Research Article: 2017 Vol: 16 Issue: 1
Bagher Asgarnezhad Nouri , University of Mohaghegh Ardabili
Milad Soltani, European University of Cyprus
Strategic Management, Strategic Management Tools and Techniques, Organizational Performance
In recent years, the management world has been faced with many challenges. Changes in the business environment such as globalization (formation of trade unions and international economic treaties), changes in technology (production technology, information technology, Internet and e-commerce), increased competition, focus on customers, and social, political, and cultural conditions have caused business environment to be dynamic. Therefore, the increased complexity of organizational activities has doubled the importance of managers' decisions. Today, managers and decision-makers of the organizations more than ever need applicable mechanisms and procedures to make strategic decisions (Rahnemaye Roudposhti, 2008). In such a condition, management scholars, using management tools and techniques, have come to help the decision-makers of organizations. In the last two decades, managers have witnessed the emergence of several management tools. In fact, as managers need to be active in markets, the introduction of management tools is highly competitive. Fortunately, nowadays, thanks to the advent of fast and relatively inexpensive systems of information transition, a set of management tools is available to managers. Using these tools, managers can overcome the complex issues and, through making appropriate decisions, bring about prosperity and progress for the organization and their employees (Rigby, 2015).
Management tools and techniques can be used in different parts of management including 1) general management, 2) marketing management, 3) operations management, 4) financial management, 5) human resources management, 6) information technology, 7) management sciences, 8) planning and resource allocation, and 9) productivity and efficiency (Armstrong, 1993). Tools and techniques used in public management help managers and executives in decision-making processes. Other tools which are used in marketing management process, are applied to identify and satisfy customers' needs and demands. Available tools and techniques of operations management are used to guarantee competitive advantages of production. Financial management includes tools which provide the basis for decision-making in finances and prediction of the company's performance. Therefore, management tools and techniques are powerful leverages which help managers define and provide solutions to the problems of the organization (Afonina, 2015).
Now, the important question is that which management tool is better in overcoming the issues and problems of the organization? The answer to this question depends to the kind of problem the organizations face with as well as internal and environmental conditions which govern them. Obviously, there is no tool as the master key of management locks. Managers and decision-makers must first identify and classify their issues and then, by studying the functions and capabilities of management tools, select and use the appropriate tool or tools. In fact, managers should be more knowledge-based so that they can classify different management tools and choose the right tool for their company. The selection process of management tools is a complex issue like business issues. Thus, managers have to choose those tools which can help them in decision-makings for the improvement of processes, products, and services and provide them with better performance and greater profit. Hence, the proper use of these tools requires that managers be aware of the strengths and weaknesses of each tool and be able to integrate and apply appropriate tools creatively, appropriately and at the right time. The mechanism of selecting and applying management tools without having objective data is nothing but a random and dangerous play (Rigby, 2015).
The literature review shows that few studies have been hitherto conducted regarding the recognition of the history of using and determining the importance of strategic management tools and techniques and satisfaction of the managers with them. Among these researches mention may be made of Rigby (2015), Afonina (2015), Pasanen (2015), Kalkan and Bozkurt (2013), and Afonina and Chalupsky (2012). Such researches will lead to the
identification of benefits resulting from the application of these tools to help managers so that they can identify the right market conditions, make appropriate decisions in achieving predetermined objectives, and have positive impact on the performance of different companies; hence, the use of such tools will be expanded among managers. In fact, many writers of strategic management have expressed that different kinds of these tools can be used according to the situation; however, as the nature of their function is not clear and there is no guidance in this area, many organizations have faced with problems in using techniques of strategic planning and suffered significant losses.
Accordingly, the present study attempts to identify the most important strategic management tools and techniques and, then, the use, importance, and satisfaction with these tools will be investigated from the viewpoint of the managers of some multinational and global companies. To this end, theoretical basis of the research will be introduced in the second section; literature of the research is presented in the third section; the research method is described in the fourth section; and the fifth part is dedicated to the data analysis. Finally, conclusion and recommendations of the research are provided in the last section of the article.
Definition of SMTT
In order to understand the essence of strategic management tools and techniques, a precise definition of it should be presented. Despite the fact that researchers have paid much attention to strategic management tools and techniques, there is no clear definition of these tools and techniques. The researchers have provided some definitions in this area (Afonina and Chalupsky, 2012). Thus trategic management tools and techniques are various tools that help managers in all areas of strategic management from strategic analysis to strategic choice (Afonina and Chalupsky, 2012).
Importance of SMTT
Today, the world economy is changing rapidly. Owing to the development of competition, technological changes and globalization, organizations need to keep pace with changing market conditions. Organizations should be more flexible so that they can find more power to compete. Otherwise, they encounter problems and will disappear in long-term. In recent years, strategic management has gained importance within organizations. The basic model of strategic management includes a review of internal and external analysis, strategy formation, strategy implementation, evaluation and control. Strategic management tools and techniques is an important element of strategic management. Information on different strategic management tools and techniques is important not only for analytical purposes but also in providing business strategy and maintaining competitive advantage (Afonina and Chalupsky, 2012). Hence, the companies' managers and executives should seek appropriate tools and techniques so that they can assess the internal and external costs of production or services, and have access to market information, product costs, customer needs analysis, prediction and evaluation of organizational performance, and guarantee competitive advantages in their manufacturing activities (Afonina, 2015). Strategic management tools and techniques provide the organizations with many advantages through which the managers can have clear understanding of the available tools and techniques (Afonina and Chalupsky, 2012). These techniques help the managers to change important information required for appropriate decisions and actions (Fleischer and Ben Soussane, 2003). The advantages of these tools include: increased awareness of the business environment, strategic issues, opportunities and threats which help to reduce the risks involved in making important decisions, prioritization of complex companies and providing a framework for assessing the relative importance of various business portfolios, and help the expression of complex issues (Frost, 2003).
Insufficient Information about SMTT
Based on what was said in the literature review section, it should be noted that the number of strategic management tools and techniques has been always increasing along with new tools. Various tools and techniques have been provided to help managers identify the decisions related to strategic planning (Ramanojam et al, 1986). Over the past few years, it has been pointed out in scientific researches that strategic management tools and techniques as well as the techniques existing in the literature should be understood. The researchers have pointed out the there is no conclusive report about strategic management tools and techniques (Clark 1997; Hughes 2007). However, a handful of researches have provided a useful list of strategic management tools and techniques (Afonina and Chalupsky, 2012). Therefore, in the environment turbulence conditions, market globalization managers have focused on the use of different tools and techniques. Organizations' proper understanding of Strategic Management Tools and Techniques is very important. As Hussey (1997) has pointed out, "techniques do not create strategy by themselves, but strategy formulation is the responsibility of managers".
Rigby (2015), from 1993, through conducting some research on senior executives around the world, have ranked management tools and models. This ranking report for 2015, which has just been published on the website of this company, shows that customer relationship management (CRM) is the most effective and widely used management tool. Ranking the use of assessed management tools and models is as follows: CRM, benchmarking, assessment of employee participation, strategic planning, Outsourcing, balanced scorecard, mission and vision statement, supply chain management, change management programs, customer segmentation, analysis of metadata, core competency, total quality management, mergers and acquisitions, business process reengineering, satisfaction and loyalty management, strategic alliances, time management in organizations, digital transformation, contingency planning and scenario, reduced complexity, price optimization models, tools of decision-making right, zero-based budgeting and disruptive innovation. At first glance, the most important change in ranking 2015 management tools is the change of the position of strategic planning tools from the most widely used management tool in 2012 to the fourth-ranked tool in the current time. A detailed evaluation of the research results show that this tool is still among the most popular and effective tools in North and South America, but its application has reduced in Asia and Europe. The second important is the deletion of key competencies from this list that in 2012 ranking was referred to as the sixth most used management tools and model. In contrast, customer segmentation tool, which in 2012 was removed from the list of top ten tools, has been again included among the most widely used management tools in the new report. Describing the emerged changes in the ranking of 2015, Rigby (2015) refers to four major trends: 1. Seeking growth and accelerating innovation in the changing environment of business; 2. Concerns about the growing cost and complexity as obstacles to growth; 3. Investment in the development of the digital world in order to accelerate growth and innovation, overcome the complexities and counter the risks; and 4. Customer understanding. In general, these four trends have changed business environment in such way that some traditional management tools have lost their relative importance compared with new tools and models such as big data analysis. According to Rigby (2015), the main reason of this is the focus of emerging economies on the use of new tools in order to bridge the gap between themselves and the developed economies. Afonina (2015) has investigated the use of strategic management tools and techniques and determined the impact these tools have on the performance of organizations in the Czech Republic. Anna (2015) has compiled the required information by sending and completing a questionnaire to 91 companies. In this study 19 different strategic management tools and techniques are used. Data analysis shows that among various tools, tools such as balanced scorecard, life cycle analysis, value chain analysis, activity-based costing and key success factors have been less applied in the companies of the Czech Republic. In contrast, tools such as SWOT analysis, customer satisfaction analysis, market segmentation, customer complaints analysis, Porter model, PEST analysis, customer profitability analysis, benchmarking and methods based on portfolio analysis have been used more than other tools. Finally, the lowest priority of managers is related to customer satisfaction analytical tools and external and internal factors of the company's environment. Pansen (2015) examined the application of strategic management tools and techniques in SEMs. External data were collected from 143 SEMs that were active in service and production sector in Finland. The results indicate that the use and satisfaction of using strategic management tools in SEMs is different from large companies. According to the results, business strategies and mission and vision statement are the most common strategic management tools. These tools have been used in more than 75% of the companies participating in the research. Strategic management tools, which have had the lowest use in SEM, include balanced scorecard and virtual teams. Nine strategic management tools whose rank has been higher than the average satisfaction include mission and vision statement, business strategies, strategic alliances, outsourcing, growth strategy, quality system, SWOT analysis and Customer satisfaction analysis. The tools whose rank has been lower than the average satisfaction include benchmarking and balanced scorecard. Kalkan and Bozkurt (2013) have been seeking to identify the attitudes of executives of small and medium-sized companies towards selection and use of strategic management tools and techniques. Selected companies have different sizes and are active in different industries. The required information was collected by sending questionnaires to high and middle level managers of the companies of the sample and, finally, 192 completed questionnaires were collected. Based on the analysis of the research data, the most widely used strategic management tools of the companies during the period of five years have been as follows: Strategic planning, human resources analysis, total quality management, customer relationship management, outsourcing, financial analysis in the firm owners, mission statement, PEST analysis, financial analysis of competitors, benchmarking, strategic planning software, portfolio analysis, critical success factors, stakeholder analysis, value chain analysis, organization's cultural analysis, SWOT, scenario analysis and conditional analysis. Afonina and Chalupsky (2012) examined the essence of strategic management tools and techniques. In fact, they investigated the use and satisfaction level of 31 strategic management tools and techniques in the companies operating in the Czech Republic. The results of their research show that 19 strategic management tools and techniques have been used in 50% of the situations by the managers of the companies. These tools are as follows respectively: SWOT analysis, customer satisfaction analysis, price analysis, analysis of the views and attitudes of employees, cost-benefit analysis, analysis of customer problems, analysis of the views and attitudes of customers, Porter's five forces, PEST analysis, service level analysis, market segmentation, market share analysis, customer profitability analysis, benchmarking. Moreover, the lowest rate of use has been related to the following tools: The relative profitability analysis, portfolio analysis, winning or losing analysis, customer value analysis, advertising effectiveness analysis, product life-cycle analysis, analysis of new product adoption, strategic gap analysis, and balanced scorecard. Abdulhussein and Hamza (2012) pointed out that strategic management accounting techniques (e.g. activity-based costing, value chain analysis, benchmarking, balanced scorecard etc.) reduce the costs and improve product quality and performance evaluation. Friedl and Biloslavo (2009) concluded in their study that there is no strong relationship between 16 SMTT and financial performance (net profit, return on capital, financial independence, debt-to-equity ratio and value added per employee). They also found out that only two of 16 management tools are related with the performance. Aldehayyat and Anchor (2008) investigated the knowledge and use of strategic planning tools in Jordan public organizations; they concluded that financial analysis, PEST or STEP analysis, analysis of Porter's five forces and analysis of critical success factors are among the most widely used factors. They investigated the use of 15 strategic management tools which have been used in the organizations of different countries based on their popularity. Studies conducted by Iseri-Say et al (2008) focused on the issue that how the use of management tools (in their research 25 tools were considered) influence organizational performance. The results show that competitive localization, organizational integrity, functional capabilities, customer share, and financial results are positively related with management tools and techniques. Elbanna (2007) examined the use of strategic management tools as a part of strategic planning process. He concluded that "traditional tools" such as Porter's five forces, BCG matrix, value chain analysis, experience curve analysis, General Electric matrix, and Delphi technique can be used in organizations in small cases. Al-khadash and Feridun (2006) found out an important relationship between the use of strategic tools (such as ABC, JIT, and TQM) and financial performance of 56 industrial companies in Jordan (which is measured by return on assets). Ghambi (2005) found out the 10% of organizations in Saudi Arabia use strategic tools and techniques regularly. These tools include: critical success factors, benchmarking, and conditional analysis. In a nutshell, the different researches conducted in the field of strategic management tools and techniques represent an integrated image of the tools used by managers in various countries. On the one hand, the use of strategic management tools and techniques brings companies success and, on the other hand, inappropriate selection and use of them can mislead the company towards wrong decisions. In general, the evaluation results in the area of using strategic management tools and techniques suggest that managers prefer to use holistic tools and techniques (Afonina and Chalupsky, 2012).
In this research, statistic population consists of all Iranian companies active in different industries which have also a history of strategic planning and the use of strategic management tools and techniques. The sample also consists of excellent management team at the high levels of organizational hierarchy such as general director, chief marketing officer, chief financial officer, chief human resources officer, etc. In the present study, library method was used in order to collect the information related to the theoretical basis and literature of the study; moreover, in order to collect the data related to the data analysis and to test research hypotheses, questionnaire-based field method was used. The questionnaire was set in three part including a cover letter, demographic questions, and specific questions. In the cover letter, in addition to the research title, the purpose of data collection by the questionnaire and the necessity of the sincere cooperation of the respondents in filling the questionnaires have been described; finally, the respondents were appreciated. Demographic questions include information on the companies' general specifications such as the nature of the activity, the ownership type, size, establishment history and the history of strategic programs as well as demographic information of the respondents such as sex, education level, age, and experience as a manager, and their organizational position. Finally, in the part of specific questions, each of strategic management tools and techniques has been proposed, and the managers' use of them has been questioned based on 5-point Likert scale including completely agree, agree, neutral, disagree, and completely disagree. The questionnaires have been distributed to and gathered from the selected managers of the companies which are members of the population via e-mail.
Identification of strategic management tools and techniques has been done through an interview with the experts of strategic management and an extensive literature review. Accordingly, of strategic management tools and techniques, finally 36 tools were selected and used as follows: Activity-based costing (ABC), analysis of employee satisfaction (the views and attitudes of employees), relative profitability analysis, balanced scorecard, benchmarking, core competencies, cost-benefit analysis, critical success factors, time value of customer life, customer profitability analysis, customer satisfaction analysis, customer value analysis, growth strategies, knowledge management, market segmentation based on customer needs and demands, market share analysis, mission and vision statement, analysis of new products acceptance, one to one marketing, outsourcing, PEST analysis , Porter's five forces, cost analysis, product life-cycle analysis, reengineering, scenario planning, strategic alliances, supply chain integration, SWOT analysis, total quality management, virtual teams, human resources analysis, financial analysis, stakeholder analysis, analysis of organizational culture and change management programs.
At the end, for the analysis of data obtained from the study, descriptive statistics such as mean, standard deviation, absolute and relative frequency, etc., and inferential statistics such as mean test, correlation, regression, etc. have been used. SPSS software has been used for the implementation of statistic methods.
Descriptive Analysis Of The Firms’ Features
|The company's feature||Absolute frequency||Relative frequency (percent)|
Descriptive analysis of the features of the sample companies including the industry type, activity duration, type of ownership, and firm size have been provided in the Table 2.
|Table 2. Descriptive analysis of the firms’ features|
|The company's feature||Absolute frequency||Relative frequency (percent)|
As shown in the Table 1, in terms of industry, 63.3% of the companies are manufacturing and 36.7% are service companies. Based on activity history 3.3% of the companies are new, 18.3% are normal and 77.3% are old. In terms of ownership type, 28.3% of the companies are public, 56.7% are private, and 15% are both. Finally, in terms of size, 20% of the companies are small, 35% are medium, and 45% are large companies. Therefore, descriptive analysis shows that based on the mentioned features, the majority of companies are manufacturing companies with a long experience, private ownership and large size.
The ranking of strategic management tools and techniques based on a percentage of their use by managers of the research's sample companies is shown in the figure 1.
The results of the figure 1 shows that Mission and vision statements is in the first rank; moreover, SWOT analysis, Cost-benefit analysis, Core competencies, Financial analysis,
Critical success factors, Total quality management, Price analysis, Market share analysis and Benchmarking are known as the 10 widely used strategic management tools and techniques among the managers of Iranian companies. In contrast, the use of Game Theory has the lowest rank; and scenario planning, Customer life time value, Product life cycle analysis, Virtual teams, 7's Mckensy, Reengineering, new product acceptance analysis, Activity based costing (ABC), One-to-one marketing together with Game Theory are the least-used strategic management tools and techniques among the managers of Iranian companies.
The reminder of this section will analyze the difference in the use of strategic management tools and techniques based on the features of the companies including the industry type, ownership type, and their size. Table 3 compares the use of strategic management tools and techniques based on the industry type (manufacturing and service).
|Table 3 : Comparing the use of SMTT based on industry type (Independent-samples T test)|
|Strategic management tools and techniques||F||Sig.|
|Activity based costing (ABC)||6.811||0.012|
|Analysis of employee satisfaction||0.162||0.689|
|Critical success factors||1.274||0.264|
|Customer life time value||1.315||0.256|
|Customer profitability analysis||0.348||0.557|
|Customer satisfaction analysis||0.010||0.922|
|Customer value analysis||1.043||0.311|
|Growth strategies Ansoff||0.774||0.383|
|Market share analysis||1.26||0.266|
|Mission and vision statements||0.575||0.451|
|New product acceptance analysis||1.899||0.173|
|Porter’s 5 forces||0.53||0.469|
|Product life cycle analysis||23.116||0.000|
|Supply chain analysis||4.842||0.032|
|Total quality management||0.016||0.9|
|Human resources analysis||0.001||0.975|
|Organizational culture analysis||2.731||0.104|
|Change Management Programs||0.286||0.595|
The results of the Table 3 shows that based on industry type, manufacturing and service companies are different only in using the tools and techniques such as activity based costing (ABC), balanced scorecard, cost-benefit analysis, product life cycle analysis, supply chain analysis, virtual teams; while, these companies are similar in using other tools and techniques. Table 4 shows the average use by the manufacturing and services companies of tools and techniques which have a different situation.
|Table 4. Comparing the average use of different SMTT based on industry type|
|Strategic management tools and techniques||Industry type|
|Activity based costing (ABC)||4.0789||3.2727|
|Product life cycle analysis||3.9737||2.1818|
|Supply chain analysis||4.6579||4.1818|
Based on the results of the Table 4, manufacturing companies have used the tools of activity based costing (ABC), balanced scorecard, cost-benefit analysis, product life cycle analysis, supply chain analysis more. This is while that the managers of service companies have been more intended to use virtual teams.
Table 5 compares the use of strategic management tools and techniques in terms of firm size (small, medium, large).
Comparing the use of SMTT based on firm size (ANOVA Test)
|Strategic management tools and techniques||F||Sig.|
|Activity based costing (ABC)||2.475||0.093|
|Analysis of employee satisfaction||0.639||0.532|
|Critical success factors||0.262||0.771|
|Customer life time value||0.381||0.685|
|Customer profitability analysis||0.67||0.516|
|Customer satisfaction analysis||1.093||0.342|
|Customer value analysis||1.683||0.195|
|Growth strategies Ansoff||0.315||0.731|
|Market share analysis||0.75||0.477|
|Mission and vision statements||0.603||0.551|
|New product acceptance analysis||7.028||0.002|
|Porter’s 5 forces||0.881||0.42|
|Product life cycle analysis||2.112||0.13|
|Supply chain analysis||3.304||0.044|
|Total quality management||1.097||0.341|
|Human resources analysis||1.05||0.357|
|Organizational culture analysis||0.102||0.903|
|Change Management Programs||0.710||0.496|
The results of the Table 5 shows that in terms of size there is a difference among the small, medium and large companies only in the use of tools such as Balanced scorecard, New product acceptance analysis, PEST analysis, scenario planning, Strategic alliances, Supply chain analysis and Game Theory; while, these companies are similar in using other tools and techniques. Table 6 indicates the average use of tools and techniques which have a different situation by the small, medium and large companies.
Comparing the average use of different SMTT based on fir
|Strategic management tools and techniques||Firm size|
|New product acceptance analysis||4.3333||4.2857||3.1111|
|Supply chain analysis||4.2500||4.2381||4.7778|
Based on the results of the Table 6, large companies have made a greater use of balanced scorecard ,PEST analysis, scenario planning, Strategic alliances, Supply chain analysis and
Game Theory. In contrast, managers of the small companies have been more intended to use the tool of new product acceptance analysis.
Table 7 shows the comparison of the use of strategic management tools and techniques based on ownership type (public, private and both
Comparing the use of SMTT based on ownership type (ANOVA Test)
|Strategic management tools and techniques||F||Sig.|
|Activity based costing (ABC)||0.129||0.879|
|Analysis of employee satisfaction||0.72||0.491|
|Critical success factors||0.793||0.458|
|Customer life time value||0.397||0.674|
|Customer profitability analysis||1.021||0.367|
|Customer satisfaction analysis||0.218||0.805|
|Customer value analysis||2.395||0.1|
|Growth strategies Ansoff||4.584||0.014|
|Market share analysis||1.209||0.306|
|Mission and vision statements||0.374||0.689|
|New product acceptance analysis||1.235||0.299|
|Porter’s 5 forces||1.541||0.223|
|Product life cycle analysis||5.019||0.01|
|Supply chain analysis||5.973||0.004|
|Total quality management||0.08||0.924|
|Human resources analysis||0.895||0.414|
|Organizational culture analysis||0.884||0.419|
|Change Management Programs||0.382||0.684|
The results of the Table 7 shows that in terms of ownership type there is a difference among the companies with public, private, and both) ownership only in the use of tools such as 7s Mckensy, growth strategies Ansoff, PEST analysis, price analysis, product life cycle analysis, strategic alliances and supply chain analysis; but, these companies are similar inusing other tools and techniques. Table 8 shows the average use of different SMTT by the public, private and both companies.
|Table 8: Comparing the average use of different SMTT based on ownership type|
|Strategic management tools and techniques||Ownership type|
|Growth strategies Ansoff||3.8235||4.2353||2.8889|
|Product life cycle analysis||3.2941||3.7059||1.8889|
|Supply chain analysis||4.5882||4.6471||3.6667|
Based on the results of the Table 8, private companies have made a greater use of 7s Mckensy, growth strategies Ansoff, product life cycle analysis and supply chain analysis. In contrast, the use of PEST analysis, price analysis, and strategic alliances by the public firms have been higher. Finally, there will be an attempt to evaluate the relationship between the use of SMTT and the performance of the companies. Table 9 shows the correlation coefficient between each of the strategic management tools and techniques and organizational performance.
Correlation coefficients between SMTTs and organizational performance
|Independent variables||Correlation coefficient||Sig.|
|Activity based costing (ABC)||0.022||0.87|
|Analysis of employee satisfaction||0.281||0.029|
|Critical success factors||0.28||0.03|
|Customer life time value||0.304||0.018|
|Customer profitability analysis||0.451||0.000|
|Customer satisfaction analysis||0.418||0.001|
|Customer value analysis||0.448||0.000|
|Growth strategies Ansoff||0.325||0.011|
|Market share analysis||0.105||0.426|
|Mission and vision statements||0.239||0.066|
|New product acceptance analysis||0.199||0.128|
|Porter’s 5 forces||0.416||0.001|
|Product life cycle analysis||0.229||0.078|
|Supply chain analysis||0.191||0.143|
|Total quality management||0.483||0.000|
|Human resources analysis||0.259||0.045|
|Organizational culture analysis||0.195||0.134|
|Change management programs||0.425||0.001|
Dependent variable: Organizational performanceCorrelation between independent and dependent variables will be significant if the significance level is smaller than 0.05. Accordingly, the results of the Table 9 show that the use of the following tools could improve the performance of Iranian companies; this means that there is a positive and significant relationship between these tools and organizational performance:
Analysis of employee satisfaction, benchmarking, critical success factors, customer life time value, customer profitability analysis, customer satisfaction analysis, customer value analysis, growth strategies Ansoff, knowledge management, PEST analysis, Porter’s 5 forces, price analysis, reengineering, strategic alliances, total quality management, virtual teams, human resources analysis, stakeholder analysis and change management programs.
However, based on the results of the Table 9, there is no significant relationship between other SMTTs and organizational performance and their being used has not been able to have a positive impact on the performance of the managers of the Iranian companies.
In addition to the calculation of correlation coefficient, regression method has been also used to identify the overall impact of SMTTs on organizational performance. Tables 10 and 11 show the estimation results of regression equation.
|Table 10: Results of regression model estimation|
|Variables||Standardized Coefficients||t student||P value|
|Using of SMTT||0.491||4.297||0.000|
|Table 11: Summary of regression model|
Based on the results of the Table 10, regression coefficient has been obtained 0.491, indicating that the use of SMTTs has a positive impact on organizational performance. This means that the use of SMTTs by most companies will improve their performance. Significance level of the independent variable coefficient is equal to 0.000 which is smaller than the significance level of 0.05 and shows that the coefficient of the independent variable is significant.
In the Table 11, correlation coefficient of 0.491 and significance level of 0.000 imply that there is a positive and significant relationship between the use of SMTTs and corporate performance. Finally, based on the f-test, the test statistics and its significance level are 18. 466 and 0.000 respectively, indicating that the estimated regression equation is generally significant. Based on the adjusted coefficient of determination, it can be concluded that 22.8% of the changes in corporate performance are resulting from the use of SMTTs.
Today, more than ever, managers and decision-makers need practical mechanisms and procedures to make strategic decisions. In such a context, experts and scholars of management, through introducing management tools and techniques, have come to help organizational decision-makers. Strategic management tools and techniques are different tools that in all stages of strategic planning help managers to comply with complex environmental conditions. In this regard, managers have to choose the tools which can help them to improve processes, products and services and provide them with better performance and greater profits. Therefore, the proper use of these tools requires that manager have enough awareness of the strengths and weaknesses of each tool and be able to integrate and apply appropriate tools creatively, appropriately and at the right time. However, the literature review shows that few studies have been hitherto conducted regarding the recognition of the history of using and determining the importance of strategic management tools and techniques and satisfaction of the managers with them. Accordingly, the present study was an attempt to assess the strategic management tools and techniques among Iranian companies. Strategic management tools and techniques were identified through an interview with the experts of strategic management and an extensive literature review and, finally, 37 tools were selected and used.
The obtained results showed that Mission and vision statements, SWOT analysis
,Cost-benefit analysis, Core competencies, Financial analysis, Critical success factors , Total quality management, Price analysis, Stakeholder analysis and Benchmarking are known as the 10 most commonly strategic management tools and techniques among the managers of Iranian companies. However, Game Theory, scenario planning, customer life time value, product life cycle analysis, virtual teams,7s Mckens, reengineering new product acceptance analysis, activity based costing (ABC), one-to-one marketing were the least-used strategic management tools and techniques among the managers of Iranian companies. Based on the type of the industry, there are only differences in the use of activity based costing (ABC), balanced scorecard, cost-benefit analysis, product life cycle analysis, supply chain analysis, and virtual teams among the manufacturing and service companies. Based on the size, there are only differences the use of balanced scorecard, new product acceptance analysis, PEST analysis, scenario planning, strategic alliances, supply chain analysis, and Game Theory among small, medium, and large companies. Based on the type of the property, there are also differences in the use of 7s Mckensy, growth strategies Ansoff, PEST analysis, price analysis, product life cycle analysis, strategic alliances, and supply chain analysis among companies with public ownership, private ownership and combinational ownership. Finally, it was found out that most managers' use of strategic management tools and techniques would cause the companies to experience a better performance, and there had been a positive and significant relationship between these tools and techniques and organizational performance.
Finally, according to the results of the research, the following suggestions are offered to the managers of the Iranian companies:
1. Strategic management tools and techniques have had a different impact on corporate performance. Some of these tools have had a positive and others a negative impact on the performance. Additionally, the tools have been different in terms of effectiveness. For example, it can be said that the tools such as customer profitability analysis, customer satisfaction analysis, customer value analysis, knowledge management, price analysis, Porter's model, reengineering, total quality management, virtual teams and change management programs have had a stronger positive impact on the performance. Accordingly, it is recommended that managers focus primarily on the use of tools and techniques in their strategic plans.
2. Literature review and the results of the current research shows that managers have not had a constant tendency in using strategic management tools and techniques and this tendency has been constantly changing in different period. So, the corporate managers are recommended to consider such changes in their long-term planning and to put emphasis on those tools that improve the performance of the company and the managers are more satisfied with.
3. According to the results of the research, it can be suggested that managers use the most widely used tools such as mission and vision statement, SWOT analysis, cost-benefit analysis, core competencies, financial analysis, key success factors, total quality management, price analysis, market share analysis and bechmarketing which are currently used by the managers of different companies. Increasing complexity of environmental conditions has made the managers use a set of strategic management tools and techniques in order to adapt to new market conditions. Thus, it is recommended that managers not focus solely on the use of a limited number of tools and be aware of the strengths and weaknesses of the prevalent strategic management tools.
4. Manufacturing and service companies provide the target markets with various products; hence, differences among these products and services (such as intangibility, unsaveability, and production and consumption of services compared with products) make the companies use a variety of methods of production, marketing and sales of products. Therefore, in using strategic management tools and techniques, the managers of these companies have to be aware of such differences and use the tools which are more compatible with the nature of their activities. Accordingly, based on the results of the study, it is recommended that the managers of the companies make more use of the tools such as activity-based costing, balanced scorecard, cost-benefit analysis, analysis of product life-cycle and supply chain integration.
5. The use of strategic management tools and techniques will be successful if certain conditions are provided in the company for using them. For example, the use of some tools requires large financial resources and they can be used only by the larger companies. Thus, it is recommended that the managers of the smaller companies not use the tools such as balanced scorecard, PEST analysis, scenario planning, strategic alliances, supply chain integration and game theory and focus mainly on scenario planning.
6. Based on the results of this research and the findings of previous similar studies, the reminder of this section attempts to provide suggestions for future researches conducting them can bridge the existing research gaps.
7. Management researchers opine that for the use of strategic management tools and techniques some specific circumstances need to be provided. Obviously, if the required infrastructures such as comprehensive information systems, proportional cultural values, ideal organizational structures and so forth are not provided, managers will not be able to use these tools and techniques as completely as possible (Hitt, 2016; Dess et al, 2014). For example, total quality management requires a particular culture in the organization according to which all employees at different organizational levels assume that strive to continually improve the quality of goods and services is one of their duties (Kumar et al, 2009; Tari, 2005); or, the implementation of activity-based costing system in the absence of a comprehensive accounting information systems in organizations is almost impossible (Intakhan, 2014; Byrne, 2011). Therefore, it is recommended that future researchers, before using any of the tools and techniques of strategic management, identify the conditions which should be provided in the organization so that they can exploit these tools and techniques optimally in order to achieve the overall goals of the organization.
8. One part of this research was to evaluate the effect of the use of strategic management tools and techniques on companies' financial performance that such an effect was confirmed. Literature review shows that financial performance measurement is possible through both qualitative and quantitative methods; that is, in quantitative method, using authentic databases, the values of financial performance indicators such as net profit, return on investment, profit margins, etc. are calculated. However, in qualitative method, some indicators of financial performance are selected and using methods such as questionnaire or having an interview with managers and employees, they are asked to compare the company's performance with that of other competing companies in the market over the past several years and based on the selected indicators (Clemens and Bakstran, 2010; Kazan et al, 2006). Given the higher accuracy of quantitative method compared with qualitative one, it is suggested that future researchers select some suitable indicators for financial performance of companies and try to examine the effect of the use of strategic management tools and techniques on the improvement of these companies' financial performance.
9. Moreover, this research, without considering moderating variables, has investigated the effect of the use of strategic management tools and techniques on companies' financial performance. This is while that specific features such as organizational culture, environmental instability, firm size, supports of financial management team, economic cycles and so forth can moderate such a relationship (Rigby, 2015; Kalkan and Bozkurt, 2013; Peng and Jiang, 2005). Thus, it is recommended that feature researchers consider the mediating role of such variables.
10. One of the main advantages of this research is that it considers a fairly complete set of strategic management tools and techniques including 39 different tools which have been selected based on the frequency of use in previous researches; this is while that in previous researches a limited number of these tools and techniques have been used by researchers. However, literature review of the research shows that there is a broad and diverse set of these tools and techniques and that some of these tools such as analysis of the key factors success, price analysis, customer lifetime value, market share analysis, scenario-based planning and so on have not been used in this research (Afonina, 2015; Dess and Miller, 2014; Afonina and Chalupský, 2012). Thus, it is recommended that future researchers examine the use of other strategic management tools and techniques and their impact on corporate performance.
11. Contingency Theory in management states that companies in different countries of the world are faced with completely different environmental conditions; this makes every company choose specific plans and procedures to achieve success. Accordingly, different environmental conditions may cause managers in different countries to use some strategic management tools and techniques more willingly (Pasanen, 2015; Peng, 2014; Kalkan and Bozkurt, 2013). Therefore, future researchers can compare the results of the researchers conducted all around the world in relation with the use of strategic management tools and techniques; doing so, they can gain new insights regarding the reasons, necessities and conditions of the use of these tools and techniques in different global locations such as Asia, Europe, Africa, and America.
After these recommendations, some limitations of the research will be mentioned. One limitation of the study is related to the limited theoretical foundations/bases. This means that no extensive research has been conducted on the use of strategic management tools and techniques. Therefore, this research could not fully consider the definitions and concepts as well as different types of strategic management tools and techniques and compare the obtained results with other similar researches. Additionally, this research was conducted only among Iranian companies and its results cannot be generalized to other countries. Another limitation is related to the problem of data collection through questionnaire; this means that despite in-person meetings and telephone and e-mail follow-ups of the authors, some of the managers of the sample companies were not willing to cooperate in completing the questionnaire. Hence, these companies were excluded from the final sample. Moreover, it is likely that some of the respondents might have responded the questions carelessly and negligently. Another limitation is related to the lack of knowledge of some of the top managers of Iranian companies about strategic management tools and techniques because of which the distribution and collection of the questionnaires took a long period of time. Moreover, because of this last limitation, the researchers were compelled to exclude from the questionnaire some new and complicated strategic management tools and techniques such as expense management systems (e.g. goal-based costing).