The Vital Role That Strategy Plays In Markets Business Essay

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Strategy plays a vital role in the success of every business enterprise. Framing and implementation of strategy is an art. Strategy is designed at different levels of an organization which includes the corporate level, business level and the functional level. The different types of strategies are implemented by an organization keeping in mind the changes in the current business environment. Mainly four different types of grand strategies are implemented by an organization which includes stability strategies, expansion strategies, retrenchment strategies and the combination strategies. The process of strategy designing and implementation is an ongoing process and the success of the strategy can take the business to great heights.

Meaning of Strategy

The word strategy evolved from the greek work strategos. The meaning of the word strategos is the art of giving instructions or directions to others. The process of strategy includes the task of defining the vision, mission and objectives of an enterprise and deciding the series of different courses of actions and allocating the different necessary resources to different strategic plans for the accomplishment of those objectives.

Definition

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In the words of Andrew, "Strategy is the pattern of objectives, purpose, 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 company it is or is to be".

Features of strategy

The strategy of a company consists of a strategic plan and various resources necessary for the purpose of implementation of strategy.

The structure of the strategy is designed on the basis of organizational long term as well as short terms goals and policies.

Implementation of strategy is done for the purpose of increasing the performance of the organization from its current position and to achieve the targets and the position which the company has planned for the future.

For the purpose of success of strategy, it is important that there should be a proper match between the strategy and the organizational structure.

The strategy of a company is designed for various purposes like for focusing on customers, to increase its performance in comparison to its competitors, for increasing profits, for concentrating on different segments of the business and to achieve the desired goals of the business.

Strategic choices

While designing a strategy, a company makes a strategic choice which is mainly the task of making the choice between the different alternatives available with the firm so as to achieve its future goals in the best manner.

Competitive advantage

For the purpose of achieving competitive advantage, a firm is required to have distinct competencies in comparison to its competitors. Those distinct competencies are achieved by a firm on the basis of different strategies developed and implemented by the firm. The distinct strategies of the firm can be based either on product differentiation, strong R&D, expansion of the company in other countries, efficiency of different departments etc.

Proactive and Reactive strategy

The strategy of a company is designed after taking into consideration various internal as well as external factors affecting the company. When a company takes the decision to follow a proactive strategy, it takes into consideration the strategy which the company is already following but along with that it also brings into action some new initiatives as well. If a company decides to follow a reactive strategy, the company changes its present strategy according to the changes in the internal as well as external environment of the company.

Strategy crafting

Strategies are designed and implemented at different levels of an organization. There are various reasons for designing and implementing strategies which include responding to environmental changes, to face the changes like downturn in business cycles, to get ahead of competitors, to get the top brand position, earning higher profits even at the time of depression. The strategy should be implemented while following the ethical and moral standards of the organization. There should be a proper check from time to time that whether an organization is following its ethical and moral responsibilities or not. It should be monitored that whether the strategy is contributing to the growth and success of the business. It can be judged with the help of business model.

Process of strategy making

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There are various steps involved in the designing and implementation of strategy. The various steps include -

Strategic intent - The term strategic intent is related with the ultimate aim of an organization for which an organization is working. Strategic intent includes the vision, mission statement and objectives of an organization.

Defining vision - The vision statement of a company depicts the position which the organization will like to achieve in future. It is the perception of the condition or state which the organization wants to achieve in future.

Defining mission - The mission statement of an organization defines the mission of an organization. The mission of an organization states the present situation of the organization, the current activities of the organization and the target customers of the organization.

Setting the business - This aspect of strategic intent defines the business of the organization. In this the present business of the company, what will it be in future, and social activities of the business are defined. The business of the company can be defined in terms of the different groups of customers, different business segments or different products of the company etc.

Defining objectives of business - The objectives of a business are the future accomplishments for which an organization is putting different courses of actions.

Strategies formulation

Appraisal of environment - In this step, an analysis of various external factors affecting the organization is judged. A SWOT analysis of the whole organization is done on the basis of which the strategies are designed.

Appraisal of organization - The organizational appraisal includes the analysis of internal factors affecting the organization. This step includes the analysis of resources of organization, internal environment of the organization, strengths and weaknesses of the organization, synergistic effects, areas where the company is doing giving excellent performance, competencies of the organization, capabilities of different segments or departments, strategic advantages which the firm is having. Designing of strategies at corporate level

To do strategic analysis - The various factors which affect the strategy or are related with the strategy formulation are analyzed. For this purpose various techniques of corporate portfolio analysis like BCG matrix, GE nine cell matrix, Hoofers' product evolution matrix, directional policy matrix etc are done.

To performing strategic choice - In this step decision is taken regarding the adoption of selective factor, among the various alternatives available with the company. This process involves the task of identification of different alternatives available with the company in regards with strategy, an evaluation of these alternatives is done and ultimately the best alternative available is selected.

Strategy formulation - After making a choice between the different alternatives available with the company, the task of strategy formulation is done.

Designing of plan of strategy - The ultimate plan of strategy, the various resources to be used, time of implementation of strategy and series of courses of actions which will be followed for the purpose of implementation of strategy is defined.

Strategy implementation

Strategies are activated - The strategic plan gives an overview of the tasks to be done for the implementation of strategy but in this step the plans, programs and projects are designed. Various regulatory formalities are also undertaken. The various resources are also allocated to the designed plans.

Preparation & organization of structures and systems - The structures and systems of the organization are provided the appropriate shape i.e. responsibilities are given to the concerned persons and departments are organized accordingly.

Behavioral implementation - Efforts are done to create an appropriate environment in the organization. Appropriate leader is assigned responsibilities as the success of the strategy implementation depends a lot on the role played by the leader.

Functional implementation of strategy - In functional implementation, various resources are allocated between the different tasks of different areas where the strategy is to be implemented.

Operational implementation of strategy - This step mainly includes the implementation of the strategy in the various operational areas of business. The execution of plans and policies is done in the production department, operations planning department, research and development department and operations control department.

Strategic evaluation and control

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Undertaking evaluation of strategy - The effectiveness of strategy in achieving the goals of the organization is measured. The various persons which evaluate the strategy include the shareholders, financial institutions, board of directors of the company, profit centers of the company, financial controllers and top level managers of the company.

To perform strategic control - The various types of strategic control implemented include premise control, implementation control, strategic surveillance and special alert control. In this step, actual performance of strategy is achieved and comparison is done with the standards established earlier, variances are analyzed and then corrective action is taken.

Redesigning of strategies - If any changes are required to be done in light of the changing circumstances then strategies are revised accordingly.

Conclusion

For achieving the success of the strategy, it is necessary that the strategy should be designed and implemented according to the requirements of the organization. The strategy should result in providing the firm with greater competitive advantages and the position of the organization should be strengthened. The success of the strategy also depends upon the flexibility and proper implementation of strategy, risk undertaken by the firm etc. The management of the company should design and properly implement the strategy according to the requirement of the company from time to time as an effective strategy contributes a lot towards the growth and success of the organization.