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Arab Academy for Science, Technology

& Maritime Transport

Driving Forces Affecting Strategic


Management
in the 21th Century
By
Ahmed Sharkas

9-Oct-2016

Course: Strategic Management


Prof: Dr. Sherif Delawar

Introduction
In this paper, the driving forced affecting the strategic management
thinking and planning in the 21 century are explained and discussed
explaining their cross intersections effects. First, Strategic
management is defined as the process of specifying an organizations
objectives, developing policies and plans to achieve these objectives,
and allocating resources so as to implement the plans. It is the highest
level of managerial activity. It provides overall direction to the whole
enterprise. An organization's strategy must be appropriate for its
resources, circumstances, and objectives. The process involves
matching the companies' strategic advantages to the business
environment the organization faces. One objective of an overall
corporate strategy is to put the organization into a position to carry out
its mission effectively and efficiently.
In the following sections, each of the driving forces are defined and
discussed from a strategic point of view:

Globalization
Reich (1998) defined globalization as a set of economic and political
structures and processes deriving from the changing character of the
goods and assets that comprise the base of the international political
economy in particular, the increasing structural differentiation.
The notion of globalization is not new, but the concept and its farreaching implications have a great influence on the way an
organization conducts its business. Rapid globalization is one of the
most salient aspects of the new millennium, particularly because of the
fast development of information technology.
Globalization has brought with it effects that have created need for
organizations to devise means of staying competitive not only in the
global market but also in the local market where they operate,
necessitating a more sophisticated and well-trained management to
cope with the 8 complexities of the organization's involvement in
multiple foreign markets.

Technology
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Technology can improve the accuracy of planning in management by


providing the management with the data they need to make effective
decisions. Technology solutions gather data from internal and external
sources, store them in a data warehouse and provide managers with
access via a network. Collaboration tools enable your managers to
work together to plan operations and make joint decisions. Technology
effects can be categorized into the following main categories:

Data: The most important effect of technology on management


planning is the availability of vast amounts of data on sales,
stock, and production.
Integration: Enterprise Resource Planning (ERP) software
improves planning by integrating individual computer systems
around the organization.
Storage: Cloud storage is a pay-as-you-go solution that enables
you to store data on massive servers at an independent service
provider.
Access: Communication networks enable managers throughout
the organization to access and share the same data using
collaboration tools as videoconferencing and Internet forums to
share data and carry out joint planning exercises.

The knowledge economy


The knowledge economy is a term that refers either to an economy of
knowledge focused on the production and management of knowledge
in the frame of economic constraints, or to a knowledge-based
economy. In the second meaning, more frequently used, it refers to the
use of knowledge technologies (such as knowledge engineering and
knowledge management) to produce economic benefits as well as job
creation.
The transition requires that the rules and practices that determined
success in the industrial economy need rewriting in an interconnected,
globalized economy where knowledge resources such as know-how and
expertise are as critical as other economic resources. According to
analysts of the "knowledge economy," these rules need to be rewritten
at the levels of firms and industries in terms of knowledge
management and at the level of public policy as knowledge policy or
knowledge-related policy.

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Sustainability
In an increasingly interconnected world, social, environmental and
governance issues are no longer just soft business concerns but are
increasingly becoming material for long-term viabilitybecause
helping to build social and environment pillars makes the global
marketplace stronger (Georg Kell, Director, UN Global Compact). A
pro-active approach to ensure the long-term viability and integrity of
the business by optimizing resource needs, reducing environmental,
energy or social impacts, and managing resources while not
compromising profitability
While the environmental components of sustainability such as carbon
and water footprints are the foundation of sustainability, they
represent a step in the process rather than the whole journey. As an
organization embarks on a strategic sustainability journey, the path
broadens and encompasses all aspects of the operation including:

Environmental sustainability: environmental reporting, ecodesign and efficiency and environmental ma8nagement systems.
Economic sustainability: codes of conduct and compliance, anticorruption policies, corporate governance, risk and crisis
management, and supply chain management.
Social sustainability: labor practices, human capital development,
social reporting, talent attraction and retention, and stakeholder
dialogue

Connectivity and Supply Chain


Supply chain activities involve the transformation of natural resources,
raw materials, and components into a finished product that is delivered
to the end customer (Blanchard, 2010). Use of appropriate technology
and applications such as a virtual private networks; VoIP, e-mail, social
networking websites such as Facebook, and even company-sponsored
blogs can facilitate communication between an organization and its
stakeholders, and help in different types of internal and external
collaborative processes providing a central source of information to
employees, customers, or suppliers.

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Shared Economy
Increasingly consumers and independent service providers are
engaging in transactions facilitated by an Internet-based platform.
Currently around 12% of the world economy are based on sharing
economy companies (The peer-to-peer revolution: 50+ companies
changing the world, 2015). The digital firms that provide the platforms
are often collectively referred to as belonging to the "sharing" or
"collaborative" economies, among other descriptors. There is focus
"Digital matching firms (Rudy Telles, 2016) for example: Uber and
Airbnb.
Crisis Management in a Complex World
Heath and Millar (2004, p. 9) pointed out, A crisis can be viewed as a
struggle for control. Persons who are affected by a crisis look to
responsible parties to control their actions or to create actions that
reduce the harm of the crisis. Yet crises are all about uncertainty and
lack of control, a factor that can create a number of negative
repercussions. However, the passage from theory to practice is
essential if organizations are to meet the demands of an increasingly
tightly coupled world. That will happen only if decision makers are
persuaded that complexity theory has pragmatic value in an
organizational context. In making that switch, managers can contribute
to the emergence of a new type of crisis management that genuinely
addresses the complexity of our turbulent world.
Conclusion
Rapid globalization, accelerating innovation and growing competition,
bringing with them volatility, complexity and ambiguity along with the
exponential growth in IT, the emergence of biotechnology and
nanotechnology, new business models such as eBay, Dell and Amazon,
and the most dramatic global economic slump since the Great
Depression. As the strategic management is a special kind of
managerial activity dealing with long-term development and growth of
the enterprise, Strategic plans must include global considerations while
remaining focused on the competitive climate of the local economy.
The primary skill required to survive this critical transformation,
therefore, is an attentive ability to reconcile the conflicting, endlessly
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changing, overwhelming complexity posed by today's diverse world. A


crucial paradox lies at the heart of this challenge. Today strategies
success is measured by the ability to achieve the business goals and
increase long-term shareholder value while integrating economic,
environmental and social opportunities into its business strategies.

References
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