Examining And Understanding The Role Of Strategy Business Essay

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The word "strategy" derives from the Greek word strategia, meaning "The generalship". In the modern era, with the industrial transformation throughout the world, technological workmanship rapidly increased and strategic theories emerged, eventually dividing strategic theories into two main or basic groups, namely the Descriptive schools of thoughts & Prescriptive Schools of Thoughts, as shown in figure no.1 At present time each construction company consists of many different types of organizations, subcontractors & suppliers, each with different management style. These different organizations have to achieve the same targets and objective, i.e. completion of the project within anticipated Time, cost & quality. Therefore strategy formulation and its implementation within the project organizations is the most important step, in order to fulfill the client's requirements and needs.

Figure no.1

DEFINITION OF STRATEGY.

As we know that every construction project has its distinctive requirements & qualities, and therefore required its own specific internal & external organization structure, in order for the stack holders and staff working on that project to coordinate their activities and maintain the necessary print or verbal communication, which is required for the project to meet its objectives. Therefore an effective and practical strategy formulation and its implementation is a key to the success of each project and better completion of that project.

Hence, Strategy formulation is all about skills and ability to organize people and resources in an environment in a manner of planning, organization, leading and controlling to achieve the project objectives.

According to Hampton view, "….strategic planning is involved in combining and directing the use of recourses to achieve a particular purpose." (Hampton, 1977)

WHY STRATEGY?

Strategy means deciding the nature, and scope of an organization's activities, which is essential, what it is like, its values, the areas of interest it covers and its direction ), and the procedure for its success to be followed for its evaluation. The pattern and different types of activities in strategy formulation arises from the acquisition, allocation and commitment of a set of resources and capabilities by the project's organization, in an effective match with the challenges of its internal & external environment, and from the top management of the network of relationships with stakeholders.

Strategic planning, formulation & implementation is fundamental to ensure that your organisation pursue the most effective route towards its mission.

STRATEGY BASED ON DISPARATE SCHOOLS OF THOUGHTS…

STRATEGY IS TO BE…

Strategy can be defined in different words as defined the following useful examples: -

"…..Strategy is the model of activities to be followed by an organisation in chase of its long-term purpose", includes its "placing" within the movement. In simple terms"

In which state we are now, where we want to go and how we plan to get there'.'

'An agreed plane of action and direction that enable to manage the relationship between an organization and its environment. The goal and targets is to achieve alignment or synergy so that an finest flow of resources to the institution is achieved.'

"…..Strategy can be defined as the process and plan of action of identifying, protecting, leveraging and renewing the strategic capabilities of an organisation, through its definition of principle its organisation and processes, and its choice and support of people.'

What most definitions have in common is: -

An understanding/assessment of the organization's capabilities and resources.

An understanding/assessment of the external and internal environment of an organization.

From these, a decision on the best approach to use and apply the former to achieve an agreed aim in the latter.

The Strategy Process

The following is a model of the strategic process: -

An important outlook highlighted by the below diagram is that strategy is formulated after examination & consideration of a broad range of factors, including stakeholders' views. Once a strategy has been planned & formulated, it may be necessary to manage stakeholder expectations and create awareness within stakeholders about the adopted or formulated pre action strategy.

Therefore, mission fulfillment is the long term concern; it is certainly not possible to satisfy all stakeholders' expectations. However, where possible, stakeholders need to be brought along, and given the opportunity to know the reason for the chosen strategy and it provides to maximise gains for the customers, clients and all stake holders. This is particularly important for major donors and funders.

CONTEMPRARY BUILT ENVIRONMENT ORGANISATION WITIH IN CURRENT CLIMATE.

STRATEGY ADOPTATION.

What comprise a Strategy?

Strategy can combine some or all of the below dynamics: -

Vision

Core Values

Mission Statement

Goals and Objectives

Positioning -Building a valued and preferred position in the minds of your target audience, like a brand. i.e. how you would like them to express your organization or brand.

Critical Success Factors - critical factors that must and organisation get right to succeed in its strategic planning.

Operational planning- agreement on the practical plans to implement the strategy. This is dealt with separately.

Brand/Reputation - Developing powerful and meaningful differences between your offerings and those of your competition integrate numerous sub-strategies covering key departments e.g. campaign strategy, educational strategy, financial strategy, fundraising strategy, and IT strategy etc.

Strategic issue - An opportunity that the organisation wishes to address or take advantage of in a specific market.

Strategic Planning Terminology and Hierarchy

"……There is a great transaction of inconsistency in how the following terms: strategic issue, goal, and objective, are used"

The following is a useful guide that can be applied in the interests of establishing a common vocabulary

Goal - Specific, measurable targets and mission statements, of what will be done to address strategic issues.

Objective - An important business activity that will help you to accomplish a goal. Objectives, sometimes called tactics, are framed in action plans that detail:

Responsibility

Timeline

Resources

Assessment/evaluation

Establishing Boundaries

In an organisation context there is always strategic boundaries and limits, and aims for focus and prioritisation. The persuasion is to include key issues and problems (that might potentially be addressed). The underlying objective should be to maximise mission fulfillment, considering available resources - and this does not mean tackling everything. It means tie together resources and leveraging these to best effect or outcome.

Vision and Mission

The vision and mission are the basic points of any strategy. Off course we all need a vision of who we are, and what we are aiming for. Then we need to decide what steps we will take to climb towards our vital goals.

Some organizations and cultural societies (NGO) have both a mission and a vision, although many have only a mission statement. Briefly, the difference is as follows: -

Mission Statement - A declaration of an organization's purpose; the reasons it stand and key objectives.

Vision - A realistic, credible, attractive future for your organization.

The mission is important because it can engage both the hearts (culture) and minds (strategy) of the organisation's staff and the board. A good mission that is used well can be inspirational and develop a strong, shared organisational culture. It helps to ensure that employees' are emotionally tied to the organisation, and that their goals are synchronised with those of the organisation.

The vision is a longer-range visualization of success and, it can be a powerful engine driving an organisation towards excellence. However, for most smaller businesses and business societies, a mission alone is probably sufficient. Indeed, it is debatable whether having both a vision and a mission weaken and confuses what should be a powerful and the most suitable message of intent (specially for external audiences).

Developing a Mission Statement

A mission statement comprise the fundamental purposes and your visionary statement for which your organisation has been established and worked. It should cover: -

Purpose - why the organisation exists - goals and objectives of the organisation.

Programme - how the organisation will achieve its purpose

Principle - what your values are

The mission statement should be: -

Understandable - the mission statement must be understandable to the general public.

Brief - comprising short paragraph.

Realistic - in terms of your financial and human resources

Specific to provide a framework for your developing objectives and programmes.

Broad enough to stand the test of time, so it does not need to be reworked frequently.

Accurate reflection of the boards intent and understanding

Operational (state the expected outcome)

The Importance of Strategy

Strategy formulation is a critical function of NGO's management. A well-focussed and defined strategy is must to ensure most favorable progress towards mission and vision is achieved - in the same way as a route map is required, to ensure the most direct route is taken between home and destination or end to end. Also crucial are effective ways to monitor, review and realign strategy in the fast-changing business & cultural environment.

Therefore, social goals make it more difficult to set measurable targets, evaluate performance, & determine priorities. This does not mean it is impossible at all, just that it is not easy (or often natural) to do this. Also, there is a noticeable tendency for the 'mission driven' to consistently expand their focus and workloads. These factors make it even more important to have a well-defined strategy.

Building a Strategy

Building a Strategy

Strategy Formulation

Strategy formulation is a vital function of NGO management. However, strategic management should not be mystified. It is simply developing and advancing the work and concerns of the organisation as a whole, within the constraints and demands of its wider environment. It is often little more than 'enlightened common sense'.

Research, future data, current market trends and analysis are the building blocks of strategy formulation. The key elements needed are an analysis of the organisation's resources and its own particular strengths and an analysis within its operating environment. Thus, we are doing both an 'internal' (within the organisation) and 'external' (outside the organisation) analysis. This is necessary to determine the organisation's 'best fit' within its 'industry' (i.e. the role that will help it to achieve the most). This is known as 'effective strategic fit' in management terminology - meaning a perfect match between the organisation, its strategic plan and its internal and external environments.

THREE ASPECTS OF STRATEGY FORMULATION

The following is the description three levels of strategy formulation, each with a different details explanation & focus; need to be dealt with in the formulation phase of strategic management. The three sets of proposal must be internally consistent and fit together in a mutually supportive manner that will make an integrated hierarchy of strategy, in the order given.

Corporate Level Strategy:

This aspect of strategy formulation in a current climate is concerned with broad decisions about the total organization's scope and direction. And entirely, we consider what basic changes should be made to prosper our objective and strategy for achieving these goals, the current climate of business we are in, and how these lines of climate of business fit together. It is much better to think of three gears of corporate level strategy:

(a) Growth strategy (what should be our growth objective, ranging from cutback through stability to varying degrees of growth - and how do we accomplish this),

(b) Portfolio strategy (what should be our selection of lines of business in current climate, which implicitly requires reconsidering how much concentration or diversification we should have), and

(c) Parenting strategy (how we allocate currently available resources and manage capabilities and activities throughout the portfolio -- where do we put special consideration & emphasis, and how much do we integrate our various lines of business).

Competitive Strategy OR Business Level Strategy: This involves deciding how the company will compete and perform its strategic plans within each line of business (LOB) or strategic business unit (SBU).

Functional Strategy: These more localized and shorter-horizon strategies deal with how each functional unit will carry out its functional activities and strategic tasks to be effective in order to maximize resource productivity.

Stability Strategies in current climate

In the current circumstances in which the most appropriate growth stance for a construction firm is stability, rather than growth. This may be used for a relatively for short period of time, after which further growth can be planned. In such climate which is usually involve with some other unreasonable circumstances that suggest a pause or caution.

Three alternative methods are outlined below, in which the actual strategy actions are similar, but differing mainly in the circumstances motivating the choice of a stability strategy and in the intentions for future strategic actions.

Pause and Then Proceed: This stability strategy alternative (essentially a timeout) may be suitable in either of two situations:

(a) The need for an opportunity to rest, digest, and consolidate after crises or some turbulent events - before continuing a growth strategy, or

(b) In the current uncertain or hostile environment in which it is prudent to stay in a "holding state" until there is change in or more clarity about the future in the current business environment.

2. No Change: This alternative could be a cop-out, showing nervousness in making a choice for change. Alternatively, it may be a comfortable, even long-term strategy in a mature environment e.g. a small shop in a small town with few competitors.

Grab Profits While You Can: I would personally not recommend this strategy to mask a fading situation by artificially supporting profits trying to act as though the problems will go away. It is an unstable, temporary strategy in a aggravation situation, and most of the organisations usually chosen this strategy try to delay letting stakeholders know how bad things are or trying to get personal gain before things collapse. Recent terrible examples of such strategy can be seen in the USA are Enron and WorldCom.

What Should Be Our Portfolio Strategy in current climate?

The second aspect of corporate level strategy is concerned with making decisions about (LOB's) the portfolio of lines of business & the current opportunities within current business environment.

Portfolio matrix models can be use in examining a company's present status within current atmosphere or portfolio. The purpose of this portfolio matrix models is to help an organisation understand and consider changes in its businesses lines, and also to think about allocation of the currently available resources among the different business elements.

"………The two primary models are the BCG Growth-Share Matrix and the GE Business Screen" (Porter, 1980,)

These models consider on a two-dimensional graph each major SBU in terms of its industry attractiveness and its relative competitive opportunities & strength.

The BCG Growth-Share Matrix model considers two relatively simple variables:

-Growth rate of the industry as an indication of industry attractiveness,

-And relative market share as an indication of its relative competitive strength.

The best test of the business portfolio's overall attractiveness in a current state and climate is, whether the combined growth and profitability of the businesses in the portfolio will allow the organisation to achieve its goals and objectives, related to its overall standards, such questions as:

* Does the portfolio in current state contain enough businesses in attractive business industries? Specially the construction industry.

* Does it contain too many marginal businesses or question marks?

* What's the proportion of declining businesses? And is the growth will be slow?

* Are there some businesses within current state, which are not really needed or should be deprived?

* Does the organisation have its share within the industry, or is it burdened with too many businesses in competitive positions?

* Is the portfolio of an organisation and its relative risk/growth potential consistent with the strategic goals?

* Do the core businesses activities generate sufficient profits?

* Are there enough cash flow producing businesses to finance these activities?

It is important to keep in mind diversification vs. concentration while working on portfolio or LOB strategy, i.e., how broad or narrow should be the scope of the company. Single-business strategies would be very successful in such crises and static environment (e.g., early strategies of McDonald's, Coca-Cola,).

Some of the advantages of a narrow scope of business are:

(a) Less ambiguity about who we are and what we do;

(b) Concentrates the efforts of the total organization, rather than straightening them across many lines of business;

(c) Focuses on long-term profits. However, having a single business plan "all the corners in one basket," which is dangerous when the industry or technology may change. Diversification becomes more necessary in crises when market growth rate slows day by day. Building stable & consistent shareholder is the ultimate justification for diversifying -- or any strategy.

What Should Be Our Parenting Strategy?

This third component is relevant for a multi-business company which is concerned with how to allocate resources and manage capabilities and activities across the BOL & portfolio of businesses, including evaluating and making decisions on the following:

* Priorities in allocating resources i.e. which business units will be stressed & more considerate.

* What are critical success factors in each unit of the business, and how can the organisation do well on them in current climate.

* Coordination of activities and transformation of skill among business units

* How much incorporation of business units is desirable?

CURRENT STRATEGY ANALYSIS

Internal Analysis

The internal analysis examine the organisation's resources (both financial and human) and its core competencies'. A common and simple tool for this is the SWOT analysis that examines: -

Strengths - key strengths, core competencies/capabilities or (especially) unique advantages ('Unique Selling Points')

Weaknesses - weaknesses in the organisation - things it does less well and/or cannot cope with

Opportunities - opportunities that may arise for the organisation

Threats (or Challenges - SWOC!) - potential threats to the organisation and its work.

A SWOT analysis can be charted on paper or simply prepared from a brainstorming session (popular as it throws up many and varied ideas).

Resources and Capabilities

The diagram below helps to identify likely areas for core competencies.

External Analysis

The second part of this analysis is the external factors affecting the organisation, and its strategic planning. This relates an analysis of an organisation's current position, competition or collaboration decisions, relevant external environmental factors (political, economic, social, cultural, geographical, legislative etc.), educational, service provision and/or campaign environments and objectives.

A common and simple tool for this external analysis is the STEEPV analysis that examines the following factors, as relevant: -

Social

Technological

Economic

Environmental

Political

(Personal) Values

Stakeholder Analysis

An important part of strategy formulation is a stakeholder analysis. This examines all major parties and their interest in the organisation, and looks at their perspective. If you are not sure of the views of major stakeholders, a consultation exercise is recommended. This can be either in writing (e.g. by questionnaire) or through personal contact (e.g. using 'focus' groups).

The following is a diagram showing likely major stakeholders of an organisation.

The Movement and its Stages of Development

When considering the position of the customer's care & protection movement in your organisation, it may be helpful to bear in mind the five stage model of the growth of the movement is always suitable: -

Acceptance building (broad/softer regular communication)

Awareness/consensus building (campaigning & more focused/issue-related communication and consumer awareness).

Legislation - Action to embed legislation (investigations and exposés, enforcement, legal action/test cases etc.)

Organisational Values

Organisation (Core) Values are lasting beliefs that your organisation, and the people who inhabit it, hold in common and attempt to put into action. Basis values guide your organisation's board, staff and volunteers in performing their work. Core values shall be informal yet still enduring. Values lead individuals within organisations to believe that some goals are lawful or correct and other goals are illegitimate or wrong. Core values are often expressed in a statement of values. In a construction industry or an organisation, there may be a number of separate Core Values, for example: -

Client and customer care policies

'Ways of working' (the 'way we do things around here')

Investment policies

Fundraising policies

Core values are a discrete belief system, with clear values. The major values may even be summarized in the organisation's mission statement. They are boundaries /framework against which the management to take decisions.

Many organisations where they have already formulated core values in construction industry business, and may be willing to share these (to help other organisations wishing to formulate their own). Therefore the larger organisations always have printed booklets pertaining their business objectives & policies, and some are given on the organisation's Web Site.

Brand or Product Name.

An organisation needs to build a strong brand, in the same way as does a commercial organisation. Both the society's name and logo are tied to brand. A successful brand is one that is always brought to mind when a similar requirement/ problem is presented - for example, donors wishing to help, or people making legacies to the cause, will think of the brand as the one to fulfil their needs. To build and communicate a strong brand an organisation needs to: -

Communicate a strong, logical brand promise to all audiences

Follow and deliver the brand promise

Make regular - and well publicised - advances and achievements

An organisation must use five key brand components to help them explain, communicate their brand: -

Brand promise

Brand rationale - an explanation & motivation of the brand promise.

Brand attributes - a phrase of words that you want to be associated with your organisation (as inspired by your brand)

Tagline or strap-line - memorable shorthand for the brand promise.

Graphic element - the visual look of the brand.

These can be equally helpful to almost every manufacturing / and products oriented organisations and societies, with the impressive phrase and eye-catching logo.

Strategic Review

A strategic approach does not mean being inflexible. In the ever-changing business environment, an organisation needs to keep side by side of changes to both its internal capabilities and its external environment - and make any necessary changes to its elastic strategy - if it wishes to retain strategic advantage.

An organisation must need to keep monitoring emerging events and its environment. This will mean the need to develop: -

General awareness of the vital strategic options and orientations of the sector.

Good awareness of the corrective & preventive actions of its competitors and collaborators.

Good knowledge of the political environment.

Ability to 'think strategically' & its day-to-day responsibility.

However, for some, the scope for strategic review may be quite limited - especially more focused and practically-orientated work.

The below are important aspects of strategic review: -

Driving forces - Factors that impact your organisation and initiate change. Driving forces can be anticipated and unanticipated, controllable and uncontrollable. They can insert a major pressure from the external environment, an emerging opportunity, an internal or global crisis or setback, or new leadership.

Environmental scan - A process for discovering and documenting facts and trends in the external environment that might impact the organisation's future & its strategic planning.

Structure and Systems

Introduction

Structure is the arrangement by which various organisational activities are divided up, and how business civilities & efforts are sharing within organisation. Structure is essential between goals and process. An organisation needs to be structured appropriately for bad circumstances in which it finds itself and - particularly - the tasks it has decided to carry out. Therefore, the strategy should be determined first, and then the organisational structure to be followed.

Need for Structure

Structure helps staff members and other people in the organisation to work together effectively. The more effective the structure, the more effective the working relations between people and departments. Structure underpins how power and accountability, internal and external, operate within the organisation: it determines how responsibilities are allocated and enables effective management and worker's participation.

Any organisation needs defined job & duties, responsibilities, communication channels, job agreed procedures etc. There is no ideal structure, just various options from which to choose the most appropriate. The most obvious divisions are departmental or working groups. Structure should show the pattern of reporting relationships. It can be captured in an organisational chart. Indeed, if it cannot easily be captured in such a chart, or if there are

too many complexities or crossed lines in this, then the structure is too unclear to be workable in practice.

Other structural features include the cycle of staff & management meetings, committee meetings, information systems, etc.

There are some NGO (non-governmental organisation) mindsets on structure: -

'We want to keep this informal. As few rules as possible.'

'We don't have a structure - everyone works in and we all have an equal voice.'

'Voluntary organisations have to be flexible.

There are many negative consequences of structural deficiencies including: -

Low morale - people not knowing what's expected of them and lacking responsibility and autonomy.

Excessive meetings.

Late decisions.

Conflict within divisions.

Lack of coordination among divisions.

Inadequate response to decisions.

Rising and excessive cost.

Larger organisations can delegate quite a bit of responsibility, given an appropriate structure, broad strategic and policy orientation, and budgetary controls, guidelines for good practice in service delivery. A small organisation is unlikely to develop the same level of budgetary and reporting systems and controls and nor consider it necessary.

Organisational Culture

Introduction

The culture of an organisation is a set of standards, value, beliefs and norms. These would develop over time within an organisation; however, the culture of an organisation is something that can have different impact on the operation of an organisation and its effectiveness. This can be review and changed over time if necessary. Organisational culture interventions are disreputable for their difficulty and duration, but if culture change is needed, this should not discourage an organisation from boarding on the process of change. Because, it may be the key to survival of that specific organisation.

Different cultures are reflected in different organisational structures and systems. Indeed, it is important that structures and systems are appropriate to the organisation's culture. Also, different people prefer different organisational cultures.

Key Cultures - four keys of cultures: -

Power

A power culture is frequently found in small campaigning societies and organisations. It involves a powerful central character or leader. Its structure is depicted by a web: -

Power culture; usually exercise informally, with few rules and procedures. Control is exercised by the central body/member and decisions are taken on the basis of power and influence.

Role Culture

Role culture is what was previously known as a 'bureaucracy'. The structure can be illustrated as a Greek temple: -

Work is coordinated by a manager, or small number of managers, at the top of the structure. The pillars are strong functional departments. The work of these departments is coordinated and controlled by: -

Procedures governing roles e.g. authority definitions and job descriptions.

Procedures for communications e.g. document distribution and circulation rules.

Rules for settlement of disputes e.g. appeal to lowest crossover points.

With ultimate coordination and control by senior manager(s).

Position power is the major power source in this culture: personal power is not welcomed, and expert power only appreciated 'in its proper place'. Rules and procedures are all encompassing. The success of this culture depends on appropriate allocation of roles and responsibilities. Also, a stable environment is necessary for this culture to work - Greek temples tremble when the ground shakes, and collapse under an earthquake. Role culture is frustrating for individuals who are power orientated or want control over his or her own work and the way in which it is done.

Staff

Different individuals prefer working under different organisational cultures. It may be more reasonable for an organisation to attempt culture change if key staff would feel uncomfortable in the desired culture.

Technology

The move towards increased use of technology tends to push organisations towards role culture, with associated procedures and protocols.

Policies

An organisation's policies also become part of its culture, and impact strongly on its work. It follows that these should be formulated and agreed carefully, with full staff consultation.

Changing Cultures

Most organisations will imagine that two or more management cultures would be appropriate for their company or organisation. Management consultants have good tools for assessing suitable organisational culture(s) and staff preferences.

Different organisational cultures can be successful, within same firm, because there is no optimum - appropriateness and 'fit' are the keys. Organisational culture interventions can be complex and time-consuming. However, it is clear from analyses that if successful companies fail to adapt their culture when the environment changes, then they cease to be successful.

Even without intervention, organisational culture changes over time as organisations grows within specific environment. Even after establishing an organisation tends to revolve around its vision. while the organisation grows, activities need to be departmentalised.

Work is delegated to its business units. This often proves difficult for the Chief Executive, because they loss the control over the new departments and staffr. Therefore this new system often become inflexible and other cultures break through to cope with a changing environment. Because the top management and the founder of the organisation can not compromise with the new systems of communication and coordination being introduced to bridge the various cultures and structures.

Managing an organisation with various activities & cultural aspects, and achieving consistency and integration, is not a simple matter. However, if a manager can recognize the different cultures involved in various parts of the organisation, then at least he will be able to understand the nature of the potential problems involved therein.

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