessity to adapt to newer and improved strategic choices
became a necessity for operating businesses. The business goals are not limited to only profit
maximization or cost minimization but are focused at creating an impact on market with distinctive
feature to attain a fair share in the consumer base (Evans, et al. 2017). The directional focus from
resources to consumers and cost to technology are the foundational pillars in strategic choices in
current scenarios. The organizations in recent times are concentrating at competitive advantage
and industrial economics with resource-based view in order to create a value for the business with
relevant stakeholders, be customers, clients, suppliers, third-parties or any other.
Porter’s Five Force model relates to the five driving forces in business. The bargaining power of
the product or service buyers and the bargaining power of suppliers that provide the raw materials,
effect the strategic decisions of an organization. These two factors have direct and significant
impact on the stakeholder. The threats of new entrants and substitutes depend upon the entry and
exit barriers that can be high or low in complexity in terms of economy. The fifth factor of
competition in the market is another important postulate (Abdelkafi, Nizar and Täuscher. 2016).
The model enables the development of a value-chain creation and identification that plays role in
strategic business decisions. The importance of value-chain can be identified with the fact that it
enables the creating of the differentiating factor for an organization in order to compete in the
market. The approach of competition analysis and value-chain related to the industrial economic
factors craft a success strategy that create a powerful insight into business.

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Fig2: Porter’s Five Force Model
On the other hand, the resource-based view of business enables the structural backbone to get
strengthened in order to succeed in the market. A solid foundation with viewpoints from resources
develop a competitive notion and provides a sustainable and strong relationship. The business
concept of ‘Theory of Growth of the Firm’ indicates that the heterogeneity of any organization and
its balance as the strategic plan of action enables organization to create a factor of uniqueness that
replicates into products and services being offered (Rosemann, Michael and Brocke 2015).
These newly identified factors of competitive advantage, considering various process of
competition like procurement, development, strategic planning with risk mitigation and
contingency planning are the unique skill set being introduced as a modern approach (Prajogo
2016). The importance of resource diversification enables the value creation of an organization
with well management strategic plan of action building set of unique skills and practices. The
popularity of these business models has not faded away even though new and technological models
that are highly automated and analyze data and meta-data to manipulate the market variables and
adjust the execution strategy exists (Bertels, et al. 2015). The foundational ground on all the
decision making attributes lay in the approaches and strategies being covered as the business
concepts if management and modelling.

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Conclusion
In the last two decades, the rise in business model related analysis of strategic actions has been
dominant. Various different business models are being adapted to ensure a well-balanced strategic
action plan is crafted, keeping the organizational resources and competencies in picture. The
models also strengthen the organizations to have clearer internal and external view in order to
sustain the organization with rapidly changing market. The market analysis through the lens of the
business models with value based and differentiation concepts at the core becomes a key factor in
decision making during the formation of strategic moves and policies of action (Saebi, Tina and
Lien, et al. 2017). The plan for risk mitigation, the contingency backup, the feedback
incorporation, value-based analysis is all the upscaled basic foundational methods that evolved in
time in correspondence to the changing market needs and environmental compatibility for
business.
In time many approaches have come and gone, trying to create the model and framework to adapt
and understand the environmental requirements. These strategies include the concepts of Total
quality management and the process of re-engineering. In the last decade, the world has seen global
market expansion, dynamic strategy formulation to meet all market risks (Carayannis, et al. 2015).
Yet the essence of business models even with upgraded technology initiatives have not lost their
starlight’s. The importance of resource-based value creation and differentiation are the
concentrated areas of strategic management.

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