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Strategic Management

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Historical development of strategic management

Strategic management emerged as a discipline in the 1950s and 60s. The most notable innovators were Alfred Chandler, Philip Selznick, Igor Ansoff and Peter Drucker. Alfred Chandler saw the need to organize the various aspects of management under one strategy. Phillip Selznick presented the idea that internal factors corresponds to external environmental circumstances. Igor Ansoff built on Chandlers work by inventing a new vocabulary. Peter Drucker accentuated the significance of objectives. He predicted the emergence of intellectual capital.

The Profit Impact of Marketing Strategies (PIMS) concluded that the greater a company's market share, the greater will be their profit. The benefits of high market share peaks an interest in new growth strategies. Another study indicated that a low market share may also be profitable

Harry Markowitz and other financial developed one of the most significant strategic management concept- the portfolio theory. The conclusion was that portfolio reduces specific risk. The marketing oriented firm evolved in the 1970s. A product of high technical quality was assumed to be of great significance in the success of a business.

The success of the Japanese industry was very noticeable in the 70s. Richard Pascale and Anthony Athos associate the success of the Japanese industry with the superior management techniques employed. Kenichi Ohame compared the Japan and the American culture by stating that Japanese tend to make vague, ambigious and tentative decisions whereas Americans make fast decisions. The Japanese challenge brought about an increase in attempt to explain their success. Dave Packard and Bill Packard devised a management style - Management by Walking Around where senior HP managers spent most of their time visiting employees, customers and suppliers.

Michael Porter was maybe the most influential strategist who introduced many new concepts such as the value chain. The position theory, initiated by Jack Trout, was accepted globally. It holds that strategy should be concerned with how the customer views the strategy in comparison to the competition. Many theorists thought western businesses lacked product quality while another group believed that the poor customer service was the problem. Process management uses some techniques from product quality and some from customer service. Some theorist concluded that some businesses placed more emphasis on acquiring new customers than retaining current ones. CRM software sustained this trend.

James Gilmore and Joseph Pine establish competitive advantage in mass customization whereas John Lewis find competitive advantage in alliance stratregies. Some business theorists such as Phillip Kotler turned to the military for guidance. After awhile it was noted that in the past periods of change were marked by stability. These periods



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