“Strategic management” is formed by the combination of two
words, ‘strategy’ and ‘management’. These two words holds relevant importance
in today’s competitive world, where every other company is trying to acquire maximum
market share in the respective industry.
These two words enables the company to take competitive
advantage by formulating unique strategy and having proper management to
execute that strategy.
These two words are not of recent origin and their use is not
only limited to the corporate world, but the origin of these words dates back
to ancient times of fighters like Hercules, Alexander and Sun Tzu. Strategy has
been used in each and every battle and war fought in ancient, medieval and
modern history of the world and will be continued to be used in future wars
also. Strategy is the set of steps adopted by one party to gain advantage over
other party in a war. The strategy was formulated with the help of tactics
which were adopted for battles.
The guidelines for formulating unique and positive result
oriented strategy were laid down by the outcomes of the famous battles and wars
and through the works done by kings and war leaders of various wars in the
course of world history.
Such one example is of the work done by Chinese war general
Sun-Tzu in his book named as “The Art of War”. This book contains the
strategies which were adopted by him in every war he fought, which gave him
success throughout his life.
Unlike history, the strategy has found its importance in
corporate world more than in any other field, where today’s competitive world
is considered as a continuous battle and war state between the companies, where
company having best strategic management survives.
But how to say that which strategy will work in which
circumstance and for what time period and whether the formulated strategy will
work in all situations or not. Before finding answers to these questions, we
should understand how strategy or competitive advantage can be developed.
There are many areas where a company can develop competitive
advantage, but the most important and reliable area is of technology.
“Technology is defined as the set of process which results in
adding value in consistency”. Technology is considered to be the backbone of
most of the industries, which is continuously evolving and developing.
With such a rapid change in technology, companies which are
able to move with the change are able survive, others just fade away with the
time.
The greatest example of this is the case of Kodak, which was
leader in the technology of traditional film photography, but after the entry
of digital photography by Sony, they could not catch up the changed technology
and soon wiped away from the market.
On the other hand, taking example of Samsung, which moved the
world by going with the new android technology in mobile phones. It became the
leader in the mobile phone industry out of no-where, forcing market leaders
like Nokia to innovate and change their technology.
The technology can be broadly classified as the hard
technology and the soft technology, where both the streams of technology leads
to complete technology up gradation in any industry. On one hand, hard
technology deals with the sciences like physics, chemistry, biology, electronics
and others, the soft technology deals with the basic areas of management and
functional areas of a company. Dividing functional areas of a company in
smaller areas of marketing, finance, human resource and operations can be
helpful initially for a company, but on a long run, will lead to problems in
coordination and conflicts of interest.
For a company which is trying to bring out technological
changes in the system, only working on hard technology which not suffice as
soft technology is equally important for the successful implementation.
Again taking the example of Kodak, after entry of Sony in the
area of digital photography, company invested heavily on research and
development of the digital technology and came up with a good technology which
had the potential to help company retail its market position. But the problem
was with the middle level management, which was change resistant and as result,
company did not launched the technology and lost all it had. Thus the soft
technology also plays a very important role in designing the strategy for a
company.
Digging further into technology, every technology adoption
has some stages, which determines the level of competitive advantage a company
has. The first stage or the beginning stage is of familiarity, where the
company just adopted the technology and is getting familiar with it. The next
stage is of competence where company achieves competence in the technology and
can utilize the technology efficiently. The third and the last stage is of
competitiveness, which enables a company to compete with the other companies on
the bases of strong hold of technology.
Taking the example of Toyota, which is famous worldwide for
its lean production technology, evolved the technology and once was beginner in
that technology. As time elapsed, it acquired competence in that technology and
by this time other companies also realized the importance of this technology
and they started adopting it. Today Toyota is the master in this technology and
it has achieved competitiveness in it which has helped it to become the largest
automobile manufacturer in the world.
But is simply changing to new technology enough for the
success? The answer is no. The technology is the driving force for the industry
and the companies, and simply changing technology cannot guarantee the
competitive advantage.
The competitive advantage is achieved by efficient
utilization of available resources with the help of smart management. Thus the
combination of the three factors of resources, utilization and management
creates the bulletproof strategy for a company.
But can we formulate the general guidelines for the companies
to follow in order to achieve everlasting competitive advantage? Again the
answer is no. The strategy is dynamic and customized. Neither it can be
generalized nor timed. No one know the time duration a particular strategy will
work for and also the situations it will work in.
The need of the hour is maximizing convenience, maximizing
choice with a lesser price and to achieve this, prudent decisions have to be
made at each and every step and level in a company.
How to formulate an
everlasting bulletproof strategy is yet to be discovered.