Strategic Management: Approaches, Environmental Impact, Innovation

This report provides a critical evaluation of strategic management concepts and models, focusing on prescriptive and emergent approaches to strategy development and their roles in achieving organizational goals. It compares PESTLE and Porter’s Five Forces models for assessing environmental impact on an organization's competitive position, further analyzing the benefits, costs, and risks associated with utilizing innovation for long-term organizational development. The report uses examples like EasyJet and TESCO to illustrate the application of prescriptive strategies and discusses the limitations of both prescriptive and emergent approaches. Ultimately, the report aims to provide a comprehensive understanding of strategic management in a dynamic business environment.

Strategic management

CONTENTS
INTRODUCTION......................................................................................................................1
SECTION– 1..............................................................................................................................1
Comparing and contrasting prescriptive and emergent approaches to strategy and outlining
their role in the delivery of this aim.......................................................................................1
SECTION – 2.............................................................................................................................4
Comparing PESTLE and Porter’s five force model for assessing the environmental impact
on the competitive position of an organisation.......................................................................4
The benefits, costs and risks of utilizing innovation for driving long-term organisation
development...........................................................................................................................5
CONCLUSION..........................................................................................................................7
REFERENCES...........................................................................................................................8

INTRODUCTION
Articulating in relation strategic management, it is all about determining as well as
describing the strategies which the manager can adopt for attaining enhanced level of
performance along with an edge over the other competing firms in the market. An
organization will be said to have a competitive advantage in case its profit margins are quite
more as compared to the average profit margin for all the organizations in the same industry.
Thus, it is important on the part of manager to have detailed knowledge and comprehension
of both general and competitive environment of the organization. Considering this, the main
aim of the current research report is to critically evaluate the concepts along with models
related to organizational strategy. The report will also going to throw light on the significance
of change management by answering varied questions. Further, the report is being segregated
into two sections, the first section talks about prescriptive and ‘emergent’ approaches to
strategy and will outline their role in the delivery of this aim. On the other hand, the second
section will compare two models to measure the environmental impact on the competitive
position of an organisation and analyse the advantages, costs and risks of using innovation.
SECTION– 1
Comparing and contrasting prescriptive and emergent approaches to strategy and outlining
their role in the delivery of this aim
The notion in relation with the corporate strategy always fights a battle with the
recurrent problem of identifying inclusive purpose as well as scope of the business
corporation. Speaking in terms of contemporary perspective, corporate strategy encompasses
requirements of long term objectives which will going to add some value to the company and
will help in coping up with uncertainties of current period. Further, considering it as a
practice it involves making use of course of action along with distribution of resources in
such a manner that it helps in attaining the complete goals of the firm (Shah and et.al, 2015).
Prescriptive and emergent approaches are one of the main theories of strategy development
and are extensively recognized and thus, they must be scrutinised surrounded by
progressively competitive, vibrant and international environment of business. There are many
strong external factors which are compelling companies to decrease their costs, augment
processes and determine prospects for development. Numerous business corporations are
obliged to undertake intense enhancements not just to participate and grow however to
endure in the market. All this paves the way for the significance of identifying the
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prescriptive and emergent approaches that can support in meeting out the current requirement
of the business at the time of developing a strategy.
Focusing in relation with the prescriptive strategy, it is being referred as that strategy
which has a main aim of defining the progress and its main component have been
industrialised prior commencement of the strategy. This approach consider development of
strategy as a schematised as well as deterministic procedure in which evaluation of the
companies, their level of performance along with the external environment results in the
establishment of a long term plan which is rational. The final objectives are being defined by
senior management and afterwards the plan is implemented by the consecutive layers of the
firm (Grant, 2019). On the other hand, emergent strategy is being referred as that strategy in
which the final goal is not decided and its main component are developed during the course
of its life hat is with the continuation of the strategy. According to Mintzberg, strategies are
not always planned and they can evolve incrementally with the passage of time with the
adaptation of actions of the business to altering reality. He further argued that as an
alternative to have a deliberate plan, a strategy must develop and grow with the process of
investigation, modification and learning. Articulating about the techniques which helps in
feeding the process of prescriptive approach encompasses five force model of Porter for
evaluating the industry and value chain analysis which helps in highlighting the current
abilities as a strong foundation for attaining an edge. Ansoff as pointed out that the firm in
this dynamic, competitive and fast paced environment makes use of methodical process for
strategic planning most of the time can rule the market effectively. Seeking support from
diagnostic and rational method, firms can create prognostic as well as anticipatory
approaches which in turn can help them in meeting novel prospects (Mintzberg, 1990).
Considering the example of EasyJet, in the year 1995 they have utilized unbelievable
foresight for introducing low cost airlines which has enabled them to achieve a competitive
edge in the markets of Europe. With this method, EasyJet was able to consolidate
multifaceted events and worked out a superior amount of control on varied units of business.
Similar is the example of TESCO, which has used their planning process for defining long
term goals and clearing boundaries for their core business of UK to many internationals
sectors. The company was able to succeed in attaining a steady growth along with profits in
all the areas in the current years.
Formulation of strategy places more emphasis on the strengths of present abilities and
is being considered as a protected foundation on which the companies should elaborate
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themselves and enhance their position, especially in the situation of speedy and turbulent
alteration (Coffie and Blankson, 2016). For instance, Motorola has been able to effectively
fulfil the requirements of the emerging markets through making use of the principal strengths
of technology in electronic elements for progressing from supplying television and radios of
cars to providing broadcastings services. From a contrary perspective, the prescriptive
approach encompasses different suppositions which are not justifiable in the present world of
business. The rationale model suggests that development of strategy is always thoughtful and
they are being comprehended as per the plan. Nevertheless, as per the empirical studies by
Mintzberg this assumption is being discounted and he highlights that comprehended
strategies are inclined to be ten to thirty percent of the envisioned strategy (Cherp, Watt and
Vinichenko, 2017). This happens due to the fact that random conditions might takes place in
business like introduction of novel laws related to technologies and other regulation which
might force the original strategy off its course. Furthermore, the prescriptive approach
towards planning also does not succeed in giving permission to any knowledgeable
components to be engrossed into the strategy and this can create a boundary for the
organization’s capabilities to retort submissively in the current rapid altering environment.
Besides, the narrow approach pays attention on recognized business areas as well as abilities
which can impede competitive transformational alteration in which there is a requirement of
reinvention.
In contrast with the prescriptive approach that pays attention on producing a fit amid
recognized strengths as well as embryonic prospects, the emergent approach on the other
hand challenges the status quo through deliberately producing an oddity amid these
components. Thus, it can be said that it is more suitable to prompt optimistic and
transformational change in the organization like restructuring and diversification. In addition
to this, it also have a supplementary advantage of supporting in reducing resistance to
alteration because it enable time for building workers support in the meantime when strategy
is taking its shape. On an undesirable note, at times when both development as well as
execution takes place concurrently there might be risk related to slower development of
strategy along with jumbling of the whole process. All this signifies that appreciated and
valued openings or prospects might be unexploited along the way (Božac and et.al, 2017).
Correspondingly, objectives which are conflicting from varied groups might also impede
effective development of strategy especially during the time of shifting in powers as in the
case of strategic alteration like merger. Deprived of any form of severe evaluation along with
determinable objectives, targets might not involve clearness which in turn will not give any
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real foundation for analysis of the performance level of the organization. Thus, it can be
concluded that relying overly on emergent strategy or approach development might leads to
underperformance of the business organizations.
SECTION – 2
Comparing PESTLE and Porter’s five force model for assessing the environmental impact on
the competitive position of an organisation
At the initial look both the environmental assessment models that is PESTLE analysis
and porter’s five force analysis are considered as very modest and stress-free to comprehend
even by those people who have some acquaintance pertaining to management of business.
Whilst, the five force analysis model of porter helps in determining the industry forces along
with the communication amid these forces for analysing the opportunity of cost-effectiveness,
PESTLE analysis scrutinizes the macro-environment for measuring the appropriateness of the
market. Five force evaluation tool offers more direct data in regards with the strategic
competitiveness and effectiveness of the organization (Porter, 2018). On contrary to this,
Pestle framework motivates the growth of strategic and external thinking as managers of the
firm are commanded to think in relation with varied environmental factors and many other
forces of market for example cultural, political, financial and legal aspects. Consequently, it
can be well attributed here that both these models are regarded as the most crucial analytical
tools for business and renders a supportive hand to the organizations in making improvement
in the competitive position in industry. Moving forward, porter’s five force analysis tool
provides support to the management and many other authorities who make decisions in the
companies through five force of the model by determining the structure of the industry and its
profitability. It includes five forces such as bargaining power of suppliers, bargaining power
of buyers, competitive rivalry, and threats from new entrants and threat of substitute products.
The firm can perform this evaluation at any time and place for identifying their position in the
market. Furthermore, it offers valuable insight in regards with the factors or forces that might
influence the industry and who are the strongest competitors of the business corporation
(Dobbs, 2017).
On contrast, pestle framework is being designed for determining the manner in which
companies can be affected by different environmental factors such as economic, social,
political, environmental, legal and technological. With this tool, companies can make
strategies for their business in order to exploit the opportunities and identifying new
prospects for novel markets. In addition to this, this tool can be utilized for evaluating both
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national as well as global level. Considering the example, if an organization is already
functioning in one nation and desire to step-in in new international markets then PESTLE
analysis of new market can be performed so that the company can know about the present
political condition and gain familiarity about its legal and other environment (Makos and
Makos, 2015). In addition to this, PESTLE model is very simple and the whole framework of
this model can be conducted and understood easily. It also supports in facilitating enhanced
as well as wider comprehension of the business environment. Besides this, it also motivates
and inspires companies to anticipate their future business challenges and risks and enables
them to minimalize and invalidate their influence.
In contrast with the pestle model that enables the business corporations to spot a
prospect and capitalizing the same, porter’s force model emphasize on external evaluation
moving away from traditional swot analysis, allowing the focus of the company to gravitate
mainly on their response to any alteration in the environment which is external to the
business. Additionally, this model is also inter-linkable like pestle framework in order to
support in comprehending as well as leveraging on vitality. Imperfects markets can be
searched by this approach effectively which tends to offer more prospects and chances to
business to grow and ear supernormal profits (Haberberg and Rieple, 2017). Above and
beyond all these benefits and advantages both the models have some limitations as well.
PESTLE framework offers too much of information about the environment on competitive
position of the company which sometimes result into paralysis by analysis. Furthermore, the
model also functions on the basis of certain suppositions which always remains to be a risk of
being wrong. Similarly, porter’s five force analysis tool also boldly claims that it is the
structure of industry that helps in driving competition and cost-effectiveness however in
numerous possibilities, the structure of industry is not the only element that impact the
effectiveness of the company. There are many other components such as legal activities and
government actions that can majorly impact the cost-effectiveness of the companies.
Moreover, this model is very static in nature as it offers snapshot of broader industry at some
point in the past and is beneficial only for developing strategies for short period of time
(Grundy, 2016). Therefore, to conclude it can be attributed that both the models that is
PESTLE analysis and porter’s five force analysis tool are very advantageous and valuable
industry evaluation tool nevertheless they be at variance in their usage along with capacities
of applications.
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The benefits, costs and risks of utilizing innovation for driving long-term organisation
development
Innovation refers to do something new or have changes in the existing product or in
the existing technology (Chen, Yin and Mei, 2018). It is the important factor for the company
in order to achieve the competitive advantage in the market. Innovation used to take place
through the development of the more good products, processes, technologies, arts, etc. The
organization must do the innovation in their technology and in their products which help the
company to earn more profits in the market. There are various benefits of doing the
innovation in the organization which are as follows:
Improves productivity: Innovation is done in order to improve the productivity by
reducing the cost of the product. This used to achieve by improving the production capacity
which enable to maintain economies of scale.
Better quality: The better quality of the products and services are basically used to
meet the customer needs. The organization should focus on the better quality of the products
in order to gain high sales and profits in the competitive market and have organizational
development in long-term.
To handle and environmental issues: By doing innovation it makes the company to
reduce the carbon emissions and produce by having less waste and maintain the decorum of
the external environment. This helps the organization to produce more and have
organizational development in the long- term.
Improves the staff retention, motivation and easier recruitment: It is not basically the
obvious benefit but it increases the product’s quality and makes the employees to work within
the improved and innovative technology in the organization. Innovations in the organization
increase the reputation and make the work easier in the company (Dziallas and Blind 2019).
This makes the organization to have the organizational development and survive in the long-
term.
By having the innovation there is also the risk- involved in order to do the innovation
in the organization for its development. Strategy of investing in the research and development
can bring the profits but not without the happening of the risk. The risk involved in order to
do the innovation is as described below:
Competition: Innovation is only done in order to gain the competitive advantage and
if the company not do this it affects the profitability of the business. The patents used to
provide some legal protection, and it is the reality that innovative products and processes are
hard to protect. As there are many industries dealing in the same variety of products and may
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the company will be doing same innovation as it will be the risk for the company to have the
organizational development in the long- term.
Uncertain commercial returns: By doing the innovation it is not guaranteed that
innovation will work in the company (Kahn, 2018). If the company used to bring any
innovative product it is not sure that it will have sale in the market and the company will earn
the return on that investment. For example, if the Tesco is bringing new variety of food
product, it is not sure that it will be earning profits on the investment done in order to produce
have innovative product.
Availability of finance: In order to do the innovation the company must have the
availability of the finance. If the company does not have finance it cannot do the for research
and development and have effect on the development of the organization in the long- term.
Cost of the innovation- It requires the lot of cost in order to do innovation in the
company. As it depends on the company that it has to do innovation in the products or in the
technology. If the company has to do innovation in the products and technology it has to do
lots of investments and sometimes it also take loans to do innovation (Arnold, 2019). The
innovation on the large- scale require the lots of cost in order to improve the organizational
development in the long- term. The organization must have the cost- effective approach in
order to bring some innovation in their organization in order to have good development.
The innovation on the short- scale does not require the lots of investments as it makes
the company to earn more profitability. Cost used in order to do the innovation improves the
cost of the products offered by the company. For example, if the Tesco has to do innovation
in products it requires the large investments as it is the big supermarket of the UK.
CONCLUSION
Therefore, it can be concluded that management of strategies is very crucial in an
organization for the purpose of building cohesive along with sustainable model of business.
The report has clearly determined the application of both prescriptive and emergent
approaches along with their role in delivering the main aim of the organization. Further, the
report has also thrown light on two important models of environmental analysis that pestle
and five force model and have originated that they both are very advantageous industry
evaluation tool nevertheless they be at variance in their usage along with capacities of
applications. Benefits, cost and risk related to innovation for driving long term goals of the
companies have also been determined successfully.
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REFERENCES
Books and journals
Arnold, F.H., 2019. Innovation by evolution: bringing new chemistry to life (Nobel Lecture).
Angewandte Chemie International Edition, 58(41), pp.14420-14426.
Božac, G.M., Paulišić, M., Tanković, Č.A. and Ivančić, M., 2017. Prescriptive Corporate
Strategy in Practice. Journal of Economics, Business and Management, 5(8), pp.285-
289.
Chen, J., Yin, X. and Mei, L., 2018. Holistic innovation: an emerging innovation paradigm.
International Journal of Innovation Studies, 2(1), pp.1-13.
Cherp, A., Watt, A. and Vinichenko, V., 2017. SEA And Strategy Formation Theories: From
Three Ps to Five Ps. Environmental Impact Assessment Review, 27, pp.624–644.
Coffie, S. and Blankson, C., 2016. Strategic Prescriptive Theories in the Business Context of
an Emerging Economy. Journal of Strategic Marketing, pp.1-12.
Dobbs, M.E., 2017. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Dziallas, M. and Blind, K., 2019. Innovation indicators throughout the innovation process:
An extensive literature analysis. Technovation, 80, pp.3-29.
Grant, M.R., 2019. Strategic Planning in a Turbulent Environment: Evidence from the Oil
Majors. Strategic Management Journal, 24, pp.491–517.
Grundy, T., 2016. Rethinking and reinventing Michael Porter's five forces model" from
Strategic Change. Harvard Business Review, 15(5), pp.213-229.
Haberberg, A. and Rieple, A., 2017. The Strategic Management of Organizations. Essex:
Pearson Education.
Kahn, K. B., 2018. Understanding innovation. Business Horizons, 61(3), pp.453-460.
Mintzberg, H., 1990. The Design School: Reconsidering the Basic Premises of Strategic
Management. Strategic Management Journal, 11, pp.171-195.
Porter, M., 2018. The Five Competitive Forces that shape strategy. Harvard Business
Review, pp.1-36.
Shah, H.T.S., Jamil, A.R., Shah, A.T. and Kazmi, A., 2015. Critical Exploration of
Prescriptive and Emergent Approaches to Strategic Management: A review paper.
International Journal of Information, Business and Management, 7(3), pp.91-100.
Online references
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Makos, J. and Makos, J., 2015. An Overview of the PESTEL Framework. [Online]. Available
through: <http://pestleanalysis.com/pestel-framework/>. [Accessed on 27thJanuary
2022].
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