Strategy is defined as “a plan of action or policy designed to achieve a major or overall aim.” Strategic management challenges have always faced companies, but things are changing in the 21st century, and so are the challenges that businesses need to overcome to secure their future success. Whether companies operate locally or internationally, the same struggles must be overcome.


Three challenges in strategic management in the 21st century are technology, the environment and politics.

Problems of Management in the 21st Century

No matter what the era, business has always needed adaptation and ingenuity to remain successful as time passes. Author Jim Crace’s 1989 prehistory novel “The Gift of Stones” was about a stone-tool artisan struggling to adapt as the Bronze Age began. The book is a great example of how humans have always had to adapt and change in order to enjoy success. Today, though, there is one difference: The speed of life and business have reached new velocities, and people are left behind faster than ever.

Watch the news on any given day, and there are unending stories that impact the logistics of doing business in a global world. Globalization is a huge facet that plays into everything to do with how business happens day to day, whether you are talking about a small-town shop waiting for a shipment of cheeses from Europe or a huge manufacturer struggling with pollution. Proponents of what’s called “chaos theory” ascribe the ability for seemingly insignificant events to affect others across the globe, with the most popular tenet of this theory being “the butterfly effect.”

A scientist named Edward Lorenz once asked, “Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?” As American Scientist writes, “The purpose of his provocative question, he said, was to illustrate the idea that some complex dynamical systems exhibit unpredictable behaviors such that small variances in the initial conditions could have profound and widely divergent effects on the system’s outcomes. Because of the sensitivity of these systems, outcomes are unpredictable.” This is the problem with strategic management: Just because a company has a plan, it doesn’t mean that outside variables can’t dramatically challenge its ability to succeed.

Strategic Challenge #1: Technology

When you discuss the challenges of management in the 21st century, technology is usually the first challenge that comes to mind. Today, everyone is walking around with a smartphone that is over 120 million times faster than NASA’s combined total computing power in 1969. DNA has been cloned, cars can drive themselves, robots are in nearly every factory, personal privacy has become a hot topic and entrepreneurs are racing to create viable travel to outer space. The speed at which technology is progressing has changed everything about life in the modern age.

Companies like Amazon have redefined what business needs to deliver in order to be successful – literally. With two-day delivery possible across the nation and 24/7 operations, brick-and-mortar companies are challenged to keep up with a delivery giant that can bring the right product to the consumer’s home. Harnessing both the direct-sale opportunity of the internet and the algorithmic abilities of modern manufacturing means companies like Function of Beauty can now create custom-made products for consumers by special order. What does a bespoke, made-to-order world mean for the one-size-fits-all business mentality of yesteryear?

With all that technology comes the financial challenge of staying current with tech. Without the right gear, businesses may not be able to compete with others in their realm. For those trying to pin down a strategy for success in the long haul, it’s impossible to know what technology's innovations will enable but also how others may capitalize on innovations to better their businesses. That’s the struggle – it’s not just the advent of technology that is an issue for companies, but it’s about how others will use tech to force their competitors’ hands.

Strategic Challenge #2: Environment

Climate change may have its detractors, but few can argue that weather events are happening more frequently and with greater consequences, and each climate event comes with real costs and a domino effect. Consider a flood and how it has effects not only locally but on any distant consumer or business that relies on that region for products or services. For instance, a recent Texas flood caused extensive damage, including one derailed train that lost 25 freight cars when it overturned. Each of those cars was destined to provide products and materials to other businesses that would now be at a loss, which may in turn impact other businesses too.

Besides the hard cost of climate unpredictability, there are changing laws like carbon taxes, a consumer demand for recycled and biodegradable packaging and so on. As the future draws near, emissions reductions, packaging changes and energy challenges will continue to be a pressing responsibility for businesses of all sizes. In June 2019, CNN reported that 215 of the world’s largest companies stated that they expect climate change to bring a $1 trillion price tag over the next five years (but also potentially $2.1 trillion in opportunities).

Who succeeds in the face of climate change will be those who best understand the science, technology and policy around the issues. They’ll be able to mitigate the problems of climate change but also may be able to create solutions that bring new opportunities.

Strategic Challenge #3: Politics

Politics must always adapt to the times. Today’s political scene is as chaotic as it has ever been, and some claim the United States is the most divided it has been since the Civil War. All this means that it’s much more difficult for businesses to navigate the political playground while doing business. Historically, smart companies would grease the palms of both political parties – contributing to both sides during elections just to be pragmatic – but in today’s age of outrage and social media, this can blow back on them when consumers take issue on things like abortion, LGBTQ rights and so on.

Politics goes much further, though, because it controls everything in the cost of doing business regarding taxation, trade tariffs, land use, emissions laws, labor regulations and beyond. Anticipating what regulations may change is impossible because there are so many variables that could change overnight and impact companies in unpredictable ways. Take the great tariff standoff of 2019 and how Midwestern farmers couldn’t offload their soybeans because tariffs made their product too expensive in foreign markets – banks saw impending failure for some farms and tightened credit reins for all farmers, further complicating already difficult times.

Such trade wars are impossible to predict and so are the actions of outside lenders, product providers, the cost of fuel and energy and so many other variables that are all dependent on how politicians govern regions and nations. The inability to anticipate political actions let alone the political mood of an electorate is certainly one of the largest problems of management in the 21st century thanks to globalization and international trade.