Strategy Development Process

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2. STRATEGY AND PROCESS
The word "Strategy" is derived in 2nd world war by the armed forces. The
military is the base and metaphor of this word. In 1950s this word is
adopted by the organization and explained in the field of business and
management studies. After reviewing the literature available, it is find
that this word is adopted in business and management studies with two
perspectives.
Some school of thoughts used it as short term planning or ways adopted to
achieve organizational objectives. While other school of thoughts used it
in long term scenario and defines it is the main stream developed before
starting the business. Organizational strategies are the foundation of the
every organization. Strategies give the thinking style to the
organizations. Thus, an organizational strategy is a scheme for competing
in the market place. On other hand it is also observed from literature that
the way of following the strategy is known as tactics, used to carry out
planned activities while continuously adjusting the competitive situation
as it unfolds.
Most of the studies done on strategy was based on the basic principles
defined by the Henry Foyal, who, was related to the classical era of
management thoughts. These studies aimed on to develop guidelines that will
direct the managers to the best possible strategies for the particular
situations that would face by their organizations. Furthermore, Michael
Porter introduces three generic models for strategy development. 1st is
Cost Leadership that is used by the organization to offer its product at
industry price but makes above average profits by being a low-cost
producer. The second strategy is Differentiation that is used by the
organization to command a premium price for its product or services by
maintaining a unique product that is of value to its customers. The last is
Focus on Quality in this strategy the organization focusing on the
segmentation and focusing on serving only a particular market segment so
effectively and efficiently that it has virtually no competitors.
2.1 STRATEGY DEVELOPMENT PROCESS
There are three different approaches in organizational theories to develop
strategies. The modernist or rational model of strategy development is
depicted in following figure:





















Fig 2.1 Rational Model of the Strategic Process (Mintzberg, Henry, 1990)

With the review of extensive literature available on strategy process it is
also find that Mintzberg also introduces a conceptual and theoretical frame
work based on contingency theory. Contingency theory is one of the
mainstays of modernist organization theory, is used by the organization
theorist. Henry Mintzberg provided strategists with a framework for
deciding which of the perspectives described below in fig 2.2 to apply the
strategy process in their organizations. Mintzberg's theory presents links
between perceived uncertainty and strategy process.
This uncertainty matrix provides the facility to managers to find out the
position of their organization according to this matrix and then apply or
chose the strategy accordingly. According to this phenomenon when the
environment of an organization is unpredictable or more commonly, takes
time to figure out after unexpected shifts, then the formulators may have
to implement him or herself alternatively.
On other hand if there are too much information to be comprehended in the
one's brain i.e. the organization has high technology, sophisticated system
and expert personals then the strategy may have to be worked out on a
collective basis. In this situation the phenomenon of implementators become
the formulators is the best choice. Furthermore, in this matrix low
uncertainty cases are also considered in these situations first the
formulators are implementators of strategies and in other case the radical
model is used for the strategy formulation and implementation.
COMPLEXITY
Low High
" " "
"Rational Model "Implementers "
" "Formulators "
" " "
"Formulators "Radical Model "
"Implementers " "

Slow
Rate
Of
Change
Fast

Fig 2.2 Strategy Under Varying Levels of Uncertainty presented in a
Contingency Theory Framework
2.2 CONCLUSION
The view of strategy that organization theorists take is that strategic
management provides an important link between the organization and its
environment through which information and influence pass. In the modernist
view this occurs largely in the direction of the environment influencing
the organization. But the environment itself is also influenced through the
link between the environment and organization. The concept of emergent
strategy provides an explanation for this in that, just as strategy emerges
from organization processes, so that environment emerges from the action
and interaction of organizations. This explanation is then extended by
enactment theory to include the symbolic meaning that organizations project
on to the environment during the course of their deliberations about the
environment and how the organization should respond to it.

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External Appraisal

Internal Appraisal

Strength and Weaknesses of Organization

Threats and Opportunities of Organization

Key Success Factor

Key Success Factor

Creation of Strategy

Managerial Values

Social Responsibility

Evaluation and Choice of Strategy

Implementation of Strategy
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