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Construction Strategic Management


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The concept of strategy has long been a subject of interest for political, military, and business leaders. It dates back to Roman military commanders who documented strategic options on the battlefield. In the business world, the importance of strategic behavior is evident from the vast amount of literature dedicated to the subject. While researchers and theorists have developed much of the knowledge base, practitioners in industries like construction have had to adapt these theories to their own specific contexts, despite limited available material on strategic management in their field.

Strategic management refers to the systematic approach taken by general managers to position and align their firm with its environment, ensuring ongoing success and protection against unexpected events. It involves three main elements: strategic analysis, which focuses on understanding the organization’s strategic position; strategic choice, which involves formulating and evaluating possible courses of action; and strategic implementation, which involves planning how to put the chosen strategy into effect. While these elements are often seen as sequential, they actually overlap and interact, with partial implementation potentially influencing strategic choices.

The concept of strategy revolves around achieving objectives and providing guidance for organizational behavior. Strategies can be explicit or implicit, confined to senior management or embedded throughout the organization to create a shared sense of direction. Two perspectives on the nature of strategy have emerged: the planning mode, which views strategy as a premeditated, systematic plan, and the evolutionary mode, which sees strategy as a series of significant decisions that unfold over time.

Strategic decisions possess certain characteristics. They pertain to the organization’s scope and its interface with the external environment. They aim to align the firm’s strengths and weaknesses with market opportunities and threats. They involve adapting the organization’s activities to its capabilities and resources. They may require changes in resource utilization or the acquisition of additional resources. They impact operational and administrative decisions. They are complex due to the inherent uncertainty of environmental forces and outcomes. They influence the long-term direction of the firm.

Strategic management is necessary for several reasons. The rapidly changing business environment demands heightened awareness and preparedness for potential shifts. It helps companies maintain stability and avoid crises resulting from unexpected strategic developments. Assessing the organization’s strengths, weaknesses, opportunities, and threats is crucial for survival in a competitive market. Larger organizations face challenges in responding quickly to change, necessitating early anticipation and response development. Having a clear strategy promotes corporate harmony, enabling individuals to align their efforts accordingly. Consistent financial performance is more likely when activities are carefully planned and realistic forecasts are made.

The strategic management role can be fulfilled by internal individuals or teams, external consultants, or executive directors. Often, a combination of internal and external approaches is employed. Timing is critical for successful strategic management, and finding adequate time to dedicate to the process is vital.

There is no universally applicable “best” strategy; it depends on the specific circumstances. Adopting a contingency approach to strategic management is essential, considering the objectives of the strategic managers.

Strategies operate at different levels within an organization. At the corporate level, decisions are made regarding which businesses or markets the company should be involved in. The business level focuses on how to compete effectively in a particular market. The operational level involves decisions made by heads of functional departments, such as estimating, purchasing, and project management, which can significantly impact the overall business, particularly in industries like construction where individual projects represent a substantial portion of a contractor’s turnover and profit.

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