Strategic Management in Engineering Enterprises Essay Example

The Role of strategic management in the success of engineering companies


In modern days, engineers often face uncertain and sometimes chaotic environments. Traditionally, the role of the engineer is to design a product, develop it, and streamline the process of manufacturing the product. However, there is increasing need for an engineer to participate in the process of identifying the product that need to be developed, the resources required to develop the product, and meeting customer satisfaction in order to achieve the success of the enterprise. When these endeavors are included as one of the functions of an engineer, the there is a new dimension of engineering management. Strategic management is an approach to the management of organizations including engineering enterprises that emphasizes the importance of strategically positioning the organization in its environment, relative to its supply-chain, its competitors, and its customers. In the current project, the ramifications of the evolving and increasing functions of an engineer and consequential impacts on strategic management of engineering enterprises are explored. We look into the role played by strategic management in the success of engineering companies, how engineering companies can be pro-active in the application of strategic management principles and practices.


Strategic Management, Engineering enterprises, Success

1.0 Introduction

Why are some companies having a remarkable entrepreneurial vigor? This is as a result of having a substantial investment in strategic planning and management. According to Dess, et al. (2006), the advent of new technologies and modern age communications has come with the need to develop unique and highly innovative products. In the current era of innovation, barriers of trade and commerce are quickly vanishing, creating way for a new dimension of competitiveness (Krishen, 1993). Success of engineering companies is a direct function of how they can develop and adopt new productive methods to innovate products, control cost, and preserve the natural resources and the environment. Today, innovative products and processes are the drivers of the commercial world. In addition, even for traditional products, the production processes and management of these processes is continually evolving. In successful companies, product development and process changes are coupled in a way unique to the commercial environment and market forces (Moyeen, 2015). This means that there is continuous consumer feedback and evaluation of market performance of a product through a structured process which provides the information required to generate new strategies for product development, management of the production process and marketing of the product. Strategic management is crucial in achieving all these for the success of an engineering company. This paper provides a detailed literature review of how strategic management affects the success of engineering companies.

2.0 Literature Review

Management of Engineering Companies

The management of engineering companies and the view that strategic management leads to improved performance and success of engineering enterprises has been of great interest for research. As pointed out by Moyeen (2015), strategic management is considered the key to the success and survival of engineering companies in the competitive world. It involves developing a a set of core activities and ways to implement them in order to achieve the desired goals. According to the author, strategic management also requires strategic planning – a process to develop management strategies. Planning can contribute to the success of an engineering company through generation of relevant information, reduction of uncertainity, and through creation of better perception of environments. Many researchers have demonstrated the beneficial effect of strategic planning in management of enginnering enterprises. Krishen (1993), notes that strategic planning is the backbone of every successful enterprise. It consists of vision, mission, objectives, goals, implementation plans, products and services, customers and other related schedules. Strategic management involves the development of a future business environment, including the ways and rules to be followed in the decision-making process for the most effective utilization of strategic resources, opportunities and strengths, and elimination of weaknesses for future profitability (Obradovic & Obradovic, 2016).

All these elements have to be integrated in the management strategies to have a better perception of what it requires in order to have a successful engineering business enterprise. Thus, whenever one mentions strategic management, it is important to consider the fact that strategic management requires a strategic plan. According to Obradovic & Obradovic (2016), the main and most difficult task of engineering companies is to create and maintain competitive advantage. The management team should be able to overcome turbulent conditions and instability prevailing in the market by creating appropriate management strategies that will ensure the achivement of both long term and short term goals. Today, changes in the business environment change too quickly. This requires managers to be in a position to manage changes in the ever dynamic and uncertain business environment that is icreasingly being dominated by knowledge, information, innovation and new technologies (Kang, et al., 2005).

What is Strategic Management?

Management refers to the entire process, from planning, human resource hiring, product development and process management, directing, coordinating, decision making to executing of core activities. Management also includes the entrepreneurial strategy to do business. It is conditioned by tradition, culture, values and habits of a society, political environment, and the commercial environment (Obradovic & Obradovic, 2016).

Strategy is a plan of moving into the future and a pattern from the past. It is a long-term direction by a company to create a match between its resources and skills and the opportunities available and risks from the external environment. Strategy is a course of action for a company to achieve its goals, and give it an advantage through configuration of resources within a dynamic environment and meet the expectations of stakeholders (Johnson & Scholes, 2002). Thus, strategic management can be thought of as a continuous process that constantly evaluates and controls the company operations and the industry in which it operates; evaluates business competitors and sets strategies to overcome the existing and future competitors; and continually re-evaluates strategies to determine how the implementation was done, and whether it was successful or requires modification or replacement (Barney & Hesterly, 1990). As stated by Chew & Gottschalk (2009), strategy without actions adds no value to a company. To realize the effect of a strategy, the company needs to manage the strategy – from formulation, implementation, and realization of the benefits. This is what is refered to as strategic management, which includes having a clear understanding of the strategic positon of a company, future strategic choices, and turning the strategy into action. Understanding strategic position involves understanding the impact of external environment on strategy, internal resources and competencies, and also the expectations and influence of different stakeholders (Chew & Gottschalk, 2009).

Strategic management is about identifying and describing the strategies that the management team can implement in order to achieve better performance and gain a competitive business advantage for their company. A company is said to have a competitive advantage if it has a higher average profitability compared to its competitors in the same industry. It is a way of planning for both predictable and uncertain or unfeasible contingencies. Thus, the role of managers in a company is to formulate and implement appropriate strategies, and make the required decisions to attain a sustainable competitive advantage. The company’s top management team determines the objectives of the business, directions, and develops a strategy to organize and direct resources, integrate all forces, and create an enabling environment for productivity and success of the company (Krishen, 1993). Thompson & Strickland (2003), affirm that strategic management is a process that combines strategy making and strategy implementation and comprises of five main interelated tasks. These are:

  1. Developing a strategic business vision and mission. This task involves setting the long-term direction and define what the company wants to be.
  2. Setting objectives by translating strategic vision into measurable outcomes that must be accomplished by a company.
  3. Make a strategy on how to achieve the business goals. This is a game plan to realize the outcomes.
  4. Efficient implementation and execution of the strategy to realize the desired goals.
  5. Evaluation of performance, monitoring new developments, and initiating corrective adjustments in line with business vision, mission, and objectives as a result of the actual experience, new opportunities and ideas, and changing conditions.

Another important aspect of strategy formulation is innovation, which plays an important role in an engineering company. Innovation includes research, organizational, management, financial and commercial phase. The process of innovation speeds up technological changes that re-structure the production process which contributes to the company’s competitiveness in the global market and increase the production efficiency (Barney & Hesterly, 1990). A company without a vision, mission, objectives, motivation and lack innovative ideas will find it difficult to survive in today’s competition. Therefore, for successful operation of engineering companies, managers have to integrate innovation as part of their strategic management plan (Obradovic & Obradovic, 2016).

Principles of Strategy

According to Chew & Gottschalk (2009), strategy is about defining a way to compete and deliver unique value of products or services to a particular set of consumers. Thompson & Strickland (2003) affirm that a strategy is a game plan employed by managers to acquire a market position, carry out its operations, compete effectively, attract customers, and achieve organizational goals. As stipulated by Porter (2001), there are six fundamental principles of strategy that a company should follow:

  1. A company must have the right goal, which is high return on investment over long-term. A company’s economic value and profitability is realized and sustained by grounding strategy, and having customers who are willing to buy products or services at a price higher than the production cost.
  2. The strategy adopted by a company must allow it to deliver a value proposition, or its customers to enjoy unique benefits that are not offered by competitors.
  3. A company must adopt robust strategies involving trade-offs and deliver products, services or activities that are unique at others.
  4. Strategy should be viewed in a distinctive value configuration. For a company to develop a continued competitive advantage, there is need for a company to perform different activities from those of its competitors, or perform the same activities in a different way.
  5. Strategy must have directional continuity. Having a distinctive value proposition allows a company to remain committed towards a specific direction and forego other opportunities.
  6. Strategy defines how elements of a company are mutually reinforced throughout the value configuration.

The Key Driving Forces for Strategic Management of Engineering Companies

There are many driving forces that increase the need for a strategic perspective in managing an engineering enterprise – both internal and external. The key driving factors are technology, globalization, intellectual capital, and political and economic environment. These driving forces are inherently interrelated and in collaboration, they all contribute to the acceleration of change and uncertainty with which all levels of management must be concerned (Krishen, 1993).

(a) Globalization – Globalization is defined by the flow of information, people, and capital worldwide. With globalization, there is enough time and space for making deals in any part of the world. The availability of digital networks allow for instantaneous transactions and market trade operation around the clock. Markets are increasingly becoming open and free trade agreements attracting more foreign companies to domestic markets. Competition in one market can have an impact on other firms that in other parts of the world economy, leading to ripple effects and further posing a challenge to competitors (Salonen, 2012).

Alongside the increased speeds of business transactions and global sourcing of information and all forms of resources, it is crucial for managers to follow the paradox of “think globally and act locally”. Managers have to move information and resources rapidly around the globe to meet local demands. They also face other challenges, such as difficult trade issues, volatile political situations, unfamiliar cultures, fluctuating exchange rates, and social problems. In the modern world, managers require more knowledge on foreign customs, competition and commerce. Globalization requires that companies increase their learning ability and collaboration to better manage diversity, ambiguity, complexity, and uncertainty (Sahlman & Haapasalo, 2009).

(b) Technology – Change in technology and diffusion of new technologies are at an incredible pace. These developments emphasize the importance of innovation for companies if they are to remain relevant and competitive on the global scene (Sahlman & Haapasalo, 2009).

(c) Political and Economic Environment – There are many political and economic events that affect the global mosaic for commercial trade. The ultimate impact of political strife cannot be fully predicted. However, based on the current trends, it can generally be put that unique technologies for manufacturing, agriculture, housing, and transportation will increasingly be in demand. More emphasis will be placed on a clean environment and high demand for technologies which will assure for this. In addition to the above generalizations, crime prevention and public safety technologies will become of greater concern than before to nations that have become technologically advanced (Krishen, 1993).

As technologies continue to advance, the adoption of newer technologies will become somewhat a dilemma for most sectors of the economy. This means new investments for consumers on a personal level, while on a commercial level, it means that managers will require new sales infrastructures and marketing strategies (Sahlman & Haapasalo, 2012). In product manufacturing, it would require new assembly lines and product processing. Finally, new working equipment and training will be required for at all levels. Thus, transition to new products and services will take a new twist in their significance. The companies that will be able to adopt new products and manufacturing processes will push ahead on the economic scale by increasing productivity and cutting production costs. It would then seem that there will be two strategies to facilitate the transitional concerns: One, technologies and processes must reduce the gap between the new and old infrastructures in order to assure the use of current enterprise investments and resources; and two, flexible strategies as well as implementation plans will anticipate changes in technology and find options to adopt newer technologies and manufacturing processes without significant disruptions (Salonen, 2012).

In regard to the above highlights, we can anticipate for increased demand for new products and services, provided the current investments and infrastructures do not become obsolete. Furthermore, an emphasis on entrepreneurship and free trade will continue. For enterprises to ascertain market share, they will collaborate with other enterprises to develop systems that can compete on the global scene and maintain a leading edge in given processes and technologies. As a result, new enterprises that are specialized in systems integration will be required for product development and manufacturing (Krishen, 1993).

Strategic Management and Competitive Advantage

Companies sometimes change their strategies in response to their rival’s competitive advantage. However, this does not occur more often and may only occur when a company’s strategies usurp another company’s competitive advantage. In such a situation, a company will be unable to gain competitive parity if it clings on its strategy, even when there is an effective implementation of their best strategies (Dess, et al., 2006). Changes in population demographics, consumer tastes, and laws that govern a business can affect a valuable strategy and render it valueless. When companies adopt a new strategy, they have to go through the whole process of strategic management. However, some difficulties may be experienced in putting away the old strategies. In most cases, changing a strategy means that a company will change its identity and purpose, which become difficult to make. Many companies would wait for a disastrous financial loss to occur for them to change their strategy (Barney & Hesterly, 1990).

The ability of a strategy to produce competitive advantages expires soon after it is formulated. Thus, firms should implement a new strategy before it becomes unviable or obsolete. This way, firms can plan a new strategy that sustains current resources and capabilities, and at the same time developing other resources and capabilities for future competition. A company’s `resources and capabilities become valuable when they enable the company to neutralize external threats and exploit external opportunities (Barney & Hesterly, 1990).

Competitive Strategies for the Success of Engineering Companies

As pointed out by Kang, et al. (2005), the main competitive strategies include differentiation, cost leadership and focus. The differentiation and cost leadership strategies are taken as competition models. This simply refers to a decision by a company on methods of creating competitive advantage. On the other hand, focus can be thought of as the scope of competition, which simply implies a company’s decision on the breadth of coming up with competitive advantage. Some of the key issues within the cost leadership strategy include: cost of resources (material, equipment and human resource), cost control in the production process, and administrative cost. Some of the issues under differentiation strategy include: reputation, high quality products, innovation, and advanced technology (Wahdan, 2014).

3.0 Knowledge Gaps

Engineering companies continually face new challenges such as the evolving political and commercial trade environments, and influx of newer technologies. For these companies to adopt to these changes, there is need to develop a flexible strategic management plan with a well laid strategic process to reflect the required changes in a timely manner. Firms that have adopted strategic management processes have not only survived, but overcome uncertain and unpredictable situations. This study intent to provide knowledge on the perception of strategic management practices in engineering companies, and the current state and significance of strategic management for the success in the performance of these companies.

4.0 Project Aims and Objectives

This project will be carried out with the following aims and objectives:

Main Objective:

To find out the role that strategic management play in the success of engineering companies

Specific Objectives:

  1. To investigate how engineering companies apply strategic management principles and practices.
  2. To investigate the factors that affect the performance and success of an engineering company.

5.0 Research Questions

: What role does strategic management play in the success of engineering companies?RQ2
: What ways do engineering companies use to achieve enterprise success?RQ3
: What factors determine the performance of a company’s product in the global market?

6.0 Hypotheses

The hypotheses of the project are as follows:

Hypothesis 1: Strategic management is positively related to competitive advantage and improved performance of engineering companies.

Hypothesis 2: Factors such as politics, culture, innovation, technology advancement, and commercial environment have a direct impact on the performance of engineering companies.

7.0 Expected Outcomes

By completion of this project, it is expected that the findings of the research will provide knowledge and guidance on the best practice of strategic management for different stakeholders in various engineering companies across different industries. This knowledge will be useful in implementing strategies that will improve the performance of engineering organizations, and gain competitive advantage over companies that operate in the same industry. In overall, the project is expected to have a significant contribution to engineering organization management by filling the knowledge gap identified in section 3.0.

8.0 Experimental Approach /method


The hypotheses in this research project will be verified by studying the aspect of strategic management in large and influential multinational engineering companies with global success. The source of information and data regarding the strategies employed by managers of engineering companies will be obtained from research questionnaires and structured interviews that will be sent to managers in selected companies. Other secondary sources of information that can benefit the research project will be obtained from sources such as company websites, journal articles, and books that have published relevant information that is required to complete the research.

Sampling Procedure

Two companies will be selected for this study based on their international reputation or ranking as an international engineering product manufacturing, processing or professional engineering service provider. Clearly, the procedure does not target a random selection of companies, since random sampling may not provide the required information for our research questions.

Measurement of Variables

The variables that will be investigated can be grouped into three categories: competitive strategies, performance, and factors that influence the performance of the identified companies.

9.0 Research Timeline

The research timeline for the project is as shown below:

Activity Timeline (weeks)
Literature review Completed
Sampling and selection of engineering companies.
Collection of resources and materials needed for the research
Design, preparation and disbursement of questionnaires and structured interviews to managers of selected companies.
Collecting the required information and data from available sources and materials
Measurement of variables and analysis
Reporting findings and presentation of a complete research to faculty members.

10.0 Required Resources & Planned Budget

The resources required to undertake this project include: internet access, books and journal articles. The project does not require any budget and therefore, no budget has been done.

11.0 Proposal contains risk analysis

The proposal does not involve any risks and therefore, no risk analysis will be done.


Barney, J. B. & Hesterly, W. S., 1990. Strategic Management and Competitive Advantage. Second Edition ed. USA: Pearson.

Chew & Gottschalk, 2009. Strategic Management Principles. s.l.:IGI Global.

Dess, G. G., Lumpkin, G. T. & Eisner, A. B., 2006. Strategic Management: Creating Competitive Advantages. 3 ed. New York: McGraw-Hill/Irwin.

Johnson, G. & Scholes, K., 2002. Exploring corporate strategy. Harlow, Essex, UK: Pearson Education, Prentice Hall.

Kang, J., Cheah, C. Y. & Chew, D. A., 2005. Strategic Analysis Of Large Chinese Construction Enterprises. London, Association of Researchers in Construction Management.

Krishen, K., 1993. Role of Strategic Planning in Engineering Management. Houston, Texas, IEEE.

Moyeen, A., 2015. Strategic Planning and Performance- A Study of Small Enterprises in Bangladesh, Australia: School of Business, University of Ballarat.

Obradovic, D. & Obradovic, D., 2016. The Role Innovation On Strategic Orientations And Competitiveness Of Enterprises. Ecoforum, 5(1), pp. 90-96.

Porter, M. E., 2001. Strategy and the Internet. Harvard Business Review, pp. 63-78.

Sahlman, K. & Haapasalo, H., 2009. Strategic management of technology objectives in enterprise practice — a conceptual framework. Industrial Engineering and Engineering Management.

Sahlman, K. & Haapasalo, H., 2012. tructures of Strategic Management of Technology in a Conceptual Framework of Enterprise Practice. International Journal of Synergy and Research, 1(1), pp. 57-76.

Salonen, A., 2012. Strategic Maintenance Improvement: Driving forces and Obstacles. Engineering Asset Management and Infrastructure Sustainability, pp. 789-800.

Thompson, A. A. & Strickland, A. J., 2003. Strategic management concepts and cases. 13 ed. Irwin: McGraw-Hill.

Wahdan, H., 2014. Strategic Analysis of Foreign Construction Enterprises in Chinese Construction Market. IOSR Journal of Business and Management (IOSR-JBM), 16(9), pp. 17-24.