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Before going to define the business strategy it is essential to know about the strategy. The concept of strategy can be traced to the war. The word "strategy" came from the two Greek words i.e. Stratus (Army) and Agein (to lead). The Greeks felt that the strategy making is one of the responsibilities of the Army General. This concept today adopted even in the business. Even around the same time, the Chinese General Sun Dzu who wrote about strategy also suggested that the strategy making is one of the responsibilities so the leader.
However, the Strategy has been defined by different scholars in different ways. These definitions emphasize different aspects of strategic management.
One of the earliest definitions of Strategy is traced to the ancient Greek writer Xenophon (Commings 1993; 134) who said "Strategy knows the business you proposed to carry out" This definition implies that the knowledge of the business as strategy
Kennth Andrews (1971) defined strategy as "the pattern of major objectives, purposes or goals and essential policies or plans for achieving the goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be" This definition of strategy emphasizes on purpose and the means by which purpose will be achieved. It also emphasizes on the values and the cultures that the company stand for.
Kenichi Ohmae (1983) defines strategy as " the way in which a corporation endeavors to different itself positively from its competitors, using its relative strengths to better satisfy customer needs" Ohmae's definition highlights the competitive aspect of strategy and the strengths required to satisfy customer needs. This definition thus aims at customer satisfaction as the driver of the strategy.
However, the above definitions are only indicative of different dimensions of strategy. It could be seen that these definitions were framed by the exponents in different settings of the businesses.
The components of Strategic Management:
The strategic management can be seen as an organisational process which can be identified into broadly four components. They are:
1) Scanning environment
2) Strategy formulation
3) Strategy implementation and
4) Strategy evaluation and control
Strategy can be seen as a response to environmental signals. However different organisations respond differently to the same environmental changes. This is because each organisation is uniquely positioned n the market.
2. BUSINESS STRATEGY:
A business strategy describes how a particular business intends to succeed in its chosen market place against its competitors. Business strategy focuses on improving the competitive positions of a company's or business unit's product or services within the specified industry or market segment that the company or business unit serves.
It represents the best attempt that the management can make at defining and securing the future of that business. A good business strategy therefore should incorporate the scope of business, appropriate documentation, real customer needs, internal capabilities and competencies, competitive advantage and effect and timely implementation to be successful.
Mathur and Kenyon (1997) explained that there should be a separate competitive strategy for each "offering" defined as the unit of customer choice. C. K Prahld suggested the concept of "Core Competence" of the enterprise.
The business strategy must identify, in broad terms, the principal initiatives that will be necessary to implement the strategies. It must identify the changes in the business processes, culture and organisation that may be needed. It must argue the case for change. It should set tight but achievable targets for the time-scales in which change can be achieved.
3. SMALL BUSINESSES - EFFECTIVE STRATEGY:
The purpose of the strategy formulation process is to cause Strategic thinking that visualize the future of the enterprise and how that future may be secured. In practice strategy process may be formal or informal, simple or complex and the process may be exactly analytical or based on a broad understanding of important trends. The strategic process may involve many people or just few. However the formulation process should lead to good strategic thinking.
Effective strategic thinking for small businesses:
To construct and carried out the effective strategy the small business should:
it has to considers the enterprise as a whole
strategy should be more about the longer term than the immediate.
It must address both the relation of the enterprise with its external environment and its own capabilities and resources.
The strategy should be based on fact and reality
It should supported by rigorous analysis
Good strategic thinking also requires imagination. An effective strategic thinker must have well knowledge about the past; good understanding of the present and he should able to imagine the future. He should also able to think beyond the current constraints in an original way.
An effective strategy formulation process for the small businesses can be constructed and carried out effectively by understanding the following issues properly.
Stake holder influences
Understanding of competence
Awareness of technological change and innovation
Mix of people involved in the process.
Encouragement and understanding of top management.
Communication of results and reaction to feed back.
A sound logic and balance to the process
Process design and not over-design.
Considered role of external support.
Anyhow, it is essential that the strategy formulation process should designed to meet the needs of the enterprise and its business needs. It should be clear about how the enterprise is trying to create value.
Strategy making process:
The strategy making process refers to formulating the strategies of the organisation. This consists of three elements; Strategic Intent, Strategic Assessment and Strategic Choice.
Strategic Intent is the driver of strategy process. It deals with 'Where does the organization want to go? 'Every organization either small or big, should clearly lay down its intent i.e. the purpose of existence of the organization. Therefore the strategic intent forms the core element of strategy making process. It combines the vision of the future with the intent to make that vision a reality. Hamel & Prahlad (1989) who first used the phrase Strategic Intent saw it as the heart of the strategy. Strategic Intent includes vision, mission, goals and objectives which ultimately drive the strategic initiatives and results into making of strategy.
Strategic Assessment provides relevant knowledge about the strategic context. It deals with 'Where is the organization now?'. The strategic assessment anchors future to the current realities. It addresses both external and internal aspects of the context so that the organization can identify the gaps and suitable strategies will be crafted to achieve the strategic intent. Henry Mintzberg (1976) discovered that "strategy formulation is not a typical a continuous processes". It is most often an irregular, discontinuous process, proceeding in fits and starts.
Strategic Choice is the link to action. It deals with 'Which options will organization choose for getting'? and 'Where organization want to be from where it is? In the ultimate analysis the strategic choice should resolve the strategic issues posed by the context. The process of choice could be divided to four steps- Identify options, Evaluate the options against selected criteria, Choose the best option and Take action. This process is more analytical and requires skills of different disciplines for obtaining the best option.
Figure 1 - Three logical elements of strategy formulation process
4. SWOT ANALYSIS OF MAKING IT BIG (MIB):
The SWOT analysis is an extremely useful tool for understanding and decision making for all sorts of situations in business including the small business. SWOT I an acronym for Strengths, Weaknesses, Opportunities and Threats. It provides a good framework for reviewing strategy, position and direction of a business proposition or any other idea.
However, the SWOT analysis of Making It Big is as follows:
Employees loyalty towards the company
Multi tasking capacity of employees ( e.g. GM)
The customer service software
Small business with a single decision maker
Staffing at management level
New product line development
Team building among the staff
Current decline of sales
Bird eye view of the CEO
5. DEVELOPING AND STRENGTHENING THE MAKING IT BIG:
MIB must focus on its internal strengths to make it competent in the market. To develop and strengthen the MIB the following considerations must be taken by the company.
Development of customer software solution is a big leap to the company, as it will bring on many more customers to it.
Development of New Product Line can be an innovative idea.
It can be achieved by a good market survey and also understanding the wants and needs of the customers.
When it comes to the staffing and skills, the following recommendations are given to the owner-manager to do.
Performance Appraisal measures should be taken care.
Best performances should be rewarded.
Key Performance Evolution Points (KPE) should be taken care and employees must be judged based on them.
Even development of employee retention plans is must which in turn will help to increase the productivity as well as the loyalty towards the company.
Decentralization of the power should be done, as Cynthia is facing difficulty in managing the entire organisation during its expansion. So, an alternative must be designed and since it is the small business the power should be distributed to either family member or to the well wisher of the company.
Proper on job training techniques should be given in order to reduce training hours for the amateurs and to make them feel comfortable at work and to make.
Key Performance Indicators (KPI) for each job should be identified and employees must be made aware of KPI so that everyone fulfils their core jobs given to them.
6. SMALL BUSINESS - TOOLS & TECHNIQUES FOR CRAFTING AND EXECUTING BUSINESS STRATEGY:
There are different tools of strategy like PEST analysis, Competitor analysis, SWOT analysis etc. which will guide the organisations to build good strategy and makes the organisation to survive in the market.
But Making It Big here is a small organisation and we can't say that the tools can't be used here as it is a small company. But instead, if we plan strategically from the beginning itself it will surely become an added advantage to the company. Therefore we can use many strategic tools even for the small company like Making It Big. For e.g. using the SWOT analysis helps to estimate the company's strengths and opportunities in what line the company should expand and at the same time it warns the company about the threats and weaknesses. If we use PEST analysis in developing a New Product Line, percentage of occurrence of loss can be decreased drastically. The competitor markets can be analyzed and helps us to be aware of customer's requirements in the mere future.
So, with this we can say that the strategic tools and techniques can be used even for small companies for becoming good to best companies.
It is true that the organisations that engage in strategic management generally perform better than those that don't. The strategic management can give clearly three most important benefits to the organizations. These are:
1. Clear sense of strategic vision for the firm
2. Sharper focus on the importance of strategy making
3. Improved understanding of a rapidly changing environment
It is also observed that the strategic Management need not always be a formal process. In small and medium enterprises strategic Management takes an informal approach. In case of large organisations with multi divisions, the strategic Management process may be time consuming. It often takes slightly more than a year for a large company because of relatively large number of people will be affected across the organisation, a formalized process is warranted.
Figure 2: The components of Strategic Management
Figure 3- Fishbone diagram of MIB Company
To market the New Product aggressively
To come up with a strategy of
Customer centric product To manage HR in a proper way to
tackle risks of new product