Strategic management is the act of maximising the efficiency of firm internal functions while at the same time, making optimum use of the external opportunities that the company may realise in the market. Strategic innovation in the management design is an important asset that allows companies to gain competitive advantages over their competitors. It is important to note that every company is unique in the internal and external factors with which they have to deal (Jeyarathnam, 2008). The increase in innovative management strategies has led to a continually and rapidly changing industries and target markets. However, there are some basic functions and attributes to the design of firms that allow common ground for the analysis of important internal and external influences on strategic management (Jeyarathnam, 2008).
Internal strategic management speaks to the changes and directives that management makes to improve the company’s operational performance. One method that this can be done is by looking into the value chain of a firm. The value chain is a mixture of the employee skills, quality of product, technology that a firm has employed and even the. All these factors affect the overall quality of the product or service that a company provides.
Innovation Planning entails looking into the primary functions of the value chain, like sourcing of raw materials, the design of the company production process and the method in which the company manages its distribution. All of these factors are well within the control of the company and therefore count as the company internal factors. When coming up with an innovative and strategic management plan, these are the areas that the managers are required to look into to ensure that the company operations are at optimum efficiency and flowing with ease. This actively improves the competitive advantage that the company will have over its competitors.
The external factors that are considered when looking into strategic management and innovative design of the firm management. The external environment represents a more intricate dynamic in that the company is not in control of the different factors occurring concurrently but can use them as opportunities to gain a competitive advantage in the company. For the company to understand these ever-shifting factors, several different metrics allow the company to improve their performance in their respective industry gradually. These models include the PESTEL Analysis and SWOT Analysis among others (Khan & Khalique, 2014).
The features of the external environment include the technology that is available on the market. In this context, the technology that is looked at is that which the company can employ to ensure that they perform optimally on the industry standard. Other factors are the Labor Markets, Supplier Markets, General Economy and the regulatory environment among other (Khan & Khalique, 2014). The company’s management has very little influence on the difference in the way that these features affect the firm. It is important to note that these features are much more complex depending on the specific industry in which the firm is a part. All these considerations are however important to the strategic management of the company.
The upper management of any company looks into the internal and external company environments to derive their desired strategic principles on which management is based. Firms, like people, have to project the tools that they have to interact with the world outside. The internal environment and it factors, therefore, make up the beginning of all strategic considerations.
The resources that the company has combined with the Competencies of the Labor force and the capabilities of the company often relate to the kind of activities, both functional and complementary that the company will realise. Managers can, therefore, work to ensure that the resources that the firm has are not wasted. Secondly from this primary stage, the, company must ensure that the capabilities and competencies of their labour force are not only appropriate per department but always improving. This way, the company activities are better run and overall organisational performance is improved. The measure of the success of this step can be seen in the business service or product quality and to some extent the number of retailers, whole sellers and customers that the company realises. After streamlining the internal environment, the company must then look at the external management.
The company must maintain good relationships with the suppliers to ensure that whatever raw product that they require for production is availed to them at an industry bargain and also at the desired time. This not only involves looking for the most reliable suppliers but also knowing how the entire supply environment works. The supplies that any firm gets is critical as it is the basis of all operations. The company must then look into the potential entrants into their industry and the impact of such entries on the industry dynamics. This is important as it prepares the company for a more competitive environment and in some cases presents the company with opportunities to acquire new assets.
The competitors are also an important external factor. The firm must always ensure that the competitors are a primer gauge for measuring their success or failure in different aspects of business. The company must then look into the consumer markets. These are the Retailers, Whole Sellers and Customers. They are a good indication of market trends which can keep the company ahead of the pack.
It is important to note that the changes that are made in the internal environment of a firm eventually affect its position in the industry. Changes in the position of a firm in a specific industry usually inspire increased competition and innovation. From a second, perspective, the changes in the external environment often make or break the firms (Hillebrand & Biemans, 2003). External factors dictate how the firm can reorganise its internal environment. In this way, the internal and external environments are prime factors of consideration when looking into the strategic management of a firm (Hillebrand & Biemans, 2003).
Companies often look to realise the maximum profit margin. They, therefore, must invest in research both internally and externally to get a clearer picture of the resources that are being used by the firm and alternative channels that the company can direct these resources. Alternatively, the company through research, development and training, can improve the competencies of their staff and more importantly add to their technological infrastructure. These are the basic principles of the innovation process (D'Alvano & Hidalgo, 2011).
References
D'Alvano, L. & Hidalgo, A. (2011). Innovation management techniques and development degree of innovation process in service organizations. R&D Manage, 42(1), 60-70. http://dx.doi.org/10.1111/j.1467-9310.2011.00663.x
Hillebrand, B. & Biemans, W. (2003). The relationship between internal and external cooperation. Journal Of Business Research, 56(9), 735-743. http://dx.doi.org/10.1016/s0148-2963(01)00258-2
Jeyarathnam, M. (2008). Strategic management. Mumbai: Himalaya Pub. House.
Khan, M. & Khalique, M. (2014). Strategic Planning and Reality of External Environment of Organizations in Contemporary Business Environments. BMS, 5(2), 165. http://dx.doi.org/10.5296/bms.v5i2.6794
