The Context In Which The Strategy Is Set Essay
Every organization in this world is moving forward with an objective in place and to achieve that objective a plan is graphed. A plan which has perspective view of the highs and lows of the situation at all levels at all times. This plan is called a Strategy. With different types of organizations there are different types of strategies being implemented with regards to their aim and their final outcome. A strategy concept could be from an orthodox school or the new school of thought. It purely depends on the circumstance and the plan of action designed.
Strategy context and content has been discussed and considered of by mankind, since organizations exist to fulfil a purpose and to create value (Schilling, 2005, De Witt & Meyer,2005). Strategies are then employed to guarantee that the organizational purpose is realized (De Witt & Meyer, 2005). In the generic literature a split is made between the strategy analysis stage, the strategy formulation stage, and the strategy implementation stage (Thompson & Strickland, 2001; Mintzberg, Ghoshal and Quinn, 1998; De Witt & Meyer,2005). In the analysis stage, strategists recognize the opportunities and threats in the environment, as well as the strengths and weaknesses of the organization. Next, in the formulation stage, strategists decide which strategic options that are obtainable to them, evaluate each and select one. Lastly, in the implementation stage, the selected strategic option is translated into a number of actual activities, which are then carried out (De Witt & Meyer, 2005). Those different stages will be discussed and explained further in the sections below. However, as the thesis focus on implementing strategies the analysis and formulating section
will not be as vast as the implementing section.
Chandler defined strategy as: "The determination of the basic long term
goals and objectives of an enterprise and the adoption of the courses of action
and the allocation of resources necessary for carrying out this goals".
Andrews defined strategy as: "The pattern of objectives, purposes, goals
and the major policies and plans for achieving these goals stated in such a way
so as to define what business the company is in or is to be and the kind of the
company it is or it is to be".
Igor Ansoff(1965) explained strategy as: "The common thread among the
organization's activities and product markets, that defines the essential nature of
business that the organization was or planned to be in the future"
but ANSOFF (1984) explained strategy as “Basically a strategy is a set of decision making rules for the guidance of organizational behavior.
William Glueck(1972) define the strategy as: "A unified, comprehensive, and integrated
plan designed to assume that the basic objectives of the enterprise are achieved"
For Mintzberg (1994) strategy is a word that we define differently than we practice. For many, the definition of strategyis "a plan," but in actuality strategy appears as a pattern that blends intended responses with responses that emerge out of the changing environment. (The power and importance of emergent strategy increases when compared to the fact that less than ten percent of intended strategies are successfully implemented.)
A company’s strategy is management’s action plan for running the business and conducting operations. The crafting of a strategy represents a managerial commitment to pursue a particular set of actions in growing the business, attracting and pleasing customers, competing successfully, conducting operations, and improving the company’s financial and market performance. Thus a company’s strategy is all about how—how management intends to grow the business, how it will build a loyal clientele and outcompete rivals, how each functional piece of the business (research and development, supply chain activities, production, sales and marketing, distribution, finance, and human resources) will be operated, how performance will be boosted. In choosing a strategy, management is in effect saying, “Among all the many different business approaches and ways of competing we could have chosen, we have decided to employ this particular combination of competitive and operating approaches in moving the company in the intended direction, strengthening its market position and competitiveness, and boosting performance.” The strategic choices a company makes are seldom easy decisions, and some of them may turn out to be wrong—but that is not an excuse for not deciding on a concrete course of action.
As explained in the introduction of this paper organisational strategies are formed according to three factors, resources, organisation’s routines and processes, and environment. The resources that have played a key role in the change of drug discovery strategies include technology and knowledge. Therefore, in the remainder of this paper, knowledge and technology will constitute two of the factors forming organisational strategies replacing the resources factor. The second factor, organisation’s routines and processes, consists of people and managerial processes that seek to project manage the discovery of new drugs. Finally, the environment of drug discovery consists of characteristics such as diseases, legislation, knowledge and the technology capabilities of competitors.
A common proposition in strategic management literature is the desire to coalign the strategy with the environment (Venkatraman and Prescott, 1990, Venkatraman, 1989). Central to this coalignment are three organisations’ factors; (i) environment, (ii) organisation’s routines and processes, and (iii) resources (Farjoun, 2002). A change in these factors leads to a change in the resulting strategy. Depending on the strategic stance that is adopted the change could be seen as the result of either careful design or reaction to the new environmental status.
The first factor, organisation’s environment, is the pattern of all the external conditions and influences that affect the organisation’s life and development (Andrews, 1971). The environment consists of other organisations and their strategies, technologies, and knowledge (Farjoun, 2002), the market, and possibly legislation. The relationship of an organisation with the environment depends on the interactions of the organisation with the environment’s elements. This interaction shapes the environment and thus the organisation’s task is to recognise the economic signals and recognise the potential opportunities to shape and harness tastes, technology, and competitor behaviour (Baden-Fuller and Stopford, 1998). Understanding the dynamics of the environment is a focal point in all strategy types.
The second factor, organisation’s routines and processes, represents the people involved in the implementation of a strategy, and the mechanisms for allocating and coordinating organisational resources i.e. the organisational routines. These mechanisms can be both formal (e.g. governance structure) and informal (e.g. culture, politics, control) (Farjoun, 2002). The organisational actions and routines depend on the history of prior resource allocation and on the nature of the political coalitions (Hannan and Freeman, 1989). Therefore, the formation of organisational routines depends on the history of an organisation (Stinchcombe, 1965).
The third factor resources includes the internal means and developments that can be drawn upon to accomplish the firm’s goals, and especially those unique features called distinctive competencies (Selznick, 1957). Resources are converted into final products or services by using a wide range of other organisation assets and bonding mechanisms such as management information systems, trust between management and labour etc. (Amit and Schoemaker, 1998). Barney (1986) argues that for organisational resources to hold the potential of sustained competitive advantage they must be valuable, rare, and imperfectly imitable. Such organisational resources may include accumulated knowledge (Helfat, 1997, Krogh et al., 2001), technology (Dougherty et al., 1998, Arthur, 1989), and physical assets (Amit and Schoemaker, 1998).
The first step in formulating a company’s strategy is to evaluate its current position and describe its strategic direction for the future. A coherent strategy both leverages and develops the firms existing competitive position, and it provides direction for the future development of the firm. Formulating a strategy first entails an accurate evaluation of where the firm currently is. It then requires an ambitious strategic plan, one that creates a gap between a company’s existing resources and capabilities and those necessary to achieve its intent. A company’s strategic intent is a long-term goal that is ambitious, builds upon and extendsthe firm’s existing core competencies, and originates from all levels of the organization(Schilling, 2005).
To assess the firm’s current position in the market place, it is useful to begin with some
standard tools of strategic analysis for analyzing the external and internal environment of the firm. There are several different tools like stake holder analysis and porter‘s value chain
The process by which a deliberate strategy is created is called strategy formulation. However, intentions sometimes end up not being put into practice, plans can be changed or cancelled along the way. This means that the formulation of strategy process is an ongoing and continuously updating process. This lays in the management control system that is, or should be the way in which the managers follow up and analyze the strategy (De Witt & Meyer, 2005).
Implementing strategy in a project based organization is heavily influenced by how the
management handles different risks and how this is mirrored in the project selection process.
When evaluating the project one of the single most important things to ensure a successful project is to deal with risks. A risk in this sense is anything that can happen that could generate an unfavourable effect to your schedule, costs, quality, or scope. If those risks are not managed they will direct the project. The risk management process could be divided in three major steps; identifying risks and threats, quantify them and develop contingency plans to deal with risks that cannot be ignored (Lewis, 2001).
Archer & Ghasemzadeh (1999) argues about the matter of course in a clear and determined strategy, before considering how to set up a project portfolio. It concerns a broader context including the organization’s goals, vision, resource allocation, financial and nonfinancial benefits and the portfolio’s level of risk. It means that it is important to know the projects’ contribution to the overall strategy of the organization as well as the portfolio.
Kaplan (1996) developed the ABC-concept (Activity-based-costing) which became very
popular. The ABC identified the cost drivers but did not give the complete picture of a
company. The Balanced Scorecard (BSC) translates the mission and the strategy into objectives and measures. That means how to work with the implementation of the strategy. According to Kaplan (1996) the seriousity, the engagement and the effort put into the development of the Balanced Scorecard decides whether the BSC will be valuable and successful for the company or not.
To further stress the importance, the Balanced Scorecard is about management, not about measuring the business. According to Kaplan (1996) the most common mistake is to see the BSC only as a tool to improve the way of measuring results. Manager has to realize that the BSC is a great help in leading the company to future success. The BSC should be used as a base when developing a new management system. It is a perfect tool to use when the company tries to reach a higher level, when the company needs to get feedback on the strategy they want to implement (Kaplan, 1996).
The objectives and the measurements are organized into four perspectives: the financial perspective, the customer perspective, the internal process perspective and the learning and growth perspective.
TRY TO PUT MORE ABT BSC
There are many factors other than organizational structure that have a significant bearing upon the performance of an organization. However, organizational structure is a particularly important aspect as, if properly designed, it allows the other aspects e.g. strategic work, to function properly. For example, Alfred D Chandler (in Foss, 1997) argues that firm structure follows strategy. That is not to say that, if an organization is inappropriately designed, it will not perform adequately (Walker, 1996).
The world keeps changing. It always has and always will. This is the fundamental importance of strategic management, for the use of strategic planning is to make decisions now to guide an organization’s future directions.
In terms of future directions, the basic problem of any company (or, for that matter, of any living thing) is survival. And to survive over the long term, as Lowell Steele of General Electric succinctly summarized, a company must have two strategic capabilities: the ability to prosper and the ability to change (Steele 1989).
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