Strategic management is concerned with management of an organization’s resources to achieve its goals and objectives. It involves various activities that incorporate stakeholders in the organization in setting objectives, analyzing the competitive environment, analyzing the internal organization, evaluating strategies, and ensuring that management rolls out the strategies across the organization.
Broadly, there are two schools of thought in strategic management, the prescriptive school and the descriptive school. While the prescriptive school outlines how strategies should be developed, the descriptive approach focuses on how strategies should be put into practice. These schools differ on whether strategies are developed through an analytic process, in which all threats and opportunities are accounted for, or are more like general guiding principles to be applied.
While an organization’s upper management is ultimately responsible for its strategy, the strategies themselves are often sparked by actions and ideas from lower-level managers and employees. An organization may have several employees devoted to strategy rather than relying solely on the chief executive officer (CEO) for guidance.
Because of this reality, organizational leaders focus on learning from past strategies and examining the environment at large. The collective knowledge is then used to develop future strategies and to guide the behavior of employees to ensure that the entire organization is moving forward. For these reasons, effective strategic management requires both an inward and outward perspective.
Several theories including the stakeholder theory are used in strategic management to drive the business with regard to identifying the competing factors and values associated with each specific stakeholder and how critical the stakeholder is to the organization. Business culture, the skills and competencies of employees, and organizational structure are all important factors that influence how an organization can achieve its stated objectives and relationship with the stakeholders. Inflexible companies may find it difficult to succeed in a changing business environment. Creating a barrier between the development of strategies and their implementation can make it difficult for managers to determine whether objectives have been efficiently met.
The stakeholder theory is not about keeping stakeholders happy to make more money. Instead, it argues that companies play a vital role in the very fabric of our society (creating jobs, innovating etc.) and that therefore their success must be valued as a whole, not just in the returns they make for their shareholders.
Stakeholder networks are held together by the members’ shared interest or stake in a common issue. While a network may be convened by one organization, the members come together voluntarily. Stakeholder networks exist to deal with complex local and global issues including security, sustainability, health, and education. Organizations use stakeholder networks to manage the business environment when issues become more complex, to gather new information, learn, build, trust and to innovate in ways that create sustainable value for our organization, for our stakeholders, and society.
This Webinar will discuss "Strategic management for large engineering projects: the stakeholder value network approach" with regard to social and economic impacts of large engineering projects as engineering systems.