Strategic management applied to construction companies.
As we have seen, strategic management is the process of formulating, implementing and evaluating decisions about the organisation’s future direction.
This process is vital to every organisation’s survival because it is the process by which the organisation adapts to the ever-changing environment, and the process is applicable to all management levels and all types of organisations. It allows an organisation to be more proactive than reactive in shaping its own future, to initiate and influence activities and exert control over its own destiny.
The key benefit of strategic management is to help organisations make better strategies through the use of a more systematic, logical and rational approach to their strategic business choices.
The application to construction companies is relatively straightforward.
Successful management of construction companies is vital in order to improve organisational performance (as opposed to individual construction project performance) and the strategic management process provides a framework for organisational activity that can lead to improved organisational function and improved responsiveness to the operating environment.
Developing a plan for the future is both a critical yet complex exercise in the modern construction world. Due to the pervasiveness of risks and uncertainties within the construction sector, planning at strategic level would require a higher degree of ‘sophistication’ in organisational capability.
The construction sector has a reputation for not performing particularly well in planning longer-term due to a preoccupation with ‘getting the job done’ and ‘winning the next project’, and the prevalence of small construction companies that lack either the time or managerial expertise.
Why do you think construction companies are reluctant to undertake a strategic management review?
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