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Implementing a strategic management process needs some facilitators and infrastructures. One of the most important of these elements is information technology. Since running projects such as strategic management process is almost impossible without utilizing information technology, so identifying the ways that through them information technology can facilitate the strategic management process, can be so beneficial. The main purpose of this paper is to introduce some of these ways. First we have a glance at strategic management and information technology and then the role of information technology in each phase of the strategic management process is described. The final part of our paper, presents a conceptual model that illustrates the role of information technology in each phase of strategic management process.
On the light of rapid growth of Information technology (IT), there is a tremendous pressure on organizations to invest huge amount of money on IT. The investment is not necessarily successful. Therefore, managers need to take into account the risks and payoffs in their investment decision-making. In addition, managers have been confronted with conflicting information regarding the outcome of IT investments. It is claimed that IT has a potential role in contributing to sustained competitive advantage Error: Reference source not found,Error: Reference source not found,Error: Reference source not found,Error: Reference source not found. Some researchers [1, 2, 3] argue that IT would be a key resource for sustainable competitive advantage, or at least complement the creation of distinctive advantages. On the other hand, others [4, 5] suggest that companies achieve nothing significant from IT investments. Whilst, it is expected the IT plays its role in the context of organizations, and improve the efficiency and effectiveness of an organization by reducing the bounded rationality of decision-making Error: Reference source not found. Despite the potential benefits, questions have been raised as to the realized benefits to IT adoption.
From the strategic point of view, understanding the sources of sustained competitive advantage is a strategic imperative for researchers as well as managers Error: Reference source not found,Error: Reference source not found. IT investments have not always been effectively tied to or aligned with organizational goals, strategies, resources or capabilities. Without such a connection, IT investments may indeed represent little more than expensive paperweights Error: Reference source not found or paving the existing cow paths Error: Reference source not found. Coff and Laverty Error: Reference source not found note that strategic assets are often not appreciated because the benefits they provide are ambiguous or uncertain. As a result, increased attention needs to be focused on clarifying the relationships among intervening variables between IT investment and firm performance Error: Reference source not found,Error: Reference source not found. In order to better understand IT's role in competitive advantage, it is identify the chain of variables between IT investments and firm performance in strategic management Error: Reference source not found,Error: Reference source not found.
This paper is aimed to introduce some facilitators and techniques that each one can be helpful in a special stage of strategic management process. Remaining parts of this paper are organized as follow: First, strategic management is briefly introduced in Section 2. The next section is devoted to an overview of Information Technology. Then, introducing the methods and techniques that can be useful in different levels of strategic management process, are the main parts of our paper.
Strategic management is rather a new field of knowledge. Its origin goes back to the work of two pioneers, Andrews and Chandler Error: Reference source not found. Andrews examined the process of strategy development. Chandler examined the links between strategy of organizations and their structure. The formulation-implementation model of Bower et al. Error: Reference source not found, and the analysis-choice-implementation model of Johnson and Scholes Error: Reference source not found are the two early followers of pioneers.
In the 1980's Porter Error: Reference source not found,Error: Reference source not found applied concepts from industrial organization economics. He coined the term competitive advantage, developed the key concepts of focused and differentiated generic strategies as a means of gaining competitive advantage, and identified the value chain of activities of an organization as one of the key influencers of an organization's strategy. Also in the 1980's another movement began that suggested that the process of strategy formulation and implementation did not take place separately. Instead it was suggested that formulation and implementation take place together in an incremental way Error: Reference source not found. It is also suggested that strategy emerges out of the process of strategy making Error: Reference source not found. In the late 1980's the focus of attention of strategy researchers moved from the position of organizations in the marketplace to the internal capabilities of the organization. Prahalad and Hamel Error: Reference source not found suggested that firms were successful because they had a small number of core competences that they were exceptionally good at and which allowed the organization compete in a number of different markets.
Much of the strategic thinking in the early 1990's focused on improving operational effectiveness Error: Reference source not found and in this era movements such as total quality management and business process reengineering Error: Reference source not found gained ground. Recent research has tended to focus more on the speed of change in the business world and the difficulty that firms have in adapting and reacting to a complex, dynamic and fast-changing environment Error: Reference source not found. Beinhocker Error: Reference source not found suggests that strategic thinking can benefit from complexity and evolutionary theories. Markides Error: Reference source not found suggests a dynamic model for strategy-making based on building internal variety, a premise of evolutionary theory.
As depicted in ., strategic management encompasses the broad concepts of strategic planning and strategic implementation. The former focuses on the formulation and selection of strategy, the later includes the management and control of strategies in order to fulfill the mission of the organization and to meet goals and objectives.
Figure .components of strategic management
Within these two components, a number of processes occur to decide a sustainable business strategy. As shown in Figure . Strategic management process [??], a useful framework to simplify the conceptualization of the two strategic management components is made up of six elements.
Figure . Strategic management process
Chaffey and Wood Error: Reference source not found described Information Technology as technology resources used for business information management. These resources include software, hardware and telecommunication networks used for managing information. According to Benemati et al. Error: Reference source not found, IT is changing rapidly and considering the increasing strategic impact of IT on business operations, its successful management is of utmost importance. Irani and Love Error: Reference source not found suggested that for IT management to be successful, it must be perceived as an iterative business process capable of providing organizational learning throughout the lifecycle of the technology. However, even when IT is managed successfully, the question arises, as to what role IT plays in the achievement of organizational strategic goals and objectives.
In response to this question, Venkatraman et al. Error: Reference source not found and Franz and Klepper Error: Reference source not found postulated that the proper role of IT in an organization is usually characterized as a fit or alignment with the strategic goals of the organization. Therefore, IT can only be appropriately aligned when infrastructure put in place to implement the IT strategy is adequate. Also, the IT strategy must support the organization's strategy and business processes.
IT in the strategic management context
Strategic management is an ongoing process that uses information to assess the organization and its environment. Based on the assessment, strategic management sets goals and strategies to meet all existing and potential competitors. It then reassesses each strategy periodically and regularly to determine how it has been implemented, and whether it has succeeded or needs replacement by new strategy. Therefore, information is a vital input for the strategic management process. In order to clarify the need for information, the following sections devoted to the role of information technology in strategic management process.
IT and the organizational purpose
The strategic management process begins with the formulation of organizational purpose. Organizational objectives can be strategic, administrative, or operational. Strategic purpose provides the overall direction for the organization. Administrative objectives specify the necessary organizational infrastructure to accomplish the strategic objectives. Operational objectives identify specific work tasks that must be performed Error: Reference source not found.
Organizational purpose encompasses vision and mission development. It also covers a definition of strategic goals and objectives of the organization Error: Reference source not found. The reality of vision and mission development and strategic goal and objective setting is typically not only undertaken when organization is in its beginning stages, but also is continually examined and perhaps refined. Now, the question is that how does technology help in the process of vision and mission development and strategic goal and objective setting?
Developing a mission statement, on the other hand, tends to entail more analytical work, reworking and finalization or consensus within the organization. Hence, ideas need to be communicated and shared. This process may include individuals within a single building or campus setting but may also include individuals in other locations. Mission development may include employees at various levels or roles, as well as constituents such as consultants, shareholders, customers and suppliers Error: Reference source not found. Technology can not only facilitate the expedient discernment of ideas about the mission, but also can act as an instrument for real-time review, refinement and ultimate creation of the mission statement.
IT as common as e-mail and on-line collaboration software, as well as tele- and video-conferencing systems, can play a critical role in mission development Error: Reference source not found. The internet and networks are the ultimate facilitators for organizations that work in conjunction with geographically distributed members in order to create, review and refine an important binding guide in the life of the organization. Furthermore, once the mission is finalized, IT acts as a key instrument to communicate the mission not only to all the employees, but also to customers, partners, suppliers and shareholders alike, especially through the use of intranets, extranets and public websites Error: Reference source not found. Without IT, developing and communicating a the mission would be substantially hampered and more costly Error: Reference source not found, and would not reach as wide an audience.
As part of the development of the organizational purpose process, strategic goals typically are broad directions the organization wishes to pursue or results it wishes to accomplish within its mission. Logically, the ability to develop goals and objectives requires input not only from many individuals, but also from many data sources. Therefore, data must be obtained. Information must be shared. Insight must be gained. Debate and consensus must be pursued in order to agree on rational and achievable goals and objectives Error: Reference source not found. In today's enterprise, where corporate level, business-unit level, and even functional and operational goals and objectives must be developed in a timely manner, IT plays an important role in bridging both stakeholder and information in order to facilitate rationale decision making in this key developmental process.
IT and research
In order for the organization to develop an appropriate course of action to fulfill the vision, mission, and the strategic goals and objectives it has set for itself, an understanding of both the general external environment and its competitive environment must be developed. Given today's global economic business environment - one underscored by speed and change - organization would do well to keep abreast and monitor for changes and trends of strategic significance in order to maintain a productive fit. Environmental research enables an organization to monitor and analyze continuously ever-changing external conditions Error: Reference source not found.
In order to fulfill the requirements of environmental research, enterprises resort to two major means to gather data and information, primary research and secondary research Error: Reference source not found. Primary research includes gathering information through interaction with people. Techniques typically include gathering information through meetings, one-on-one interviews, focus groups and surveys. While many of these techniques may not be considered high-tech, the internet and the use of web-based surveying techniques are becoming quite popular for primary research. Secondary research includes the gathering of information through literature, publications, broadcast media, electronic new sources, information brokers and distributors, books and other non-human sources. For secondary research, the internet has perhaps become the de facto tool or source for information gathering Error: Reference source not found.
Another aspect of environmental research concerns itself with continuous monitoring, learning and insight into the external - and internal - environment. Major changes in the environment can occur at any time. Additionally, an organization must also monitor the learning of its internal constituents to understand better the external environment Error: Reference source not found. Special groups such as market research and intelligence, competitive intelligence and customer intelligence, among others, have been established in many organizations to explore both the external environment and internal learning Error: Reference source not found. Hence, not only does internet technology (including intranets and extranets) become important, but also other technology, such as knowledge management, business intelligence software, decision support software, play a critical role in disseminating and analyzing vast amounts of data on the environment as well as valuable insights generated internally from the workforce Error: Reference source not found.
IT and discovery
The analysis of environmental information is crucial for executives to mold the organization's future Error: Reference source not found, Error: Reference source not foundError: Reference source not found. Information is needed about customers, suppliers, competitors, new technologies, the economy, labor markets, the international scene, demographic trends, and political developments Error: Reference source not found, Error: Reference source not found. Executives rely most heavily on external sources for this information (e.g., trade journals, friends in the industry), but internal sources are also used (e.g., managers in marketing). When it comes to strategic environmental information, executives have a limited number of sources which they constantly consult Error: Reference source not found.
In the discovery process, key stakeholders in the business, as well as corporate planners, should be given the opportunity to incorporate the environmental data and forecasts developed in the research process. Individuals within the organization should have the opportunity not only to review the output of the environment research, but also to assess the organization's internal strengths and weaknesses, as well as external threats and opportunities in light of the data. The ultimate outcome of the discovery process is indeed about the future. While the forecasts developed in the research phase present static data about the future, or the what, scenarios are developed to better understand a dynamic element of the future, or the events describing 'why' and 'how' the future might evolve. Scenarios are devices for ordering one's perceptions about alternative environments within which one's decisions might be played out in the future. The goal is to develop at least two or three credible scenarios of the future, including anticipated and unanticipated scenarios, thus setting the stage for which strategies might be developed to thrive in each alternative scenario Error: Reference source not found.
The biggest benefit of technology in the discovery process is making data and information available to those who need it. For example, Nokia involves upwards of 250 employees in its strategy process Error: Reference source not found. Technologies such as specialized databases, made available through intranet systems, are apparently simple, yet important tools to help facilitate discovery Error: Reference source not found. Sophisticated enterprises have developed specialized research and discovery databases with navigational aids, e-mail and e-mail alerts, feedback mechanisms and reports that summarize changes in the environment on a continual and real-time basis. Furthermore, advanced data mining, data visualization and business intelligence software prove extremely useful not only to mine internal databases, but also to help find patterns and trends in the data that may reveal critical aspects useful in crafting or modifying strategies Error: Reference source not found.
IT and opportunity identification
A typical approach, in the opportunity identification process, is to develop teams of researchers, executives and managers to evaluate the output of the research and discovery phases Error: Reference source not found. Hence, market opportunities must be defined against the plausible future scenarios. Not only must markets be defined, but also their relative attractiveness which may include the market outlook, competitive landscape and fit with the various scenarios created in the discovery process. The key thrust of this process is to engage the sum experience, knowledge and intuition of a variety of individuals within the organization, in order to develop a robust set of strategic choices that the organization may or may not choose to pursue Error: Reference source not found.
This stage of the strategic management process includes a wide variety of techniques Error: Reference source not found, including brainstorming, worksheet input, meetings, teleconferencing, videoconferencing, and information distribution and presentation Error: Reference source not found. The tasks necessary to create a range of strategic choices can be tedious and time consuming. IT, obviously, plays a critical role here, particularly in plotting, disseminating and presenting work from a variety of individuals and teams. Databases, packaged software, e-mail, the internet and private networks Error: Reference source not found are critical to the opportunity identification process.
IT and recommendations
The recommendations process is that stage where strategic decisions must be made. Ultimately, in any strategy formulation exercise, an organization is trying to make decisions on where it is going to play, how it is going to win and how it is going to sustain an advantage in its markets Error: Reference source not found. At this stage, a range of strategic options, which may or may not be valid, have been plotted in the option prioritization framework for further evaluation and the organization's choice of strategic positioning is decided in the recommendations process Error: Reference source not found. In this phase of strategic management process the different strategies are then evaluated on various financial and non-financial criteria and the best strategies are selected for implementation Error: Reference source not found. Information systems such as Executive information systems (EISs) Error: Reference source not found and OLAP (On-line Analytical Processing) capabilities allow users to perform multidimensional analyses. Data mining capabilities can provide insights on relationships that are hidden in the data. The balanced scorecard concept has influenced EIS design and content. It highlights the importance of monitoring financial, the customer, internal operations, and innovation and learning measures Error: Reference source not found, Error: Reference source not found. An EIS can be used to facilitate the communication and negotiation of alternative plans and programs that are emerged at the recommendation stage in strategic management process Error: Reference source not found.