IMPACT OF STRATEGIC MANAGEMENT ON PRODUCTIVITY AND PROFITABILITY OF A BUSINESS ORGANIZATION

CHAPTER ONE

INTRODUCTION

1.2Background to the Study

In today’s turbulent business environment, managers increasingly need reliable navigational tools to achieve competitive advantage. Many academics and practitioners consider strategic management to be such a tool, that today’s managers have to think strategically about their company’s position and about the impact of changing business environment. Strategic management, according to Kotler (2012), is defined as the managerial process of developing and maintaining a viable fit between organization objective, skills resources and its changing market opportunities. In any organization, strategic management occurs in two phases which include the decision on the products to produce andor the services to render. Also, it includes deciding on the marketing and or the manufacturing strategy to follow in getting the intended product or service to the proper user.

Strategic management decisions will have long term impact on the organization. Similarly, Mintzberg (2011) argued that strategic management attempts to combine short-term planning and long-term planning. Organizations conducting Strategic management typically commit themselves to a formal process in which a group of planners articulate a mission statement, set goals and objectives, audits the organization for internal strengths and weaknesses, assesses the external environment for opportunities and threats, evaluates strategic options, and then select and operationalize an organizational strategy. The basic aim of strategic management is to link daily organizational decisions with a vision of where the organization wants to be at some point in future, usually five years. Hence, strategic management is not a single panacea but is instead an adaptable set of concepts, procedures, tools and practices intended to assist organizations determine where they are, what they are doing, how to do it and why. Porter (2010) argued that strategic management is the process of devising a plan of both offensive and defensive action intended to maintain and build competitive advantage over the competitors through strategic and organizational innovation.  The three issues that Strategic management should address include; what to do, to identify the customers and how to do better than the competitors. Blackerby Associates (2010), said that strategic management is a continuous and systematic process where people make decisions about intended future outcomes, how outcomes are to be accomplished, and how success is to be measured. McDonald (2013) further developed a frame work arguing that strategic management process delivers a set of defined initiatives (projects) that achieve a desired set of business goals. Renger and Titcomb (2012), were of the opinion that strategic management is an organizational process of defining its strategy or direction and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenue through which it can pursue in particular its course of action. In addition, Amit and Zott (2010) averred that strategic  management spells out the basic mission of the organization and decides the resources that will be used to accomplish the stated mission. It is the master plan of the organization from where all the departments in an organization derive their functions and directions.

For these managers, the trick is knowing which levers to pull, and when to pull these levers to produce the desired and significant results in term of increased productivity which leads to high profitability of their organizations. We may identify these critical levers as organizational strategies. Strategy and strategic management in the context of business organizations refer the major action programmes that are used by organizations to achieve their mission and goals. The focus of all business organization is viability and profitability. The first requirement of the spirit of organization is high productivity standards for the group as well as for individuals in the organization. A successful organization is most often an efficient enterprise and one of the major focuses of management by objectives is to have managers set high productivity standards for themselves. A manager performs his functions by allocating and integrating of human and economic resources through the process of planning, organizing, directing, and controlling, for the purpose of producing outputs (goods and services) desired by its customers, so that the organization’s objectives are achieved. A manager works with and through people and other resources to realize these organizational objectives.