Strategic Management Theories

Subject: Strategic Management
Pages: 8
Words: 2253
Reading time:
8 min
Study level: PhD


Strategic management is an important concept that can help companies to succeed in the current business environment. Chapter 1 of the present paper will define and explain strategic management theories. Chapter 2 will discuss Porter’s Five Forces, which are among the key tools in strategic management. Chapter 3 will focus on Hofstede’s Six Dimensions of Culture and show how they can be applied in businesses today. Chapter 4 will seek to explore Martha Rogers IDIC Thinking Process, which can also assist companies in strategic management. Finally, Chapter 5 will present a conclusion showing how these three theories can be used to achieve the goals of my Ph.D. Marketing thesis.

Strategic Management Theories

Definition of Strategic Management Theories

According to Morden (2016), the scope of strategic management involves analyzing the current business environment, formulating strategies, choosing the most useful strategy given a company’s goals, and implementing the chosen strategy. Strategic management theory, in turn, is defined as “a supposition, proposition or a system of ideas intended to explain the origin, evolution, principles, and applications of strategic management” (Omalaja & Eruola 2011). This means that the goal of strategic management theories is to provide a foundation for the process identified above and to help managers in strategic decision-making.

Explanation of Key Strategic Management Theories

There are six prominent theories in strategic management: survival-based theory, resource-based theory, human resource-based theory, agency theory, contingency theory, and profit-maximizing and competition-based theory. The survival-based theory posits that the primary aim of companies is to adapt to changes in the external environment to stay in business (Omalaja & Eruola, 2011). The resource-based theory offers a different view, suggesting that competitive advantage comes from the company’s internal resources, and thus shows that managers should focus more on the internal analysis (Omalaja & Eruola, 2011). The human resource-based theory stems from this view, highlighting the importance of employees in generating a competitive advantage and achieving growth (Omalaja & Eruola, 2011).

The agency theory of strategic management focuses on the interaction between shareholders of a company and its managers. According to Panda and Leepsa (2017), the agency theory states that most common business problems arise from the separation between these two parties, and thus the goal of strategic management should be to align the perspectives of company owners and managers into one strategy. The profit-maximizing and competition-based theory is probably the most common approach to strategic management. This theory was developed by Michael Porter, whose work largely focused on achieving competitive advantage (Omalaja & Eruola, 2011). Porter’s view is that strategic management should be comprehensive, and a firm’s strategy should focus on the competitive environment, market research, and increasing internal capacity since these factors are pivotal to winning over competitors and increasing profits (Omalaja & Eruola, 2011). Lastly, the contingency theory posits that there is no one-fits-all approach to strategic management, and thus each company should take into account its current position, environment, goals, capacity, and resources to produce a viable strategy for development (Omalaja & Eruola, 2011).

Porter’s Five Forces

Porter’s Five Forces Definition

Porter’s Five Forces is a framework for analyzing the business environment focusing on its components. According to Porter’s theory, five forces make up these components: the threat of new entrants, rivalry among existing competitors, the bargaining power of buyers, the bargaining power of suppliers, and the availability of substitutes (Hill & Jones, 2012). The first factor refers to the probability of new brands appearing in the market and influencing the competitive environment. The second force refers to the level of competition among existing players, which will also differ between the markets. The third force refers to “the ability of buyers to bargain down prices charged by companies in the industry or to raise the costs of companies in the industry by demanding better product quality and service” (Hill & Jones, 2012, p. 58). The buyers’ bargaining power is at its highest in industries where buyers can switch between brands freely, as well as when there is a small number of buyers who purchase products in large quantities.

The bargaining power of suppliers is different since it refers to the ability of suppliers to raise prices or decrease quality without losing buyers (Hill & Jones, 2012). This may occur when there are few suppliers in the market or when their profitability is not affected by buyers from a specific industry. Finally, the availability of substitute products also impacts business performance and competition due to its impact on buyers’ decisions (Hill & Jones, 2012). When there are many alternatives available, buyers would have higher bargaining power, and the competition would also be more significant. In contrast, when a company has a unique selling proposition (USP) that distinguishes it from other brands, it can earn a high market share quickly.

Porter’s Five Forces Application

The main application of Porter’s Five Forces is analyzing the market in which a company operates. All of the factors described in the model influence competition in the market and thus should be taken into account when formulating a strategy. Therefore, the results of the analysis produced using this model can be used in strategic decision-making. For example, if the bargaining power of suppliers in the industry is too high, a company might consider producing parts and raw materials on its own to gain independence. If the threat of new entrants is high, the company should focus its marketing efforts on building brand awareness and reputation to make it harder for new businesses to take away customers. Therefore, Porter’s model provides essential insight into the market that can assist companies in creating and implementing a successful strategy for development.

Hofstede’s Six Dimensions of Culture

Definition of Hofstede’s Six Dimensions of Culture

Hofstede’s theory is defined as the approach to classifying national cultures based on the values of their members. There are six core dimensions in Hofstede’s theory: power distance, uncertainty avoidance, individualism versus collectivism, masculinity versus femininity, long- versus short-term orientation, and indulgence versus restraint (Hofstede, 2011). Power distance refers to people’s acceptance of social inequality, meaning that in large power distance cultures, people tend to conform to the existing hierarchy and autocratic leadership. Uncertainty avoidance “indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations” (Hofstede, 2011). The dimension of individualism versus collectivism describes the degree to which people in a particular culture are integrated into groups (Hofstede 2011). Masculinity versus femininity shows the culture’s role differentiation and behavioral values. The dimension of orientation in Hofstede’s theory describes people’s attitudes to goal setting, traditions, and prosperity. Finally, the dimension of indulgence versus restraint refers to people’s degree of self-control and personal freedom (Hofstede, 2011).

Application of Hofstede’s Six Dimensions of Culture

Globalization has played an essential part in shaping the contemporary business environment. Today, many businesses create international partnerships, open branches in other countries, and hire workers from diverse cultural backgrounds. This means that it is essential for companies to understand and appreciate cultural differences to alter their strategy. Applying Hofstede’s theory can assist companies to be more successful in the globalized environment by helping them to adapt to diversity. For instance, marketers can use Hofstede’s theory to create advertisements for customers from other countries, whereas managers could apply the theory to work with diverse employees. Hence, Hofstede’s theory is relevant to the contemporary business environment and can benefit many companies.

Martha Rogers’ IDIC Thinking Process

Definition of Martha Rogers’ IDIC Thinking Process

The IDIC Thinking Process is a theoretical framework for managing customer relationships proposed by Martha Rogers. The theory states that to build long-term relationships with customers, companies need to follow the thinking process of IDIC, which stands for the following (Peppers & Rogers 2016):

  • Identify customers as unique and addressable individuals;
  • Differentiate customers by value, behaviors, and needs;
  • Interact with customers in effective, cost-efficient ways;
  • Customize certain aspects of the company’s behavior or communication to address customers.
  • Each step of the process involves a degree of analysis and interpretation, which is why it can be referred to as a thinking process.

Application of Martha Rogers’ IDIC Thinking Process

According to Peppers and Rogers (2016), the process identified above may help companies to increase customers’ trust, thus building loyalty. Customer loyalty has a significant impact on business because loyal customers will continue purchasing products in the future while also recommending the company’s products or services to others. Hence, the theory can be applied as part of strategic management efforts to interact with customers more effectively. Rogers’ IDIC Thinking Process is particularly useful for companies in the service industry because of its focus on customers’ experience with the company, but it can be applied to most other business settings and industries just as well.


Marketing is an important part of any company’s strategy because it helps in achieving strategic goals. Therefore, regardless of the strategic management theory applied in a business, marketing will be a part of the company’s strategy in one way or another. However, the relationship between marketing and strategy is more complex than that, and strategic theories and tools can be implemented in marketing efforts to enhance research and plans. The three theories described above – Porter’s Five Forces, Hofstede’s Six Cultural Dimensions, and Rogers’ IDIC Thinking Process – will all be useful for my thesis research, because they would complement it with new knowledge and allow applying the results in marketing practice.

First of all, the understanding of the target market is crucial to all marketing endeavors. Increasing the understanding of the market is the primary goal of Porter’s Five Forces theory. The theory offers a critical tool for analyzing the environment in which every business operates, and it can thus be used to analyze an entire market.

Additionally, Porter’s theory is important because it highlights the interactions between different industry features and components. For instance, the bargaining power of buyers is influenced by the availability of substitutes, whereas the current competitive environment can increase or decrease the threat of new entrants (Hill & Jones, 2012). When preparing a marketing strategy for a specific company, it is essential to take all of these factors into account. However, even if my Ph.D. thesis will be based on an industry rather than on a company, Porter’s Five Forces model will still be useful to examine general marketing options available to companies operating in the chosen sector. Thus, I would use Porter’s Five Forces theory in my Marketing thesis to better understand the industry that I will choose as the focus of the research.

Secondly, cultural awareness has a pivotal influence on marketing in the contemporary world. As explained in Chapter 3, globalization means that more and more businesses are now required to market their products and brands to diverse communities of customers. Hofstede’s cultural theory posits that people from different cultural backgrounds have different values and opinions. This idea has huge repercussions for marketing because it suggests that the messages conveyed through advertisements must be tailored to the culture that they target. For example, in Western societies, more and more ads focus on the subject of gender equality. Gilette’s recent advertisements engaged with the Me Too movement and received a lot of praise in America, the United Kingdom, and many other countries (Topping, Lyons & Weaver, 2019). Based on Hofstede’s theory, the responses to the same advertisement in societies that fall into the masculine category would be completely different, as the majority of people from those cultures would not be able to understand and appreciate the message.

As part of my marketing thesis, I intend to explore different marketing strategies that are available to businesses in a particular industry. Thus, integrating Hofstede’s theory in my thesis would enable me to explore and explain differences in marketing strategies depending on the culture of the target audience. I believe that this would allow me to produce a dissertation of greater depth and scope. Moreover, it would help me to ensure that the results and conclusions could be applied to marketing practice in a variety of companies.

Lastly, Rogers’ IDIC Thinking Process will also help me in creating my thesis and adding more meaningful information to it. This is mainly because this theory implies that an effective marketing strategy should be comprehensive and include a focus on customer trust and long-term relationships. This idea will assist me in enhancing the practical recommendations that I will seek to provide in my thesis. It will also help me to expand the scope of the paper by looking at marketing in a broader context and considering business-customer interactions during the research.

Overall, all of the three theories considered in the paper will assist me in producing an excellent thesis paper with significant scope and depth. This is due to their relevance to the contemporary business environment and the fact that they highlight additional factors that could influence marketing strategies. For example, the application of Porter’s Five Forces will ensure that marketing strategies take into account the competitive environment, whereas Rogers’ IDIC process will contribute to recommendations regarding communication and service. Therefore, the inclusion of these theories in the thesis would make the recommendations provided as a result of research practical and relevant to businesses in any chosen industry. This would assist me to achieve the goals of the thesis paper, which are to add new information on the chosen subject as well as to provide recommendations that enhance practice in the chosen area of business.

Reference List

  1. Hill, CWL, Jones, GR 2013, Strategic management: an integrated approach, 10th edn, Cengage Learning, Mason, OH.
  2. Hofstede, G 2011, ‘Dimensionalizing cultures: the Hofstede model in context,’ Online Readings in Psychology and Culture, vol. 2, no. 1, pp. 1-23.
  3. Morden, T 2016, Principles of strategic management, 3rd edn, Routledge, London
  4. Omalaja, MA & Eruola, OA 2011, ‘Strategic management theory: concepts, analysis and critiques in relation to corporate competitive advantage from the resource-based philosophy’, Economic Analysis, vol. 44, no. 1-2, pp. 59-77.
  5. Panda, B & Leepsa, NM, 2017, ‘Agency theory: review of theory and evidence on problems and perspectives’, Indian Journal of Corporate Governance, vol. 10, no. 1, pp. 74-95.
  6. Peppers, D & Rogers, M 2016, Managing customer experience and relationships: a strategic framework, 3rd edn, John Wiley & Sons, Hoboken, NJ.
  7. Topping, A, Lyons, K & Weaver, M 2019, ‘Gillette #metoo razors ad on “toxic masculinity” gets praise – and abuse,’ The Guardian.