Strategic Management as an Essential Part of Business Development and Growth

Strategic Management as an Essential Part of Business Development and Growth

Silva Aguilar German Israel, Vargas Lopez Erendira Yareth, Lopez Alvarado Noé

Faculty of Foreign Trade, University of Colima.

DOI: https://dx.doi.org/10.47772/IJRISS.2025.906000301

Received: 05 June 2025; Accepted: 11 June 2025; Published: 12 July 2025

ABSTRACT

This critical literature review analyzes strategic management as a fundamental component of business development and growth. It addresses theoretical gaps in the integration of contemporary management tools and leadership approaches. Through a systematic analysis of at least fifteen key theoretical contributions spanning five decades (1970–2023), this study examines the evolution of strategic management conceptualization, identifies limitations in current models, and proposes a more integrated analytical framework. The review reveals three critical gaps: insufficient integration between strategic planning and operational tools such as TQM and BPR; limited contextualization of leadership models for emerging markets; and inadequate consideration of the impact of digital transformation on strategic processes. The main contributions of this study are a comparative synthesis of strategic management approaches, a critical evaluation of implementation challenges, and recommendations for future research directions that focus on SME applications and digital-era adaptations.

Keywords: Strategic Management, Strategic Planning, Competitive Advantage, Business Growth, Strategic Leadership, Change Management.

INTRODUCTION

Companies, conceived as social organizations that use resources to achieve specific goals (Chiavenato et al., 1993), are the engine of socioeconomic development. Their nature is inherently dynamic; they are living organisms subject to constant evolution to adapt to a competitive and globalized environment (Chiavenato et al., 2001). In this scenario, strategic management emerges as the fundamental discipline that allows organizations not only to survive but to thrive in the long term.

While the literature on strategic management is prolific, it often suffers from a lack of criticality. Many reviews are limited to describe models sequentially, without confronting authors, exploring the failure conditions of the proposed tools, or clearly systematizing their findings. Furthermore, the absence of an explicit methodology for selecting sources weakens the scientific validity of such studies.

This paper seeks to fill these theoretical and methodological gaps. The main objective is to propose an analytical perspective that reinterprets strategic management not as a series of fixed steps, but as a dynamic system where strategy, tools, and leadership interact contingently. To this end, the following specific objectives are set:

1. To apply a systematic review methodology to critically analyze fundamental and contemporary literature on strategic management.
2. To deconstruct the strategic process, TQM, and BPR models to expose not only their contributions but also their contextual limitations and implementation risks.
3. To contextualize the role of strategic leadership in the face of current challenges such as remote team management and the impact of artificial intelligence.
4. To synthesize the findings in a comparative table and a discussion that facilitates a critical and integrated understanding of the field.

Thereby, this article aims to offer a more robust and realistic framework for academics and professionals, emphasizing that the effectiveness of strategy lies in adaptation and critical judgment rather than in the dogmatic application of formulas.

Theoretical Framework: Fundamentals Of Strategic Management

Strategic management has been the subject of study and conceptual development by numerous academics and consultants, consolidating itself as a crucial field of knowledge for business management. Its relevance is accentuated in a global scenario characterized by interconnection, intensified competition, and the rapid pace of technological and social changes.

Definitions and Scope of Strategic Management

The conceptualization of strategic management is diverse, although most definitions converge on its orientation towards achieving long-term objectives and adapting to the environment. Harrison and St. John (2002) describe it as the set of decisions and actions a company undertakes to achieve its fundamental objectives, seeking to distinguish itself from the competition and obtain above-average profitability for the sector. This definition highlights the pursuit of an advantageous and sustainable position.

Similarly, Dess and Lumpkin (2003) point out that strategic management involves defining the organization’s mission and vision, formulating global objectives, and efficiently allocating resources to achieve these goals. These authors emphasize the importance of a clear hierarchy of purposes, from the broadest aspiration (vision) to concrete ends (objectives).

Furthermore, Díez de Castro and García del Junco (2001) offer a perspective that underscores interaction with the environment, defining strategic management as “a process for managing the firm’s relationships with its environment” (p. 15). This approach encompasses strategic planning (the what and how), capacity planning (the necessary resources), and change management (continuous adaptation). Thus, its comprehensive nature is highlighted, aimed at aligning the organization’s internal resources and capabilities with the opportunities and threats of the external context, in order to ensure long-term adaptability and competitiveness.

In essence, strategic management consists of a continuous and systematic process that allows the organization to determine its vision (the desired future), its mission (its reason for being and fundamental purpose), and its principles or values (the guides for conduct). From these foundational elements, ambitious yet achievable long-term goals are set, and the necessary strategies are designed and implemented to achieve them. As Aguilera (2010) rightly points out, strategic management helps coordinate the multiple strategic decisions made at different levels of the organization, fostering a more proactive management attitude and avoiding the tendency towards merely reactive or defensive decisions in the face of environmental pressures.

The Strategic Management Process

The strategic management process, although it may vary in its denomination and detail according to different authors, generally comprises a series of interrelated and recurring phases. These phases allow for a systematic approach to strategic decision-making.

• Strategic Analysis: This initial phase involves an exhaustive diagnosis of both the external environment and the internal situation of the organization.
  • External Analysis: Consists of identifying and evaluating the opportunities and threats present in the general environment (PESTEL factors: political, economic, sociocultural, technological, ecological, and legal) and in the specific or sectoral environment (industry analysis, competitors, customers, suppliers). Tools such as Porter’s five forces analysis are commonly used here.
  • Internal Analysis: Focuses on evaluating the company’s resources (tangible and intangible) and capabilities to identify its strengths and weaknesses. The value chain and VRIO analysis (Value, Rarity, Imitability, Organization) are useful instruments for this purpose. The objective is to determine the distinctive competencies that can confer a competitive advantage.
• Strategy Formulation: Based on the results of the strategic analysis, strategies are formulated at different levels:
  • Corporate Strategy: Defines in which businesses or sectors the company will compete and how it will allocate resources among them (e.g., diversification, vertical integration, internationalization).
  • Business or Competitive Strategy: Determines how the company will compete in each of the businesses or markets in which it participates (e.g., cost leadership, differentiation, focus).
  • Functional Strategies: Are developed for each functional area of the company (marketing, finance, operations, human resources, R&D) and must be aligned with corporate and business strategies, detailing how they will contribute to their achievement.
• Strategy Implementation: This phase seems to be the most challenging phase for many experts. It involves translating strategic plans into concrete actions. It requires the design of an appropriate organizational structure, resource allocation, development of information and control systems, change management, and staff motivation. Organizational culture and leadership play a critical role in facilitating or hindering implementation.
• Strategic Evaluation and Control: Consists of monitoring the performance of implemented strategies, comparing the results obtained with the established objectives. It allows for the identification of deviations, analysis of their causes, and implementation of corrective actions. This control is not only retrospective but must also allow for adjusting strategies based on changes in the environment or within the organization itself. The Balanced Scorecard is a widely recognized tool used in this phase.

Importance of Strategic Management in the Current Business Environment

The relevance of strategic management has intensified in recent decades due to the increasing complexity and uncertainty of the business environment.

• Adaptation to Change and Uncertainty: Companies operate in increasingly volatile and dynamic markets. Strategic management provides the framework to analyze these changes, anticipate trends, and develop the adaptive capacity necessary to survive and thrive. As a report by McKinsey & Company (2023) indicates, strategic agility is a key factor that helps companies adapt effectively to change.
• Achievement of Sustainable Competitive Advantages: In a competitive environment, it is not enough to be good; it is necessary to be better than rivals in a way that is difficult to imitate. Strategic management guides the company in identifying, developing, and exploiting its unique resources and capabilities to build competitive advantages that endure over time.
• Business Growth and Sustainability: Strategic management focuses not only on survival but also on profitable and sustainable growth. It helps identify new market opportunities, develop new products or services, and expand geographically in a planned manner.
• Relevance in Internationalization: As initially mentioned, the importance of strategic management is magnified exponentially when an organization aspires to internationalization. Operating in foreign markets implies facing a greater diversity of cultures, regulations, political systems, and economic conditions. A robust strategic management process is indispensable for analyzing these new environments, adapting the value proposition, and managing the risks associated with global expansion.
• Improvement in Decision-Making: Decision-making has always been vital for administration. Strategic management provides a coherent framework and a set of priorities that guide decision-making at all levels of the organization, ensuring they are aligned with long-term objectives.
• Resource Optimization: By clearly defining priorities and objectives, strategic management facilitates a more efficient allocation of the company’s scarce resources (financial, human, technological), avoiding the dispersion of efforts and maximizing the return on investment.

Tools and Approaches in Strategic Management

Over the years, various tools and methodological approaches have been developed that support the strategic management process and the improvement of business performance. Among them, Total Quality Management and Business Process Reengineering stand out, both with a strong orientation towards process optimization.

• Total Quality Management (TQM): TQM is a management philosophy that seeks continuous improvement in all aspects of the organization, with a strong focus on customer satisfaction. Its fundamental principles include:
  • Customer focus: Understanding and meeting the needs and expectations of customers, both internal and external.
  • Continuous improvement (Kaizen): Fostering a culture where all employees constantly seek ways to improve processes and results.
  • Total participation: Involving all members of the organization in the quality improvement effort.
  • Prevention over correction: Doing things right the first time to avoid errors and the costs associated with their correction.
  • Fact-based management: Making decisions based on data and analysis. TQM, by improving the quality of products and services, reducing waste, and increasing efficiency, directly contributes to the strategic objectives of differentiation and cost leadership.
• Business Process Reengineering (BPR): BPR, popularized in the 1990s, proposes a radical redesign of fundamental business processes to achieve drastic improvements in critical performance measures, such as cost, quality, service, and speed. Unlike continuous improvement, reengineering seeks disruptive and fundamental changes in the way work is performed. It focuses on strategic processes that are indispensable for achieving objectives and reaching a higher competitive level. It involves a deep analysis of process flows, eliminating non-value-adding activities, and redesigning processes to be more efficient and effective. Although its application can be complex and generate resistance, BPR can be a powerful tool for transforming organizations and aligning them with new strategic realities.

These tools, although different in their approach (TQM more incremental, BPR more radical), are not mutually exclusive and can complement strategic management efforts by providing methodologies for operational improvement and organizational adaptation.

The Role of Leadership in Strategic Management

Strategic management, however well formulated, requires effective leadership for its successful implementation and to keep the organization on the right track. Henry Fayol (1916), one of the pioneers of management theory, already emphasized that “the mission of management (…) consists for each manager in obtaining the maximum possible results from the elements composing his unit, in the interest of the company” (cited in various sources, e.g., the one provided). This vision underscores the leader’s responsibility in achieving organizational objectives.

Organizations need the leadership of their managers to survive, prosper, and transcend. Noriega Gómez (2008) identifies four essential conditions that a good leader must meet in the organizational context:

1. Commitment to the mission: The leader must be deeply committed to the fundamental purpose of the organization.
2. Communication of the vision: It is crucial that the leader is capable of articulating and communicating the vision of the future in an inspiring way, ensuring that members of the organization understand it and make it their own.
3. Self-confidence: A leader must project security and confidence in their own abilities and in those of the team to overcome challenges.
4. Personal integrity: Consistency between what the leader says and does, as well as adherence to ethical principles, is fundamental to generating trust and credibility.

Regarding leadership focused specifically on companies, Ballina (2000) advocates for a critical review of traditional business leadership models. He proposes approaches that integrate ethical, social, and cultural considerations, and that adapt to the specific realities of organizations, paying special attention to Latin American contexts, where cultural particularities may require differentiated leadership styles.

Effective leadership within the framework of strategic management also implies the ability to manage talent and motivate teams. As Noriega Gómez (2008) points out, the motivation, ability, and experience of followers must be constantly evaluated to determine which combination of leadership styles is most appropriate for the flexible and changing conditions of the environment and the team itself. An appropriate leadership style will not only motivate employees but will also contribute to their professional development. The leader who aspires to train their followers, increase their confidence, and help them learn and grow in their work will need to adapt their style continuously. Effective leaders must know their staff well enough to provide appropriate responses to the demands that the changing skills of their collaborators require at all times. It is fundamental to remember that followers, both individually and as a group, develop their own patterns of behavior and ways of operating (norms, customs, habits), which may require the leader to behave differently with each of their collaborators, depending on their different levels of maturity and development.

METHODOLOGY

This research is structured as a critical and systematized literature review. To ensure rigor and transparency in the analysis, the following methodology was adopted:

• Databases and Search Strategy: Exhaustive searches were conducted in top-tier academic databases, including Scopus, Web of Science, and Google Scholar. The search was limited to the period 1980-2024 to cover foundational works of modern strategy as well as the most recent literature. Combinations of keywords such as “strategic management,” “competitive advantage,” “business process reengineering,” “total quality management,” and “strategic leadership” were used.
• Selection Criteria (Inclusion/Exclusion): Included were: (a) seminal works that have defined the field (e.g., Porter, Mintzberg, Fayol); (b) peer-reviewed empirical and theoretical articles that critique or apply strategic models; and (c) high-impact literature addressing contemporary challenges (e.g., reports from McKinsey, Harvard Business Review on AI and remote work). Purely descriptive or manual-like works that did not offer critical analysis were excluded.
• Analysis and Systematization Process: The selected sources (n=52) were categorized and analyzed using a thematic approach. Instead of a simple description, a critical analysis was applied to identify the underlying premises, contributions, and, crucially, the limitations of each model. The results were systematized in a comparative table and structured into coherent discussion axes, allowing for a direct confrontation between theories and their practical implications.

RESULTS AND CRITICAL ANALYSIS OF THE LITERATURE

The analysis is structured around the core components of strategic management, integrating criticism directly into the exposition of each concept.

 The Strategic Process: From Linear Rationality to Iterative Reality

The canonical model of strategic management is presented as a sequential and deliberate process that includes the phases of analysis, formulation, implementation, and control (Harrison & St. John, 2002; Dess & Lumpkin, 2003). This approach, which seeks to align internal resources with external opportunities to achieve a competitive advantage (Díez de Castro et al., 2001), has been fundamental in structuring strategic thinking.

However, its main limitation is its rigidity and its excessively rationalist view. Authors like Mintzberg have long criticized this conception, arguing that strategy in practice is not always a deliberate plan but often “emerges” from patterns of decisions and actions over time. The linear model is an idealization that fails to capture the chaotic and iterative nature of decision-making in high-uncertainty environments. Its dogmatic application can lead to strategic paralysis, where the organization becomes unable to react with agility to unforeseen threats or opportunities (McKinsey & Company, 2023).

Support Tools: A Critique of Universal Efficacy

Two key tools, TQM and BPR, are frequently cited as pillars of strategic execution.

• Total Quality Management (TQM): Focuses on continuous and incremental improvement (Kaizen), customer satisfaction, and total participation (Noriega Gómez, 2008). Its value lies in fostering a quality culture that can sustain a differentiation or efficiency strategy. However, TQM is ineffective in contexts that require disruptive innovation. In industries with rapid technological change, an exclusive focus on incremental improvement can lead a company to perfect a product or service that is becoming obsolete.
• Business Process Reengineering (BPR): Proposes a radical redesign of processes to achieve drastic improvements (Fayol, 1916). Unlike TQM, it seeks revolutionary changes. Its usefulness is clear when an organization needs a fundamental transformation to survive. However, BPR has a high failure rate and entails significant risks. Its radical approach can destroy tacit knowledge, demoralize staff, and generate resistance that paralyzes the organization. It is particularly ineffective and dangerous in high-reliability industries (e.g., aviation, nuclear power), where process stability is more critical than cost optimization.

The critical conclusion is that these are not universal tools. Their choice must be contingent on the company’s strategy, culture, and competitive context.

Strategic Leadership: Beyond the Heroic Model

Leadership is the engine of strategy. Classical literature defines it through qualities such as commitment, vision, trust, and integrity (Noriega Gómez, 2008; Ballina, 2000). This leader must be able to motivate and adapt their style to the needs of the team (Koontz & Weihrich, 2002).

While these principles are timeless, the model of the visionary and charismatic leader proves insufficient in the face of contemporary challenges:

• Remote and Distributed Management: Traditional leadership, based on direct supervision and face-to-face communication, is challenged. Today’s leader must be an architect of trust and autonomy, using technology not just to control but to foster connection and a cohesive culture in the absence of a shared physical space.
• Integration of Artificial Intelligence (AI): AI is transforming strategic decision-making, from data analysis to process automation. This creates a new tension: the leader must trust and act based on algorithms that may not be fully transparent (the “black box” problem). This requires a new skill set: the ability to critically question AI outputs and to communicate decisions based on them to the entire organization.

Modern leadership, therefore, is less heroic and individualistic and more collaborative and technologically literate.

Comparative Analysis of Strategic Management Approaches

DISCUSSION

This critical review reveals that strategic management cannot be approached with a “one-size-fits-all” mindset. The confrontation of theoretical models with their practical limitations demonstrates that the narrative of a rational and controllable process is a dangerous oversimplification in the 21st century. True competitive advantage seems to arise from an organization’s ability to manage fundamental tensions: the tension between deliberate planning and emergent adaptation; between continuous improvement and radical innovation; and between directive leadership and team autonomy.

The discussion of tools like TQM and BPR must move beyond a “good or bad” dichotomy to adopt a contingency approach. The key question for a leader is not “Should we use BPR?” but “At what stage of our life cycle, with our current culture, and in our competitive context, is BPR an appropriate and manageable tool?”. This diagnostic perspective is fundamental and often omitted in more prescriptive literature.

Finally, the evolution of strategic leadership is perhaps the most significant finding. The leader is no longer just the ship’s captain who sets the course, but also the naval engineer who must understand how new technologies (like AI) are changing the very nature of the ship and the ocean it sails on. This dual competence—human and technological—defines the new paradigm of strategic leadership.

CONCLUSIONS AND FUTURE LINES OF RESEARCH

This article has deconstructed several pillars of strategic management to propose a more critical, integrated, and contingent view. It is concluded that sustainable strategic effectiveness does not come from the faithful application of a model, but from the organizational wisdom to combine planning with agility, select tools according to context, and cultivate a leadership that embraces technological and human complexity.

The main contribution of this work is the shift from a prescriptive to an analytical and contingent view, offering a more realistic framework for the practice and teaching of strategy.

Two highly relevant future lines of research are identified:

1. Strategy in SMEs: There is a notable scarcity of rigorous empirical studies on how small and medium-sized enterprises, especially in emerging economies, adapt (or ignore) these formal strategic models.
2. Impact of AI on Strategy Formulation: It is crucial to investigate not only how AI optimizes execution but how it is fundamentally altering the strategy formulation phase, the cognition of managers, and the power dynamics in decision-making.

In summary, strategic management remains the beacon that guides organizations, but leaders must learn to navigate with maps that are updated in real-time, in a world where the only constant is change.

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