Analysis for Strategic Management

According to Price and Newson (2003), to be successful, construction companies need to supplement their current short-term approaches taken through improving organisational effectiveness with a more long-term strategic approach. Strategic management is concerned with making a decision on strategy and planning how the decided strategy is to be put into effect. Developing a successful strategy requires capability of a firm, creativity and thorough understanding of the resources and comprehensive analysis of the competitive market. 

During the strategic management process, firstly strategists seek to understand the strategic position of the company by analysing the external and internal environment. Then in the strategic formation/choice stage, strategists formulate possible courses of action and evaluate and choose between them. The final element is strategy implementation in which strategists are concerned with planning how the choice of strategy can be put in to effect. These three elements are not sequential but they overlap and interact.

Situation/Contextual Analysis

The strategic management process in the construction industry usually operates in a dynamic and complex business environment. Therefore, it is crucial to understand the external business impact and any assessment of an organisation’s internal environment for the process of strategic management. External influences such as political, economic, social, technological, legal and environmental on the organisation can be analysed using PESTLE analysis (Gorgenlander, 2011). The dominant groups in the external environment are usually the organisation’s customers, shareholders, suppliers and the representatives of the community at large. The activities of these groups have the greatest repercussions on the organisation (Cole, 2003). In addition, technological advancement, the nature of the labour market, government and the law of the country, and the state of the industry are the most important other factors which influence the external business environment (Cole, 1997, Cole, 2003, Kimelberg and Williams, 2013).

Other important elements in assessing a firm’s overall position is identification of the strengths and weaknesses of the organisation’s internal environment by which strategists can analyse the nature of internal conditions and internal performance. These can be analysed from a number of different perspectives such as financial, cultural, organisational, marketing, production, research and development and resourcing perspectives (Cole, 1997, Hill and Jones, 2012). Verification of an organisation’s existing resources is also the main course of work during the strategic analysis stage and it will provide the basis for the further course of action.

Pettigrew et al. (2001) state that an organisation that is unable to fit with the dynamic situation and changes, will not succeed and will incur substantial losses. Therefore, it needs to keep an eye on its business environment for internal vulnerabilities as well as external threats, and focus on and exploit new ways faster than their competitors. Thus, an organisation can use SWOT analysis as a strategic development tool to match their internal strengths and weaknesses with external threats and opportunities, which helps an organisation to balance idealism and pragmatism. Moreover it also helps to develop an effective strategy by obtaining a balanced perspective of the organisation’s internal strengths and weaknesses and external threats and opportunities (Pettigrew et al., 2001, Griffin, 2011).

Situation/Contextual Analysis (Designed by the Author)

References

COLE, G. A. (1997) Strategic Management. London: Thompson Learning.

COLE, G. A. (2003) Strategic Management Singapore: Cengage Learning EMEA.

GORGENLANDER, V. (2011) A Strategic Analysis of the Construction Industry in the United Arab Emirates: Opportunities and Threats in the Construction Business Hamburg: Diplomica Verlag.

GRIFFIN, R. W. (2011) Fundamentals of Management Mason OH: South Western Cengage Learning.

HILL, C. W. L. and JONES, G. R. (2012) Strategic Management: Theory. Belmont, CA. : Wadsworth Publishing Co Inc.

KIMELBERG, S. M. and WILLIAMS, E. (2013) Evaluating the Importance of Business Location Factors: The Influence of Facility Type. Growth and Change Vol.44, pp. 92-117

PETTIGREW, A., THOMAS, H. and WHITTINGTON, R. (2001) Strategic Management: The Strength and Limitation of a Field. Elster: Sage.

PRICE, A. D. F. and NEWSON, E. (2003) Strategic Management: Consideration of Paradoxes, Processes, and Associated Concepts as Applied to Construction. Journal of Management in Engineering Vol.19, pp. 183-192