Differentiate similarities and differences between strategy and strategic management in operation of an organization

According to Alfred Chandler 4: Strategic Management is a process of defining long-term basic objective of an organization, selecting manner and direction of action and allocating natura

Differentiate similarities and differences between Strategy and Strategic

Management in operation of an organization/enterprise.

Task:

Concept of strategy and strategic management have many similarities and differences, to differentiate them, first of all, we should clarify two concepts

Concept of “Strategy”

At present, there are so many different definitions of strategy, basic reason of this difference is that there are so many different concepts of organization in general and different methods of approach of strategy of organization in particular

Naturally, depending on viewpoint of positivism or constructivism, nature of strategy is defined under natural law or greatly affects significance of subject In the fact, strategy is usually defined in actual manner in order to make easy practical processes in the organization

Term of strategy derives from military field with significance t mention big and long-term plans basing on what competitor can do or can not do Then, term of business strategy was born According to traditional viewpoint, strategy is to determine long-term basic objectives of an organization and then, make specific action programs together with use of resources on a appropriate basis to reach such objectives

According to Alfred Chandler (1): Strategy includes long-term basic objectives of

an organization while select method and process of activities, allocate resources necessary for reaching such objectives

According to William J’Glueck (2): Strategy is an activity of unification, comprehensiveness and cooperativeness designed to ensure the basic objective of the organization

According to Fred R.David (3): Strategy is

means used to reach the long-term objectives

Business strategy can include geographical

development, action diversification, ownership,

product development, market penetration, cutback of spending, liquidation and joint venture

According to Michael Porter (1996), “Strategy is to create a harmony between actions of a company Success of strategy is mainly based on how to do well many works … and cooperate them with each other… core of strategy is to “select what has not been done”

According to this approach, strategy is to create differences in competition, find out and carry out what not to do Nature of strategy is to build competitive advantages, strategy just exists in unique activities Strategy is to build a unique position and affect

a group of different activities

According to the above definitions, basically, strategy of an enterprise is formed

to answer to the following questions:

 Where does business activity happen in a long-term period? (Orientation)

 What will business activity compete in product market and scope of activities? (Market, scope of activity)

 How to business activity carried out better than competitors in the market?

 Which are resources (skill, assets, finance, human resource, technology, trademark…) necessary for creating competitive advantages? (Resources)

(1), (2) Strategic management, Statistical Publishing House, page 4 (3) Fred R.David (2006) Version 1, Overview of Strategic Management, Statistical Publishing House, page 20.

 Elements of external environment affect competitive capacity of enterprise? (Environment)

Company operating without strategy likes a person on the road does know where

to come regardless the crowded (market and competitors) giving somebody full powers

to do If this situation continues, he is a mediocre person hidden the crowded

A leader of a firm stuff shall not want to leave nothing to chance, does not let his enterprise depend on any market or competitor To do so, this leader must take the initiative in all work to set out a way and make best efforts to guide the market under this way that his enterprise has prepared and accordingly, his enterprise can have more advantages than other competitors

Hence, a clear strategy is a binding requirement for companies of aspiration of

leading the market

Strategy is a direction for objective way of enterprise Doing business is so simply

as much as hawking newspaper around, changing to sell lottery ticket or cigarette tomorrow, it is to prepare capital, relation, working tools and seek customers, building relations… and then, in the course of hawking, he must define a roadmap of earning on certain road or area, form competitive method step by step These things become flesh and blood, govern action of daily hawker, till the market is changeable or when he prepare enough capital and find out about new business opportunity

And Michael Porter (1996) outlined a clear difference between excellence in action and location of strategy So many companies think that they have strategy by following their excellent objective They work hard under “standard point” of “the worst business performance” to stand on their competitors But on same racing road

demand is run on another racing road Company focuses on specific group of customers and demand and supply with different utilities, this is considered as a strategy

For a company manager, OSTI method is the most basic one in the plan-based operation

 O: Objective - Destination of enterprise

 S: Strategy - Method enterprise apply to reach objective

 T: Tactics - Specific actions

 I: Implementation - Implementation plan

From OSTI Method, we can say that strategy is a core part of the operation of any company

Hence, “Strategy is a combination of activity chain to be created sustainable competitive advantage" McKinsey said

“Strategy is not a plan, an idea, strategy is philosophy for life of a company" Cynthia

A Montgomery said

As analyzed above, it is concept of strategy, how about Strategic Management?

According to Alfred Chandler (4): Strategic Management is a process of defining long-term basic objective of an organization, selecting manner and direction of action and allocating natural resources necessary for implementing such objective

According to Fred R.David (5): Strategic management can be defined as an art and science of establishing, evaluating decisions relating to possible functions of an organization in order to reach such objective

According to John Pearce II and Richard B.Robinson (6): Strategic management

is a system of decisions and actions to form and implement plans in order to reach the objectives set out by enterprise

Hence, task of strategic management includes three main parts: Establishment of

objective - it means to define where does organization want to go; Establishment of plan - it means to define how organization reaches; Allocation of resources - it means that how organization goes

(4) Strategic management, Statistical Publishing House, page 26-2005 (5) Fred R.David (2006) Version 1, Overview of Strategic Management, Statistical Publishing House, page 9.

Firstly, “Strategic Management is a science and art of strategy in order to set up

business direction and objective, implement short-term and long-term plan based on existing resources in order to each Enterprise/Organization enable to reach their long-term objectives”

Secondly, “Strategic Management is a process of research on environments at

present as well as in future, defining objectives of enterprises , implementing,

Development of

strategic prospect

and mission

Establishment of objectives

Establishment of strategies to reach objectives

Execution and operation of selected objectives

Evaluation, monitoring, vamping, adjustment

Vamping

If needed

Vamping

If needed

Improvement/

change

If needed

Improvement/

change

If needed

Restoration of

1, 2, 3, 4

If needed

inspecting the decision implementation to reach such objectives in the environments at present as well as in future”

Thirdly, “Strategic Management is an art and science of establishing,

implementing and evaluating decisions to help each Enterprise enable to reach its objectives”

- Basic tasks:

- Establishment of prospect

- Establishment of objectives

- Establishment of strategy

- Execution and operation of strategies

- Evaluation & adjustment

Basic strategy making model

STRATEGIC MANAGER

Mission and objective

External analysis

(opportunities and threats)

Selection and establishment

of strategies Functional strategy

Business strategy

Global strategy

Corporate strategy

Internal analysis (Seeking possible resources and core capacity)

Structure of organization Compliance with strategy, structure and control Control design

Change to strategy

Company level

General Director.

Senior managers

Business entity level

Division managers

Office

Business functions Business functions Business functions

Functional level

Functional managers

EXPECTED AND UNEXPECTED STRATEGIES

Strategic Management is spine of all professional managements and administrations Where needs a basic and professional management system to be operated well, where is not short of important meetings concerning strategic management Strategic Management is not only associated with management system at corporate and company level but also covers all functional managements and administrations

Therefore, between strategy and strategic management, there are similarities and differences showed in below table:

Difference:

Tasks:

+ Determining objectives to be reached

+ Determining way or method to reach

such objectives

+ And directing resources allocation to

reach such selected objectives

+ Establishment of objective - it means to define where does organization want to go;

+ Establishment of plan - it means to define how organization reaches;

+ Allocation of resources - it means that how organization goes

Concept:

Expected strategy

Considered strategy

Unreal strategy Unexpected strategy

Real strategy

Strategy: is action program, action plan to

be designed to reach specific objective, is

a combination of long-term objectives and

methods, manners, way to reach such

objectives

Strategic Management: is a process of

determining strategic objectives of an organization, establishing policies and plans to reach objectives and allocating resources of the organization for the implementation of these policies and plans

Similarity:

Strategy and Strategic Management are guidelines for all activities of entire Company

If establishing a good strategy and managing it effectively, we shall have an overall view of strategies, tactics of the Company If all of use agree with implementing the strategic objectives, it is mostly likely that we are successful Strategic objective shall

be changed every year but its basic foundation is not changed

Therefore, we can realize basic differences between Strategy and Strategic Management, they are: Strategy is engaged and it is part of strategic management and Strategic Management is a process of flexible arrangement of strategies Strategic Management is also a cooperation and integration, seeking consent in supportive and business strategies and ensures soundness of strategies to have more specific approach Strategic Management also establishes strategy, implements strategy, monitors and evaluates strategy To reach good result of business, a strategy must be established on a methodical basis and must be cooperated and unified between strategy establishment step and strategic management step If a strategy is established well without good strategic management, operation of the company shall be not reached as expected