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Strategy is a direction and scope of an organisation over long term to achieve advantage in a changing environment through optimal utilisation of resources and competencies with the aim to fulfil stakeholder expectations.
Mintzberg's 5 P's to explain the concept of strategy
Mintzberg suggested that nobody can claim to own the word strategy as this term can be used in several ways i.e. it can be
1.Plan: This implies that strategy can be a plan i.e. intended strategy, something is intentionally put in train and its progress is monitored from starting till it is finished, proper plans are made for a certain period of time as regards what to do like schedule for new product launch, acquisition, mergers ,financing etc.
2.Ploy : This suggests that strategy can be ploy i.e. it can be a game just to misguide the competitor ,has very limited objective and is for short period of time.
3.Pattern of Behaviour : this implies that there is no planning as such , strategies just happen as a result of consistent behaviour ,useful for small businesses or we can say that these type of strategies are emergent , these are successful when this consistent behaviour has emerged into a success.
4.Position : Here positioning defines strategy, related to stand in the market whether leader ,challenger, follower or nicher with respect to competitors , where it should achieve or defend its position.
5.Perspective: How a firm view itself i.e. its internal positioning statement, are about changing the culture of the organisation as they want the employees to think in a certain way ,it is believed that success is achieved when all thinks in the same way.(Source : strategic Management by David Campbell)
As we read the case of yahoo ,I think that for them strategy is a perspective as they are planning to change the structure of the organisation , as we go through the case they are planning to involve operational level in decision making so that employees can think the way they want and they can be successful .
It is necessary for the business to have converging objectives in order to succeed in the long term , if the employees and management to have converging objectives than businesses may fail .
Strategic Business Management and Planning and its need
Strategic business management and planning is concerned with long term planning for business ,understanding the strategic position of an organisation ,strategic choice for the future and turning strategy into action.
There is need for strategic business management and planning in global environment to take strategic decisions that are associated with the issues .
The long term direction of the organisation .
The scope of an organisation activities -whether it should concentrate on one activity or spread over too many activities.
Advantages of the organisation over competition.
To have a strategic fit with business environment
The organisation resource and competencies
Values and expectations of stakeholders.
Therefore they are likely to be
1.complex in nature.
2.Made in situations of uncertainty
3. affect operational decisions
4. Need for integrated approach inside and outside the organisation.
5.Involve considerable change
Issues facing Yahoo are strategic according to me as it is concerned with
Yahoo lacks clear direction of what to do , when to do and how to go about it
Scope of activities: when we read the case of Yahoo it seems that there is no proper allocation of resources at yahoo, there is thinly spread of resources over too many activities (like peanut butter) and is not concentrating on what it is good at.
Yahoo is lacking competitive advantage for e.g. lacking core competencies , threshold capabilities and unique resources.
As we assess the case for yahoo it reveals that there is a need for yahoo to think over the ways in which he can gain competitive advantage may be by providing better value services than others , its business are not properly organised.
Core competencies are the minimum required activities/. resources which cannot be replicated by the competitors and through which it gains competitive advantage by concentrating only on those activities in which it is good at( Source : From class notes)
Yahoo faces complexity can be due of poor organisation of internal businesses and because of this internal organisation it is not able to move with fast changing market environment.
Types of Strategies
Intended Strategy came from top down are planned , deliberate strategy based on systematic analysis having clear intention s of what to do when to do or how to do .Organisation Know clearly what it has to achieve, what are the objective clearly defined problems and issues . It also helps in application of resources .Key areas of concentration are markets , product and positioning .
Emergent strategies these strategies are not planned they emerged from day to day activities and decision . They don't have any specific or formal plan , these strategies emerge from a consistent pattern developed in the absence of intention s of an organisations
In Yahoo it seems as if they have formalised planning system with many layers of management
Formalised Planning system: It is a planning system in which rules and procedures are laid down by the top management in advance and operational level has to only follow the instructions as they have no right in decision making
But in my organisation which is a small organisation one of sole proprietorship there is no need for formalised planning and strategic planning as such. Decisions are taken as situations arise. We can say that we have emergent strategies that is there is no advance planning about what to do depending upon the circumstances.
This does not mean that formalised planning systems are not good or are better than informal planning systems. It can be very effective for large scale businesses which has different levels of hierarchies and number of employees. Formalised planning is very effective as it is an organised system, where everything is properly planned keeping in mind future uncertainties.
In my view there is no good or bad planning systems ,it all depends upon the ownership structure whether sole proprieter, large scale company ,small manufacturing unit
Structure and culture to large extent effects the planning system but it all depends upon circumstances and
on the size of business.
But according to my view point there should be formalised planning system at top where decisions are concerned with the Mergers ,acquisitions ,joint ventures, strategic alliances etc as it is clearly a corporate level strategy ,it gives direction of what to do ,without knowing what to do there is no question of how to do.
But as far as the production is concerned there can be in formalised planning system at the operational level as it is the operational level who faces day to day problems while working , they actually work so they know better about the routine problems and their solution .
In my organisation which is a small manufacturing unit , we have about workforce of 50 employees who work in plant and deals with customer complaints regularly.
They know better than us problems they face during production and feedback they receive from customers and if we don't involve them in the decision making than we are going to loose customer base , top level executives wont directly contact with the customers neither they work in production so they are unaware of the problem and solution ,it is in our interest to involve them in decision making .
As we read the case of Yahoo if appears as if they have an issue with their culture which is a direct effect of their structure.
had THROB Model which means they had formalised planning system which breeds in Bureaucratic culture but slowly they are changing and moving towards FELT Model i.e. they following In formalised planning system which breeds in task culture as Yahoo is planning to involve operational level in decision making which is good for them as it will bring in different ideas.
Different Levels of strategy
There can be 3 levels of strategy
1.Corporate Level Strategy :It embraces the ,it is concerned with the overall scope an organisation and how value will be added to different parts of the organisation ,it is concerned allocation of resources throughout business or divisions, determines key choices as product ,markets , shareholders and stakeholder expectations.
2.Business Level Strategy : Concerned with decision regarding how to compete successfully in particular market. Determines competitive position of specific SBU's with respect to products or services, includes decision between undifferentiated, differentiated and focus.
3.Operational Level Strategy : Concerned with specific functions in the organisation and how to deliver effectively the corporate level and business level strategies in terms of resources ,processes and people. Operational activities implement strategic policy but do not constitute strategic management.
In case of Yahoo it talks about different levels of strategy .It talks about selling of some of its businesses which is clearly a corporate level strategy ,Clarity of corporate level strategy is important for determining the range of business to include as this the basis for other strategic decision.
In case of yahoo its relationship with online advertisers is stretched across different business units so protecting yahoo brand is vital for all ,Yahoo's corporate strategy should support SBU's but at the same time SBU's have to make sure that their business level strategy should not damage corporate whole..
At yahoo there are appropriate operational strategies in terms of design ,layout and renewal related to its business units but there is lack of clear accountability among lower level management.
Structure and culture
Structure is the physical layout of the organisation ,it shows various managerial levels for e.g. Organisational chart whereas culture is the assumption and belief shared by members of the organisation .Structure and culture are related to each other as one is always dependent on the other.
Two types of models in organisation structure and culture
Rational Model -THROB Model (Suitable for undifferentiated approach)
Excellence Model -FELT Model (suitable for Differentiated approach)
Organisations using rational model has top-down approach, functions are properly organised ,have well defined procedures and systems, formalised planning system. Power is at the top. Such organisation have deliberate development of strategies i.e. they have Intended Strategies, they are usually risk averse as mistakes are taken as punishments.
In organisations using excellence Model have top-down ,bottom-up and lateral
communication system, Informal Planning system i.e. strategy development is emergent, wider span of control ,higher level of ownership, mostly learning organisations because mistakes are viewed as opportunity to learn.
Structure breeds Culture
Types of structure and culture
1.Enterpreneural Structure and Power Culture : Person is important, useful for small business e.g. shops or sole proprietorship.
2.Bureaucratic Structure and Role Culture : Role is important , used in Government services like Army where role is more important.
3.Matrix Structure and Task Culture : Based on expertise and is equal to specific projects, builds on knowledge, competency and skills.
4.Independence Structure and Person Culture : Person is the most important as if no person than no structure no culture for e.g. Doctors, Solicitors.
2(a) Logical Incrementalism It is the deliberate development of strategy by experiments and learning from past experiences rather than formulation of strategies .LI is concerned with standardized planning procedures , systematic data collection , constant scanning of environment which improves quality of information for decision making and helps in maintaining efficiency and performance.
LI can be a executive practice to improved information available for decision making mix of formal and informal as environment is uncertain so managers cannot rely on historic data for predicting change , so there is need to be a constant scanning of environment to know the emerging strategies and use of them to maintain efficiency and performance
4. Transformational change (cultural change ) when a strategy requires massive organisational change not only structural change but also cultural changes is transformational change .T C can be the result of merger , acquisition , strategic alliance , major down turn in performance etc such change could take form in multiple changes related to organisation strategy for e.g. change in product , markets or markets focus , change in the top management of the organisation .This happens in the organisation which have failed to responded to change in the environmental or competitive pressures .It is required to bring back business on tracks.
5.strategic Drift : It is the tendency of the strategies to develop incrementally on past experiences and cultural influences but it may not change in line with its environment.
While assessing the case of yahoo it is seen that it talks about transformational change i.e. overall change related to structure change and the cultural change , overall change in the market position etc .in my view transformational change is not effective as it both demands time and money , in today's competitive environment every business is short of both , it can be a wastage of resources and above all it is not easy to change human thinking ,if the organisation has a formal planning system than employees may resist change, they can take it as negative as why the top level wants us to change ,it is a belief that employees like the old ways of doing things they have a general tendency to avoid responsibility. According to me it is not easy to bring transformational change there are greater chances of loosing than to succeed but if it is an informal organisation with few levels of hierarchy than transformational change can be effective as employees work as a team , creativity is important so employees accept change and try to adjust accordingly.
In my view change should be incremental i.e. it should be in parts so that employees do not resist it , it is learning from mistakes made in past . for e.g. in my organisation which is a manufacturing unit we have formal planning system with many layers of management and it breeds power culture , everyone is doing the same repeated work and were happy but still we are not able to gain more market share , than the top level conducted an audit as to what can be the reason for our failure at the market , it has been observed that we are not changing with the environment although we have unique resources, skilled and creative manpower but due to many levels of hierarchy they are not able to show their creativity , so we decided to change but not as a whole as it demands time and money , we tried to bring incremental change , as first step we de layered levels of management , than we motivated employees as to work in teams so that they feel belonged to the organisation , encourage them to show their creativity , as they started show their creativity , mistakes are treated a s opportunity to learn than to punish ,there thinking changed , they changed themselves according to us and become more productive and innovative , it has helped the organisation in gaining the market share .
But if we have decided to have a transformational change which is overall change than we will not be able to retain the talented employees , we need to spend more time and investment and in a competitive environment it becomes very difficult for us to gain market share .
ORGANISATIONAL RESOURCE MANAGEMENT
Strategy HRM Focus-Integration or fit of b/s strategy with HR Strategy
HR Strategy is concerned with the challenge of matching the 5ps
Link between environment , human resource strategy and business strategy
Actual HR Strategy will be determined by decision at all three levels and by the ability and leader ship style of local managers to follow through goals
HR functions should be strategically integrated established a fit between external business strategy and the elements of internal HR Strategy
An organisation HRM Policies and practice must fit with its strategy in the competitive environment with immediate business conditions that it faces .
Integration has three aspects
Linking of HR policies and practices with the strategic management process of the organisation.
Importance of HR on the part of line managers
Integration of work force into the organisation to foster commitment
For example in my organisation they need to follow differentiation strategy which is one of porter's 3