Modes of strategic management are the approaches adopted by managers in formulating and implementing strategies. They address the issues of who has the major influence in the strategic management process and how the process is carried out. Managers generally use one of the three major approaches to strategic management: entrepreneurial, adaptive and planning.
Entrepreneurial Mode: In the entrepreneurial mode, strategy is developed mainly by a strong visionary chief executive who actively searches for new opportunities, is heavily oriented towards growth and is willing to make bold decisions or to shift strategies whenever necessary. The entrepreneurial mode is generally found in organizations that are young or small, have a strong leader or are in such serious trouble that bold moves are their only hope. The vision and dynamism of the top leaders, who enjoy absolute power, shape the future of the organization.
Adaptive Mode: This is an approach to strategy formulation that emphasizes taking small, incremental steps reacting to problems rather than seeking opportunities and attempting to satisfy a number of organizational power groups. The adaptive mode is characterized thus, by some familiar features:
1) The focus is on solving problems of immediate concern, rather than developing long term strategies.
2) Instead of meeting problems head-on in a bold way, the executive try to follow a reactive approach.
3) This approach is used by managers in established organizations that face a rapidly changing environment and yet several coalitions or power blocks, that make it difficult to obtain agreement on clear strategic goals and associated long term plans (Mintzberg)
4) The emphasis is on taking small, incremental steps aimed at appraising powerful coalitions within the organization. Since power is distributed it is not always possible to develop major goals, take bold initiatives and get ahead in a unified way.
This is an approach to strategy formulation that involves systematic, comprehension analysis along with the integration of various decisions and strategies. The aim of the planning mode is to understand the environment well enough to influence it. It is most commonly used in large organizations that have enough resources to conduct detailed analysis, have an internal situation where agreement can be reached on major goals, and operate in an environment that has enough stability to enable the formulation and implementation of carefully conceived strategies.
Ultimately to achieve success, each mode needs to be tailored to actual situations in an appropriate way. To this end a top level manager may adopt an entrepreneurial mode for a new business that is just starting and utilize the planning mode of strategic management to the rest of the organization. Each of these approaches can either promote organizational innovation or stifle it, depending on how the mode is employed.
Elements of strategic management
The above definitions clearly reveal four important elements of strategic management: (1) Strategic analysis, (2) Strategic choice, (3) Strategy implementation (4) Strategy evaluation
Strategic Analysis: This is concerned with the strategic situation of the organization. Here the organizations looks into issues such as change in the organizational environment and its likely impact on the organization assessment of its resources and strengths and weakness in the light of changes in environment. A vigilant and proactive organization always tries to get ahead of competition through a constant reexamination of its positions in the marketplace in terms of its products, services strategies etc.
Strategic choice: Strategic analysis provides a basis for strategic choice. This is basically concerned with the formulation of suitable courses of action, their evaluation and the choices between them. The relevant issues include deciding what new businesses to enter what businesses to abandon, how to allocate resources, whether to expand operations or diversify whether to enter international markets whether to merge or form joint ventures and how to avoid a hostile takeover etc. since an organization has to utilize its resources judiciously it must decide which alternative strategies will benefit the firm the most.
Strategy Implementation: This is the action stage of strategic management.
Implementing mean mobilizing employees to translate formulated strategies into concrete action:
This step requires a form a ) establish annual objectives , b) devise policies c) motivate employees d) allocate resources e) develop a strategy of supportive culture f) create an effective organizations structure g) channel marketing efforts h) prepare budgets i) develop and utilize information systems and j) link employees rewards to organizational performance. Often successful strategy implementation hinges upon a manager’s ability to motivate people.