Definitions And Theories On Strategy Essay

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Various scholars have proposed definitions and theories on "Strategy" which have been successful in a particular organization. Few of such definitions from prominent scholars such as Andrews, Chandler, etc are as follows:

"Strategy is determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals." (Chandler (1962) cited in Cole, 1997)

This definition was further extended to include the uncertain environment in which the organization functions to "the organization's preselected means or approach to achieving its goal or objectives, while coping with current and future external environments."

"The pattern of decisions ……(which represent)….the unity, coherence and internal consistency of a company's strategic decisions that position a company in its environment and give the firm its identity, its power to mobilize its strengths, and its likelihood of success in the marketplace"

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(Kenneth Andrews (1987) cited in Cole, 1997)

"Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations."

(Johnson & Scholes, 2006, p.9)

Michael porter broadened the term advantage to competitive advantage informing that Approach to Strategy " is to find a position….. where a company can best defend itself against…..forces(as described by Porter) or can influence them in its favour"

(Porter 1970 cited in Moore 2001,p.38 & 42)

Whereas Mintzberg stated that rather than restrict definition of Strategy to one, it can be defined as the 5 Ps- Plan, Ploy, Pattern, position and perspective and their interrelationship.

Each scholar had defined Strategy stressing on certain key factors to suit approach which they found most important for successful strategy. We shall take all these factors as --------------

Ensuring that all the above factors are essential we shall define Strategy as "Strategy are those decisions that have high medium-term to long term impact on the activities of the organizations, including the analysis leading to the resourcing and implementation of those decisions, to create value for key stakeholders and to outperform competitors."

(Hubbard, Rice, Beamish, 2008)

It is critical for an organization in employ a suitable Strategic management process effective for it to easily define its objectives, assess internal resources and external environment to formulate a strategy which can then be implemented successfully. The strategy should also flexible enough for modification if required after evaluation. It is preferable if the process is simple and results are achieved within a short period of time. Being in line with Hubbard et al definition of Strategy we shall describe Strategy process as 1) firms defining its missions and objectives, 2) Strategic analysis to scrutinize the external and internal environment which would determine the effectives of the Strategy 3) Strategic choice in terms of the decision making process the firm would take in order to realize its strategy 4) Strategic implementation by actioning the decisions made to make the strategy live, 5) finally it isn't sufficient for just strategic implementation but to ensure successful incorporation by monitoring and feedback and ensuring that firm has achieved advantage over its competitors.

Defining the Mission and objectives has been considered as initial stage in order to allow for more focused strategic process. Mission and objectives are conceived by the top management. It is essential that the mission statements is in close relation to the firms operation and helps to add value to the firm (Barney.J, Hesterly ,2010) . When Firm mission states its purpose and values, objectives measurable targets which effectively should allow the firm to evaluate the extent to which it realizes its mission. Once the mission and objectives are realized the next stage of strategic management process would be analysis.

This is stage could either be extensive or simple based on the requirement and complexity of the strategy involved. The analysis consisting of scrutiny of both external and internal environment of the firm helps to determine the external opportunities and threats and internal strength and weakness of the firm. The most common and popularly utilized tool for this purpose is the SWOT analysis. SWOT analysis is simple to execute has very often been reduced to mere checklist of internal and external factors or discarded after analysis (Hill and Westbrook, 1997). Furthermore it has been found that there is gap between strategic analysis and Strategic choice as the analysis at times is insufficiently informative. While examining the new approach to SWOT analysis approach , Cooke, Slack(1991) state that this gap can be narrowed down making the SWOT factors more focused and refined and strategists to be creative in generating strategic choices that match the SWOT analysis result. Other assessments which would make strategy decision making more effective would be the external and internal audit and various analytical process which make up part of these audits. Most firms also incorporate Michael Porters five force model for structural analysis to determine the position of the firm in the market. In addition to this competitor analysis and strategic group analysis also helps to determine the competitive advantage of the firm. These analysis unfortunately do not provide the tools to determine competitive advantage in resource based approach or innovation which has become essential in present environment. (Price, Newson, 2003).

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Once the Firm has satisfied itself with sufficient analysis required for strategy formation it should proceed with Strategic choice through Strategic decision making process.

Strategic decision making is the center and most crucial part of the strategic process as it shapes the course of the firm (Eisenhardt, Zbaracki, 1992). Strategic choice has known to be influenced by various factors such as the characteristics of the Top executive (Hambrick & Mason 1984) , complexity of the external environment (Bourgeois, 1984), resource availability (Keats & hits 1988) and even the decision- specific characteristics as in how the problem is perceived. Each factors can create an opposing effect in influencing the course of decision making. It is highly imperative that there level of objectivity by the management and good balance of rational systematic analysis and creative thinking and not be influenced by standard operating procedures. Strategic decision would also be effective if the different level management is included as they have different perspective of firms strengths, weaknesses and environmental uncertainty (Ireland et al.).

"Understanding the strategic position of an organization and considering the strategic choices open to it are of little value unless the preferred strategies can be turned into organizational action." (Johnson et al 2006). Alexander (1991) suggests that people tend to overlook it because of a belief that anyone can do it, people are not sure what it includes and where it begins and ends. In formal environment the strategy was dictated from top management and rest of the organization simply implemented it, this is no longer sufficient for effective strategic implementation. It is essential to examine the factors governing the strategic implementation for successful execution which are structure, systems, culture and power (Mintzberg and Quinn 1991). This can be achieved by using the 7 S Mckinsey frame work for managing strategy, structure, shared values, systems, staff, style and skill. Balancing these factors is essential for organizing firm in holistic and efficient way. Successful implementation relies on good two - way communication, proper interpretation of strategy, committed adoption by all levels of the firm and strategic actions (Aaltonen, Ikavalko, 2002). Strong link between strategies and day to day operations is required for effective Strategic change.

When implementation is done it needs to be evaluated to confirm whether the firm is heading towards its mission and strategy is working. This can be carried out through careful monitoring and feedback which is final stage strategic management process though it is not a linear process but a cyclic. That means if strategy is fully realized, there should be flexibility in strategy to be modified according to the desired level. The whole process could be repeated but not elaborately as done initially. Useful way of measuring strategic performance through bench marking and strategic audit.

The entire strategic management process if executed efficiently would allow for successful realization of firms mission and lead the firm to direction it requires to be.

Though Strategy and strategy management process has been around for many decades, it has received less attention in the construction industry. This is mainly due to construction industry being a project based industry with emphasis on project performance unlike manufacturing industries. More focus is made towards project management than strategic management. But as construction is the first and the most effected industry in unstable environment it is all the more imperative why strategic management is essential for it. Also due to Technology, innovation and communication has lead to blurring of boundaries making it possible for construction industry to participate in design or construct project in any location. This has lead to change in pace in company loyalty, traditional competitors and employee development. It is found that strategic management perspective has formed the need due to three issues i.e, knowledge workers, new markets and information technology. The industry has shifted from skilled based to knowledge based with knowledge through modern technology. Employees are no longer restricting themselves to single employer. Earlier markets were clearly divided which allowed the organizations to entrench themselves to particular narrow market. With increasing market boundaries, there is pressure on profit margins also as there no limitation to market focus it has given industry opportunity to explore alternative income sources. Advancement in information technology is also leading to change in operational process and human resources which necessitating the firm to look into it long term development (chinowsky and Meredith 2000).

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Seven areas where strategic management would be required related to construction would be 1)Vision mission and goals, 2) core competencies,3) Knowledge resources, 4)Education , 5) Finance and economics, 6)Market and 7)competition. Surveys held showed that there was positive execution of strategic management in fields of vision , core competencies, knowledge resources, finance and market focus but lacked in education and competitive positioning indicating the greater need for emphasis in these area (Chinowsky and Meredith 2000). Least focus was on life-long learning. Though importance was recognized for new market and opportunities, companies were finding it difficult to defend their position in the market. Ngowi & Rwelamila (1999) stated that Many construction firms have managed to satisfy their clients and make profits by embracing operational tool such as the Time, Quality management. But the yielded profits have been temporary and minimal as the operation effectiveness meant performing same activities , just better than their competitors. It became imperative for organization to take on strategy to have competitive advantage over their competitors. Porters 5 forces model can be incorporated to determine external position of the firm .Analyses of the core competences of the organization also to be carried out. As these two are disparate approaches a bridge of the two i.e, resource based view of competitive advantage can be considered for direction of the organization. In order to make the competitive advantage sustainable it is requirement for constant improvement.