Strategic Management Approaches Analysis Report: MGT302

This report provides an in-depth analysis of three key strategic management approaches: dynamic capability, stakeholder, and resource-based view. It begins with an introduction to strategic management and the importance of selecting the right approach for business success. The report then delves into each approach, exploring its history, benefits, limitations, and real-world examples of firms that have successfully implemented it. The dynamic capability approach focuses on developing internal and external capabilities to address challenges. The stakeholder approach emphasizes managing relationships with stakeholders to achieve maximum satisfaction. Finally, the resource-based view approach highlights the importance of leveraging internal resources for competitive advantage. The report concludes with a summary of the key findings and their implications for strategic decision-making. The report uses appropriate headings and sub-headings and includes a reference list.

STRATEGIC
MANAGEMENT

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Contents
Introduction...........................................................................................................................................1
Strategic management approaches.........................................................................................................1
Dynamic capability approach................................................................................................................1
History...............................................................................................................................................2
Benefits.............................................................................................................................................2
Limitations........................................................................................................................................2
Firms that used this approach............................................................................................................3
Stakeholder Approach...........................................................................................................................3
History...............................................................................................................................................3
Benefits that this approach provides..................................................................................................4
Limitations........................................................................................................................................4
Firms that have adopted this approach...............................................................................................4
Resource Based View approach............................................................................................................5
History...............................................................................................................................................5
Benefits.............................................................................................................................................6
Limitations........................................................................................................................................6
Firms that utilises this approach........................................................................................................6
Conclusion.............................................................................................................................................7
REFERENCES......................................................................................................................................8

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Introduction
In the today’s time, strategic management is crucial for achieving success in the market.
Since the nature of business has become complex hence the selecting the best approach to
strategic management is essential. These strategic management approaches gives the
framework through which each and every strategy will be made (Ansoff, et al. 2018). Every
firm has their own set of challenges hence companies need to define their strategic
management approach accordingly. All approaches keep particular things in focus and build
their strategies around it. This report will analyse different aspects of the major strategic
approaches used by the businesses and the strengths and weaknesses it has. The approach to
strategic management must be selected wisely in order to achieve success in the market.
Strategic management approaches
Different kind of strategic management approach is adopted by different firms in which the
three most common approaches that are widely used by firms are dynamic capability,
resource based view and the stakeholders approach (Eden and Ackermann, 2013).
Dynamic capability approach
Challenges related to business have increased and this has forced the firms to make sure that
they develop their capabilities in such a manner that they are able to tackle all these
challenges. This is because the firms which will have the dynamic capabilities will be easily
able to make strategies that confront these emerging challenges. Since the dynamic nature of
the environment is increasing hence the risks that are confronting the business model of the
companies have also become bigger. Adding to the capabilities of the firms gives them
advantage over the rivals. It is a widely used approach in the areas like rivalry on the basis of
innovation, price and competencies (Vogel and Güttel, 2013). This approach shows the light
to the company that the will have to transform themselves on the basis of the resource base
they have. This approach provides an assumption that every firm’s must rely on their primary
strengths and should work on them for creating short-term competitive advantage over the
rivals. These basic capabilities of the organisation are crucial for separating themselves from
the others. The capability at both individual and organisational level needs to be
improved so as to gain desired benefits.

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History
In 1997, the paper “Dynamic capability and strategic management” this approach was first
used. This approach was invented by David Teece, Amy Shuen and Amy Shuen. This
approach was developed towards providing a strategic framework that concentrates on
developing internal and external capabilities by integrating and reconfiguration of these
strengths. It was the book by Nelson and Winter released in the year 1982 named “An
Evolutionary Theory of Economic Change” which links the conceptual development of
organisation’s resource based view (Kindström, Kowalkowski and Sandberg, 2013).
Benefits
For any firm, the way in which they manage their resources plays a crucial role in its success.
Increasing resources both in terms of quality and quantity enhances the capability of the firm.
It gives the firm with scope to capture their opportunities and tackle threats and at the same
time, it also has impact on the strength and weaknesses of the firm which for any organisation
is important to know. It allows a company to be ready for the challenges that confronts them
in their future. It is easier for the companies with dynamic capabilities to deal with whatever
situation confronting their business (Teece, 2012). In dynamic capability approach the focus
is not only on product development but also the development of procedures that helps in
dealing with consumers. In this regards the role of intellectual property development and
management becomes highly critical. At the same time, it is the role of the HRM and the
learning methodology adopted by a firm becomes highly critical.
Limitations
It is an approach that provides a multi-dimensional construct to the firm. For any
organisation, it is critical to utilise all the dimensions in the same manner. However, it is not
easy to achieve. It is critical to note that affinity to resource based changes lies on the higher
side and must be done for creating decisions that are favourable for using the capability of the
firm that actually exists (Chien and Tsai, 2012). The firm’s readiness to re-configure itself
becomes highly supportive when it is added with the readiness of the firm to take decisions
according to the changing environment in the market.
Another critical limitation of this approach is that it does not explain when the need of adding
capabilities is. It might be possible that a firm is doing as per planning done by the company
in the start and still there might be need of adding capabilities or firm tries hard to add to the
capabilities. This makes the company vulnerable to risks related to management of changes

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which can reduce the growth rate of the company which no firm will desire in the amount of
competition existing in the market (Zhou and Li, 2010).
Firms that used this approach
Since capability development is the need of modern day business hence many firms have
adopted this strategy to improve their strategic development initiatives. Opportunities and
threats are analysed by every firm and according they develop their capabilities so as to react
to these opportunities and threats. Amazon works with approach towards their strategic
development in order to creating, making changes in it and expanding their resource base
according to their need in the market. It is due to this approach they are so successful in all
the parts of the world and they have grown into an “everything store” from just being a book
seller. They are known for being the fastest in the industry in delivering their products. This
capability they have developed through adding more numbers of local and smaller suppliers
(Wu, 2010).
Stakeholder Approach
It is an approach that deals with the stakeholder attached with the firm and its basic idea is to
do better stakeholder management. This approach aims to reduce the challenges that any firm
might face in time of making disruptive decisions that are capable of changing the situation in
the market and at the same time achieving maximum stakeholder satisfaction which is desired
in the modern day business (Ayuso, et al. 2014).
History
The book published in the name of strategic Management- a stakeholder approach, first
provided the idea about this approach in the year 1984. This book is written by R.E. Freeman.
The major objective of this approach is to manage the stakeholder’s interest in the time when
today’s market has become highly turbulent (Sedereviciute and Valentini, 2011). This
approach is destined towards creating a healthy relation with their stakeholders while
developing any strategy. This approach was actually used by the managers in 1960s to adapt
and reduce the turbulence level in the business environment and the approach is still effective
in modern day business.
Benefits that this approach provides
Several benefits are linked when the company aims to utilise this approach. The first benefit
is that it enhances the firm’s relationship with their stakeholders as stakeholders also starts

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trusting the firm. This motivates stakeholders to work according to the vision of the firm
towards achieving desired benefits. This binds all the stakeholders in a single unit and hence
is highly efficient in the strategic process planning through which long term growth can be
ensured (Soh, Chua and Singh, 2011). This approach is successful in terms of the fact that it
makes the organisations more democratic and decisions are also made checking its impact on
the stakeholders as suggestions from all the stakeholders are taken while designing any
strategy. It helps in combating with the corporate social obligations which is a matter of
concern for any organisation. All structural requirements need to be fulfilled so that they
pursue the moral while implementing alternatives. This approach becomes highly significant
in the case of the organisations that evolve through new ideas as they face lot of difficulties in
this regards (Razali and Anwar, 2011). This approach improves the strategy execution and is
highly crucial in the case of CSR as well as the strategies that are made in relation to the
financial operations of the firm.
Limitations
Limitations are also present in this approach. First is the fact that it includes a lot of
stakeholder in the market and taking the consent of everyone while developing a strategy can
be a difficult job. It also reduces the pace with which any organisation develops its
capabilities (Clifton and Amran, 2011). It reduces the self-sufficiency of the administration to
make choices that are valuable for the development of the firm. The major weakness of this
approach can be seen in the monopolistic markets where the targets of the firms are defined
(Voinov and Bousquet, 2010). Since the worries of the stakeholder carry-on for longer period
of time hence it is not easy to measure the time when their worries get satisfied. This
approach also does not indicate the way in which stakeholder’s concerns will be managed.
Firms that have adopted this approach
Different firms utilises this approach for making a good relations with their stakeholders. One
of the biggest firms that utilises this approach is Tesco which is involving lot of their
stakeholders in their strategy development. Such involvements of all the stakeholder reduces
the chances of their risk that might arise in the strategic development process. This adds to
operational efficiency of the company. Other company that has adopted this approach is BHP
billiton. This can be seen with the fact that in the development of their strategies that includes
tribal and local communities especially the ones that are related to the development of that
area. The major reason behind these two companies utilising this approach is because the
amount of stakeholders that are attached with these firm is large (Freeman, 2010).

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Resource Based View approach
As resources are an integral part of the organisations and plays a crucial role in the
development of the firms hence it is essential that a firm understands the value of their
resources. In the development of their strategic competencies, the role of their resources
becomes highly significant hence companies are adopting this approach as their primary
approach for strategic development. This is an interdisciplinary approach as it can be used in
any area of business and their different operations (Kraaijenbrink, Spender and Groen, 2010).
Some of the commonly used areas are marketing, supply chain management, law, business
ethics, HRM etc.
Since organisations have heterogeneous resources hence managing these resources can be
critical. It acts as a strategic tool that allows a firm to analyse its resources and the quality of
their resources that allows them to give competitive advantage over the rivals. It also
addresses the fact that not all resources of the company are similar and neither every one of
them has the capability to provide competitive advantage to the rivals. These competitive
advantages are gained through sustainability which heavily relies on the fact that how easily
the firm’s competencies can be imitated or substituted. Managers must be responsible for
identifying, understanding and categorising the primary strengths of the firm. Internal
learning needs to be promoted by the organisation in order to foster, develop and safeguard
primary resources and competencies (Andersén, 2010). This approach allows a firm to select
a strategy that gives them competitive gains over the rivals. This approach also suggests an
organisation to exploit their available capabilities and resources according to the available
external opportunities.
History
Scholarly references suggest that the development of this approach began in the early 1930s.
The major work about this approach lay down in article “Firm resources and sustained
competitive advantage” written by Barney. In the strategy making process, RBV plays a
highly critical approach. This approach was developed with the fact that if any firm has
inimitable resources then there is huge chance that company can gain extra-ordinary returns
through it and there is always a requirement that resources could be protected with the help of
isolating mechanism (Nemati, et al. 2010). These resources must be diffused throughout the
industry.

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Benefits
This approach is generally utilised in the situation when any organisation need to evaluate its
existing resources. It generates a resource portfolio which can be used for transforming
business through new product market. Such resources are utilised by the firm as a tool that
enable them to become the primary source of returns. This approach perceives skills related
to management, information capability and the procedures of administration as a unique
feature that assists a firm in gaining financial returns (Spyropoulou, Skarmeas and Katsikeas,
2010). This approach is utilised by the firms to know that whether or not their resources are
rare, substitutable, imitable and valuable. Several areas where competitive gains can be
achieved through RBV are service, personalized positioning, quality, price and innovation.
This approach also helps in providing long term success to any organisation as the resources
will be critically utilised by any firm and hence ensuring sustainability and success becomes
easier.
Limitations
The basic limitation that is attached with this approach is that it is based on few assumptions,
heterogeneity and preferences of economists. Role of the human resource are also analysed
with the use of this approach. Since Human resource is an intangible asset hence it generates
a condition for accountants where identifying the overall value of the firm might not be easy.
Valuation of intangible asset and that of overall business becomes further problematic for the
organisation (Bortoluzzi, et al. 2014). Accountants faces challenges in terms of controls that
confines resource misappropriation which is generally the stakeholder’s property. This
approach also does not give idea about the role of the resource market.
Firms that utilises this approach
Among the several firms that utilises this approach BMW and Honda are the two major
companies who have adopted this approach for gaining advantage in the competitive rivalry.
In the quality management, Honda utilises this approach. This is done by Honda to ensure
that they do not fail in front of the rivals that are continuously increasing in the market. At the
same time, BMW has used it for the reconfiguring their value chain (Bortoluzzi, et al. 2014).
As BMW highly depends on their technology, and internal capabilities for generating
successful products and services hence improving value chain becomes important for them.
Resource based view is an approach that is used in the areas that are primary to the success of
the firm hence it is widely used approach.

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Conclusion
From the above based report, it can be concluded that strategic planning and initiatives have
critical role in the success of the firm hence companies need to design their strategies on the
basis of certain strategic framework. There are wide ranges of options available with any firm
and among them dynamic capabilities, resource based view and stakeholder management can
be the three approaches that are being discussed in the above section. In the process of
strategy building firms have to take care of the impact it is going to have on the stakeholders
and the firms that takes this into account is known to be using stakeholders approach. The
firms that keeps resources in the focus of their strategy development seems to follow resource
based view while the firms that concentrates on developing dynamic capabilities seems to be
using dynamic capability approach. These approaches are being utilised by both larger and
smaller firms.

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