Academic journal article Academy of Strategic Management Journal

Grand Theory Model of Strategy Quality: Strategic Asset Approach at Industry

Academic journal article Academy of Strategic Management Journal

Grand Theory Model of Strategy Quality: Strategic Asset Approach at Industry

Article excerpt

INTRODUCTION

The basic problem in the strategic management is on how an organization achieves a superior performance and preserves the sustainable competitive advantage (David, Pisano & Shuen, 1997). Sustainable competitive advantage appears as one of the most promising theoretical frameworks in the management literature, especially in the strategic management field (Low, 2010). Sustainable competitive advantage becomes very essential and substantial if the market is highly competitive. However, sustainable competitive advantage is not the final destination of various strategic maneuver developed by the organization, as it is only the main tool to achieve the bigger purposes such as the accomplishment and the safety warranty for the sustainability of the long-term performance achievement. Hence, the organization should focus on the strategic management.

However, not all organizations are success with their strategies, which mean that those organizations already have strategies but not many of them generate superior performance. Such condition relates with strategic quality. There are some approaches to realize strategic quality. The first approach is through strategic process which means that strategic quality is a strategy which is built through strategic formulation quality, strategic implementation quality and strategic evaluation quality (Menon, 1999). A good strategic development process should be started from a basic belief that the strategy should have appropriate strategic content, with high quality of formulation process as well as clarity and firmness of the implementation and evaluation that should be done (Varadarajan, 1999).

The second approach is through strategic asset. The strategic assets are resource and capability that have potential to generate competitive advantage. On the other hand, Amit & Schoemaker (1993) state that strategic assets are resource and capability which are scarce, uneasily traded, inimitable, durable and can be used to convert the value become profit. Those strategic assets can be categorized into larger groups, such as financial assets, physical assets, human assets, technological assets and intangible assets (Grant, 1991). Therefore, the threat faced by the leader should integrate the resource and capability into strategic assets in order to realize the sustainable competitive advantage.

The resource based view emphasizes on knowledge-based resource (Galunic & Rodan, 2008), as knowledge becomes an important component in the new economic arena (Grant, 1991). The emphasis on knowledge triggers the development of Knowledge Management (KM) concept, as the assumption then is that the knowledge resource is important in the production process. KM emphasizes on the organization ability to use and combine various knowledge resources which are able to change the intangible resource into innovation. The study conducted by Hsu (2007) shows that 80% of respondents agreed that knowledge is strategic asset, while 78% business opportunities failed because of inability to exploit the knowledge in the organization. Then, the study conducted by Leticia (2012) explains that knowledge is the most important resource in the competitive advantage, but the relationship between knowledge management and competitive advantage is weak.

Based on the above explanation, it can be concluded that managing an organization is like managing knowledge, as knowledge will not meaningful if it is only used as information. Conversely, knowledge will be meaningful if it is well-implemented. Thus, it acquires knowledge exploitability.

STRATEGIC QUALITY

The studies conducted by Menon, Bharadwaj & Roy (1996) explain that the improvement of organizational performance is determined by the strategy used. Strategy is an overall plan which explains the competitive position of an organization. Strategy as a set of methods is used to enhance, produce and sell actual products and services. …

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