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Assignment is about Strategy is a framework through which an organisation can assert its vital continuity in management

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Strategy is a framework through which an organisation can assert its vital continuity whilst managing to adapt to the changing environment to gain competitive advantage.

According to Igor Ansoff (1984),

Strategic Management is a systematic approach to the major and increasingly important responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises.

Consequently, strategic planning is that decision making process that aligns the organisation’s internal capability with the opportunities and threats it faces in its environment.

Generally strategic planning is a top-down, formal, disciplined process to produce fundamental decisions and actions to shape and guide what an organisation is, what it does and why it does it. Strategic plans look at the long view. To do strategic planning well, organisations must participate in broad scale information gathering, explore various alternatives, and place an emphasis on the future implications of present decisions.

Strategic planning is not the same as long range planning. Strategic planning requires an in-depth assessment of the environment inside and outside the organisation. It is this assessment that sets strategic planning apart from traditional long range planning. Another difference is that long-range planning tends to assume that current trends will continue into the future. Strategic planning, on the other hand, tries to anticipate new trends and build in flexibility to adapt to changes through periodic updates and contingency plans.

In summary, strategic planning is an attempt by an organisation to answer three basic questions:

1, Where are we going? To guide its actions and decisions, an organisation must have a mission – its purpose, or reason for being. This is often expressed in the form of a mission statement, which is not compulsory provided the senior management are communicating the strategic intentions of the organisation.

2, What is our environment like? To evaluate the available routes, an organisation is forced to take an objective look at itself, its external and internal environments, its competition, and the threats and opportunities that competition and other organisations present.

3, How will we get there? To answer this question furnishes the organisation with a detailed road map – containing specific goals, objectives, time frames, resources and measurement – to guide the organisation on its journey toward achieving its strategic goals.

 

Classical Strategy

 

CAPABILITIES

WHERE DO WE WANT TO BE

Therefore strategy planning requires a stream of decisions that are rich in contemporary information.

 

Strategy is about planning, having clear intentions and monitoring what you actually did and responding accordingly.

 

Perfect Deliberate Strategy

For a perfect deliberate strategy, three conditions must exist.

i. Precise intentions based on a relatively sound level of detail

ii. Common to all, shared as their own or readily accepted from the leadership

iii. Collective intentions realised as intended – no interference from external sources

It is rare to find a perfect deliberate strategy. A perfect emergent strategy is also a rarity. The success of strategy is consistencies over a period of time. As managers, we should expect that strategies to be in the nature of deliberate/emergent rather than in perfect forms. In practice, the realised strategy will generally be somewhere along the continuum shown below.

Emergent Deliberate

 

Continuum

 

Characteristics of Effective Strategic Plans

An effective strategic plan is:

Flexible – It must deal with the real world outside the organisation; as changes occur in the outside world, the strategic plan must change in response.

Responsive – To respond, the organisation must be close to the market (or sector) where changes take place. Responding is not reacting; responding is about adapting an existing strategy as circumstances demand whilst reacting means trying to respond without having a strategy.

Continual – Because the organisation must continually deal with the changes in the marketplace, strategic planning must itself be a continual process that includes periodic reviews and up dates.

Analytical – A plan is only as good as the information that goes into developing it. Relevant information, well analysed, should dictate the content of the plan. An organisations management must be willing to commit the necessary time and resources to collecting and evaluating information.

Creative – The plan should reflect not only the analysis of the data collected, but also some intuition, vision and creativity on the part of the organisation’s management.

Action-Oriented – A strategic plan should specify actions that the organisation can and will take.

Focused – The plan should allow the organisation to evaluate all major decisions by asking, “Will this decision help achieve organisational objectives? Will it move us closer to our strategic targets?”

Efficient – Strategic planning allows an organisation to allocate its resources in the most efficient way possible – by linking them to objectives where they can have the greatest impact.

 

Classical Strategy Process

 

The Development of Strategic Planning & Perspectives

 

Although a considerable amount has been written on strategic planning, it should be recognised that as a discipline strategic planning and the associated concepts and techniques did not emerge fully until the early 1970’s. There are several reasons for this, perhaps the most significant of which is that, as Kotler (1988, pp. 33-

4) has pointed out, largely because of the growing and continuously buoyant markets of the 1950’s and 1960’s many companies prospered on the back of largely short-term operational planning. The turbulence of the early 1970’s that followed a series of crises, including oil supply restrictions, energy and material shortages, high inflation, economic stagnation, labour unrest, increased unemployment and then recession, caused many managers to search for a radically different approach to the running of their businesses.

 

At the same time an influx of low-price but relatively high-quality products from countries such as Japan began to flood Western markets, changing drastically the economics of manufacturing. The revised approach to management planning that emerged was designed to provide organisations with a far stronger and more resilient framework that would enable managers both to recognise opportunities more readily and overcome threats more easily. This new planning process was based on three central premises:

1. The company’s business should be viewed and managed in a similar way to an investment portfolio with each aspect of the business being closely monitored and decisions subsequently made on which products or specific parts of the business should be developed, maintained, phased out, or deleted. (Strategic Decisions: Growth, Consolidation diversification)

2. Emphasis should be placed upon identifying in detail the future profit potential of each aspect of the business.

3. A strategic perspective to the management of each major element of the business should be adopted. This notion of what has sometimes been referred to as a ‘game plan’ for achieving long-term objectives required the strategist to plan on the basis of industry position, objectives, opportunities and resources.

 

It needs to be recognised, however, that for the strategist to be able to adopt this approach to management, there is a need to understand in detail the complexities of the interrelationships that exist between different parts of the organisational structure. In the majority of businesses, three different organisational levels can be identified: the corporate level, the business unit level, and the product level.

 

Hofer and Schendel (1978, p 27) “Strategy Formulation Analytical Concepts,” identified three distinct levels of strategy in a commercial context. These are:

1 Corporate strategy, which deals with the allocation of resources among the various Business’s or divisions of an enterprise.

At the corporate level, the decisions made are concerned principally with the corporate strategic plan and how best to develop the long-term profile of the business.

 

 

 

2 Business strategy, which exists at the level of the individual business or division that addresses primarily with the question of competitive position.

Following on from this, each business unit should, within the resources allocated by corporate headquarters then develop their own strategic plan.

 

3 Functional or Product level strategy, which is limited to the actions of specific functions within specific businesses.

Finally, marketing plans need to be developed at the product level. Plans at all three levels need then to be implemented, the results monitored and evaluated and, where necessary, corrective action taken.

 

Alternative Types of Strategy

The following is taken from De Wit and Meyer (1998) Strategy, Process Content and Context, (Pages 12 -31). Planned Strategy, Leaders formulate and strive for implementation with the minimum of distortion (Budgets, schedules etc). Formulated in the environment that is fairly predictable or controllable.

Entrepreneurial, More influenced by the individual, not so precise or articulate as planned strategy, requires an ability to impose one’s vision on the organisation. Entrepreneurial strategy provides flexibility at the expense of specificity and articulation of intentions.

Ideological Strategy, Shared vision collectively pursued is an ideology. Intentions can usually be identified (Indoctrination, credo etc). Positively embraced by members of the organisation, not passive acceptance Umbrella Strategy, Relax control, leaders set guidelines for behaviour, define boundaries and let actors manoeuvre within. All organisations actions fall under the umbrella (Pricing strategies for example). Umbrella strategy can be both deliberate and emergent. De Wit and Meyer (ibid) argue that all ‘real’ world strategies tend to be umbrella claiming that you cannot pre-empt the discretion of others.

 

If leadership can direct, organisations can be directed and move towards planned or entrepreneurial. When it can hardly nudge, we move towards more emergent strategies. Umbrella strategies require the right balance between ‘Pro-action and Reaction’.

Process Strategy, Leader controls the process of strategy making whilst leaving the content of strategy to others. Behaviour is both deliberate and emergent. Leaders control the staff and organisation structure thereby influencing the strategy process.

Unconnected Strategy, One part of the organisation with considerable discretion (sometimes a single individual) because it is only loosely coupled to the rest is able to realise its own pattern in its stream of actions. This strategy can also be deliberate or emergent. Emergent in the context of the organisation and deliberate from the perspective of the individual)

Concensus Strategy, (Emergent) Many converge on to the same theme or pattern that it becomes pervasive. Unlike the ideology strategy which has a central focus intentionally. Concensus strategy can be the product of a

 

host of individual actions – can be deliberately hosted by some actors. Result – Collective Action but not necessarily collective intent.

Imposed Strategy, Environment not always acquiescent or benign. Strategies can be imposed from outside, external individuals/group with influence. The strategy is then deliberate because the organisation could not resist. The environment can impose strategies.

 

? Reality seems to bring organisations closer to a compromise position between determinism and free choice

? Environments seldom pre-empt all choice, just as they seldom offer unlimited choice

? Purely determined strategies are as rare as purely planned ones

? The difference between deliberate and emergent strategy is that the former focuses on direction and control – getting desired things done. The latter opens up the notion of strategic learning.

? Emergent Strategies implies learning what works (feed back)

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