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Management Services Winter 2012
Auditing
Auditing strategic business management:
why and how?
By Mike Sweeney and Bob Lillis.
A number of high profi le UK companies have reported exceptional business
performance successes of late; an example is Jaguar Land Rover. Such achievements automatically trigger
inquisitiveness about how such success has been realised, given that it has been accomplished in spite of a seemingly unending period of global economic recession. It is almost certain that some of the strategic management practices employed by successful businesses are practised by most organisations, albeit not so effectively. For example, there is a general consensus among both practitioners and theoreticians, that to achieve business success requires a close alignment between how an organisation plans to compete and the competitive capabilities of its operations
(Swink et al., 2005). However, little has been reported on how such an alignment can be measured for its management. To perform such an analysis requires an auditing of two strategic business management variables; the fi rst is an assessment of the approach to competitiveness being pursued by the organisation. The second is an assessment of the strategic role and contribution its operations are presently performing. A sustainable competitive advantage cannot be established without complementarity between the strategic intents of both the competitive and operations strategies of a business. In practice such an
assessment would be made by judgement and intuition. Clearly, this strategic business management task is performed extremely well in some businesses but, in others, it is
equally clear that it is not so well managed. If, however, the alignment of these two variables could be audited and reported upon in a more transparent form, the resultant information could facilitate greater involvement and improvement in the management of this strategic management goal.
In this article, we report an audit approach we devised and tested in 21 service organisations whose primary purpose was the development of such a capability.
Alternative views of competitive strategy Competitive strategy may be founded upon a market or a business-environment based perspective of how to compete (Porter, 1996). Alternatively, it could be grounded upon a resource-based (Prahalad and Hamel, 1990; Teece et al., 1997)
or an organisational-capability based view of how to deliver competitive customer value. The well-established view of competitive strategy, which is the market-based view, is grounded on an understanding of what is happening in the business environment of a fi rm and using this information to determine the major threats and opportunities that prevail. The aims of the strategy formulated are to counter competitive threats and prepare plans for capitalising upon any identifi ed demand growth opportunities. The advocates of the resource-based view of competition suggest that the achievement of a sustainable competitive advantage could lie within the fi rm itself. Through the development and continuous improvement of capabilities that are diffi cult to replicate and that deliver
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