Strategic management in construction and business strategy

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Construction, like every other industry in the global market, is facing a wide range of challenges and robust obstacles that attempt to derail the performance of companies within the industry. Hyper-competition, the economic downturn and lack of skilled personnel (Tatum 1998) are just an example of some of the challenges the industry is currently facing. Along with the aforementioned challenges, the construction industry has equally become more sophisticated over the past few decades through rapid technological change (Tatum, 1988), stringent regulations (Nam and Tatum, 1988), changing client needs (Chow, 1990) and concern for more quality and environmental soundness of projects (Burberry, 1991) among other things. Such change presents the need for companies to take the notion of strategy on board and for strategy to plan an important role in long term development of the organisation.

Betts and Ofori (1992) stated that companies within the construction industry have incorporated strategies into their operations in order to maximise the advantage of value added concepts of strategic nature, yet more often that not, the primary goal of these firms is too simply survive. According to Szulanski et. al., (2005) this question of how to make effective strategies usually stand at the top of the agenda for most senior mangers. Unlike previous eras of stability and predictable changes within the industry, managers are now adopting a more dynamic approach shaped by the current global business environment in order to obtain competitive outcomes.

Despite a vast array of literate in existence in relation to strategy and strategic management in general, researchers have shied away from the construction industry and as a result a lack of literature within this area exists. This is despite of work presented by Hitt and Tyler (1991) and Dess et al. (1997) that suggests that industry type may affect the complexity and style of the strategy formation processes. More so, convectional thought within the construction industry as a project-based industry have often made large proportion of academic research and published work in construction management to focus on the management of construction projects, rather than construction business (Winch 1989 & Betts and Lansley 1993). However, singular project success may itself not guarantee that the firm experiences overall success in relation to its strategy (Cleland and Kimball 1987). Langford and Male (2001) noted that within the construction industry, firms willing to employ diverse forms of strategies in relation to their resources, such as financial and technological, have a stronger chance of successful operation and continued existence.

Deliberate Strategy

Chinowsky and Merdith (2000) define deliberate strategy as a strategy formation process that emphasizes the benefits of acting intentionally. The belief surrounding this particular school of thought is to plan the actions and processes and think before to act. Naoum (2001) states that the top management is in charge to formulate a strategy supported by a bulk of analysis and that the strategy must be clear and concise and must be executed by the firm. Robins (1998) states the beneficial aspect of deliberate strategy by declaring that thoughtful and careful planning is necessary in order to become competitive in turbulent and unpredictable markets. As a result of adapting such a strategy the aim is to achieve an advantageous position in the market thanks to the careful planning and analysis undertaken. Mintzberg (1994) differentiates between 'deliberate' strategies where intentions are fully realized and 'emergent' strategies, where a realized pattern was not expressly intended. For a strategy to be regarded as perfectly deliberate it would have to satisfy and form the actions and processes that was intended by senior management. Whittington (2001) states at least conditions have to be satisfied in order for a strategy to be deemed deliberate. Firstly, the intentions must have been made known and circulated so that everyone knows the desired intentions before any action is taken, Secondly, the strategy must have been commonly agreed upon and accepted by all relevant stakeholders and thirdly the strategy cannot have been affected by no external force such as technological or political interference. In response to Whittington's' work Cheah, Garvin and Miller (2004) stated that achieving such conditions where almost impossible for any firm to achieve stating that such conditions where a tall order, largely due to the fact that the business environment is not perfectly predicable and it was unlikely that any company could achieve a perfectly deliberate strategy.

Emergent Strategy

Brown (1998) states that emergent strategy can be seen as a response to an unexpected opportunity and usually develops from the locations at which business level strategies are usually implemented. This coincides with the work of Mintzberg (1994) who states that emergent strategy arises through an opportunity that was not initially intended. The view regarding strategy is general is that it usually emerges from practice, rather than being formulated at the initial planning stages.

Galbraith (2000) believes strategy is as an ongoing process of constant learning, experimentation and risk taking. This means the business environment can be extremely difficult to predict and a planned, deliberate strategy should not be fully relied upon. This is where the school of thought regarding emergent strategy comes into play. Handy (1998) believes that emergent strategy itself allows the firm or organisation to take action at one step at a time and try to learn from what has been successful along the way. The work of Kale and Arditi (2002) adds weight to that of Handy' by stating that adopting an emergent strategy approach allows management to respond to an evolving scenario and environment rather than having to focus on a planned, stable strategy. All of the previous work mentioned goes hand in hand with earlier work by Mintzberg (1994) who stated that strategy is plan and pattern and that is organisations develop plans for the future, whilst also evolving patterns out of their past.

According to Noe et al (2003) emergent strategies also rely upon the firm's ability to learn from the experience of their employees at all level. This goes along with the work of Brown and Eisenhardt (1998) who believe managers cannot control what will happen in the future and as a result should promote improvisation and entrepreneurship amongst the workforce.

With this view, it is impossible to develop an outlook for the future and determine certain objectives within an unstable environment. Instead, what should be encouraged is flexibility in terms of dealing with opportunities or unexpected developments that may lie ahead. This conforms with the view of Mintzberg (1994), who believes that flexible strategy should play an important role in companies' strategy development and through this react, in a non-structured manner and learn through their mistakes.

Adaptive Strategy

Hofer (1978) defines adaptive strategy as being concerned with the development of viable match between the opportunities and risks present in the external environments the organisations capabilities and resources for exploiting these opportunities. Hewlett and Kaufman (2008) champion the idea of adaptive strategy within organisations, stating that the future is too uncertain and the market to unpredictable to rely solely on deliberate planning. Similarly, Warzawski (1996) stated that the market environment is too unpredictable and as a result, there must be a need to respond quickly to any opportunities that arise. This is where an effective strategy that responds to such situations is necessary.

In relation to adaptive strategies, Miles and Cameron (1982) states that the organisation is expected to continually asses external or internal conditions that may have an effect on their strategy or performance. Such assessment should then be followed up by adjustments in the organisation that will allow the companies resources and capabilities to deal with the opportunities and risks that may arise.

According to Miles and Snow (1978), adaptive strategy relies on several assumptions. Compared to the deliberate strategy school of thought, the adaptive strategy is deemed to be more open towards the environment it is operating in. This claim is backed up by Leinberger (1993) who states the environment is more dynamic and less easy to predict within the adaptive model. Miles and Snow return to the point that rather than assuming that the organisation must deal with the environment, the adaptive model assumes that the organisation must change within the environment.

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