Key Strategic Planning At Dell Inc Commerce Essay

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Strategic planning is a management tool which is used to make the organization reach a better fit between its objectives and its environment. It helps the organization do a better job by focusing its resources, time and energy toward ensuring that all parts of the organization are striving for the same goals and objectives. The planning process is 'strategic' because it involves preparing the best way to adapt and redirect the organization to its ever changing environment. An important part of the planning process is to develop a Grand Strategy, which is a general plan of action intended to achieve long term objectives, and then work towards specific strategic goals.

Strategic planning is only useful if it leads to strategic management, the implementation of the ideas provided by the planning process for leading the organization better. Dr Jagdish Seth, a reliable authority on strategy management, has provided a simple frame work for understanding the process. According to him, the organization should continually ask this question 'Are we doing the right thing?' This simple yet vital question brings the management's attention to the 'bigger picture' and gears up the authorities to accept changes in environment, technology, regulation and competition. It is the first step to incorporate strategic management in the culture of an organization because gone are the times when a traditional approach of "if it doesn`t broke, don't fix it" would work.


Strategic management is of vital importance as CEOs and managers have to constantly reassess their strategy management models and implement change and improvement wherever needed. Therefore, a strategy is a plan of action to help the organization achieve its goals. A strategy differentiates a business from its competitors and is adaptive for the firm and its environment. The main purposes that strategic management serves are Core Competence, Synergy and Value Creation. (Daft, 4e)

Core competence is a field of business activity that an organization does particularly well in comparison to competitors and gives the company competitive advantage. For example, Boeing has a core competence in the areas of flexible design and assembly of aircraft while Home Depot thrives because of superior customer service.

Synergy is the condition that exists when the different parts of an organization work together in cohesion. Managing all part of a business well creates additional value with the existing resources providing a big boost to the bottom line. A good example is the PepsiCo's 'power of one' strategy which leverages the power of all its snack food and beverage lines to create maximum market power.

Value creation has gained immense importance in recent years as a competitive advantage for firms. Delivering maximum value to customers can make a business go above and beyond its competitors on the basis of a satisfied customer base. Mc Donalds made use of its competency of delivering value to customers by opening up stalls at Wal-Mart and Sears stores

A contemporary example is that of Dell. Dell computers constantly changes and adapts itself to its environment by finding new ways to produce computers. However, Dell has always focused on low cost and high speed and it never compromises on its core competence. According to observers, Dell has spent years perfecting its competence and it employs brutal standards to the all areas of the business to promote a consistent strategy and so that all functional areas work towards the same objectives. It maintains healthy relations with its key customers and suppliers and adds value to the delivery network. All these factors make the company competitive in a highly volatile technological environment. [1] 

Therefore, strategic management is very important to business success.



Though extensive data collection and statistical analysis is needed for a strategy to be developed which is fit for the kind of market a business operates in, it is equally important to have a sound judgment about market trends and to be ever ready to strike for the best opportunities to get ahead of competitors. This knowledge and skill comes from experience that executives get by being in the market for years and by observing closely how the market responds to different business stimuli.

The overall strategic management process begins with the executives evaluating the current organizational positioning in relation to the mission and vision set by the executives. The business' internal and external environment is analyzed next by conducting a SWOT analysis. This process involves a thorough study of the strengths and weaknesses of the organization and the major threats it is faced with, along with the opportunities that come along its way. (Daft, 4e)

For example, the Citigroup has been able to leverage its global strategy on reliable business processes and low cost because of the valuable information they have had from situational SWOT analysis. Similarly, Toys R Us valued greatly by recognizing a major opportunity in the market and became a specialized 'category killer' toy store instead of stoking every other product by any manufacturer. It was John Eyler's sheer judgment and an instinct for opportunism to explore this niche in the toy industry. [2] 

Moreover, for instance, in the fiercely competitive airline industry, Southwest Airlines saw a market opportunity to provide low cost air fares that would attract discount seekers from other airlines, plus bus and railway travelers. They would do this while generating higher customer satisfaction with better on time performance and overall convenience in the customer experience. 

In is in the best interest of the organization for it to recognize opportunities both in the external and internal environment of the business. The aim of this survey is to identify the major factors that might require change to be introduced in any field of business activity. This change may require the mission to be redefined after which a strategy is developed.

Organizational strategy is developed in three stages or levels of hierarchy,

Corporate Level strategy is concerned with the selection of businesses in which the firm should compete. While strategy may be about a firm's survival, it is products that compete on the front lines and therefore a good selection of a product portfolio is of utmost importance. A key determinant of corporate strategy is Management Practices and the management of Interrelationships. Therefore, corporations have to decide whether to run a centralized or a decentralized business and how develop synergies by sharing and coordinating with the staff. This requires the manager to have excellent interpersonal ties and communication skills. Therefore, such practices are 'rungs on a ladder' and enable an integrated strategy to be developed.

Business Level strategy is about developing and sustaining a competitive edge for the products produced by each business unit. At this level anticipating changes in demand and technology is very important. Michael Porter identified five forces that can directly influence an organization and in turn its strategy [3] . These include bargaining power of buyers and suppliers, new entrants in the market, threats of substitutes and rivalry between competitors. Preemptive action along with analytical and intuitive thought processes are needed to predict the changes in the market place and to prevent being side tracked by these forces. Porter suggested three major strategies that can be implemented keeping in mind the culture of the organization and how well it can adapt to changes. (Daft;4e)




Flexible, loosely knit, strong coordination, employee innovation, high level of quality

Cost leadership

Strong central authority, tight cost controls, standard procedures and quality, close supervision


Customer intimacy, empowered employees, balances cost and customer loyalty.

Table 1

Therefore, the design and characteristics of the organization need to be kept in mind before any strategy is chosen and implemented. Without proper consideration, a very efficient strategy may be rendered useless.

Functional level strategy revolves around issues related to business process and the value chain of the firm. Functional level strategy involves the development and coordination of resources through which business level strategies can be executed efficiently and effectively.

Once strategy is developed in these three hierarchical levels, it is implemented in every aspect of the business be it human resource, information control systems, structure, leadership or culture.


Strategy formation is incomplete and void if it is not in accordance with the important schools of thought regarding strategy. There are ten major schools of thought for strategy development. These schools of thought give a snap shot of how one strategy may best fit according to the aims and the environment of the organization. However, it is essential that all these schools are given consideration whilst formulation of a strategy. The lack of this can lead to the missing out of great opportunities and eventually lower competitive advantage.

According to Mintzberg, Ahlstrand, Lampel,

"We are all like the blind men and the strategy process is our elephant. Each of us grabs one part of the elephant and thinks of it as everything. "Everyone has seized some part or other of the animal and ignored the rest. Consultants have generally gone for the tusks, while academics have preferred to take photo safaris, reducing the animal to a static two dimensions. As a consequence, managers have been encouraged to embrace one narrow perspective or another, like the glories of planning or the wonders of core competences. Unfortunately, the process will only work for them when they deal with the entire beast, as a living organism." [4] 

Some of the major schools of thought are as follows:

The Design and Planning school: This is a deliberate approach where by strategy is fully planned through a conscious thought process and is communicated to the staff so everyone works toward a common goal. There is great emphasis on SWOT analysis and the findings are implemented in strategy formulation. Today, many companies get little value from their annual strategic-planning process. To meet the new challenges, this process should be redesigned to support real-time strategy making and to encourage 'creative accidents'

Positioning School: This perspective was very famous in the 1980's and was given great importance by Michael Porter. According to this, strategy reduces to generic positions that are chosen through formalized analysis of industry situations. The process, therefore, turns planners to analysts and indulges them into hard core facts to promote rigid 'scientific truths'

The Cognitive School: This outlook to strategy has been mostly restricted to the academic front. There has always been interest for the origins of strategies however these have little influence on the practical process of forming a business strategy. The main idea behind this approach is the cognition is used to build strategies and they are then implemented.

The Entrepreneurial School: The entrepreneurial school holds its foundation with the design school by centering the process toward the top executives however the important element of intuition sets it apart from the traditional strategy planning processes. This results in a shift of strategy from concrete designs to vague visions and perspectives.

The learning school: This school of thought is emergent in nature that is it focuses on past learning and teaches the people that the right strategy can be found by learning about past experiences and practices. It propagates that a good strategy is rarely planned new; it is almost always based on past accomplishments. Therefore, a look in the past enables the right fit to be achieved.

The Power School: This comparatively small, but quite different school has focused on strategy making rooted in power, in two senses. Micro power sees the development of strategies within the organization as essentially political, a process involving bargaining, persuasion, and confrontation among inside actors. Macro power takes the organization as an entity that uses its power over others and among its partners. It focuses on self interest and fragmentation.

The cultural and Environmental School: This process looks at strategy formation as a social process and focuses on integration and common interest. It takes into account the influence of culture on strategic change and emphasizes the need for cultural practices and environmental changes to be in line with the next move of the business. This means that practices other than those involving hard core facts should be the focus of the business.

The Configuration School: This school enjoys the most extensive and integrative literature and practice at present. It sees the organization as a cluster of characteristics and each behavior configures its own place in the business. Therefore, strategy formation is in the light of each of these characteristics.

The central idea of having different schools of strategy is that no one strategy works for all times and for all kinds of business. While some schools of thought are considered deliberate that is strategy is properly planned and analyzed and each change is absolutely marked and accounted for, others are adaptive in their practices. Adaptive strategies are those that take into account the environment of the business and prepare the organization for uncertainty and ambiguity by saying "it's a jungle out there!"

Therefore, the most important concept derived from the various strategy schools is that only planning and preparing for future events is not the key to success. Willingness to respond to situations and the right judgment is required to excel beyond the walls of the organization.

"Scholars and consultants should certainly continue to probe the important aspects of each school, for the same reasons that biologists need to know more about the tusks, trunks and tails of elephants", say Mintzberg, Ahlstrand and Lampel. "But more importantly, we must move beyond the narrowness of each school. We need to ask better questions to allow ourselves to be pulled by concerns out there rather than pushed by concepts in here, whether in consulting or in research... In addition to probing its parts, we must pay more attention to the integral beast of strategy formulation. We shall never find it, never really see the whole. But we can certainly see it better."


An excellent analogy to understand the importance of each school of strategy is to think about growing a business exactly as a human grows. This human being has multiple facets to life that he wants to live to the fullest. For this to happen, narrow strategies focused on one aspect of his life will not result in a perfect man. This view should be broadened and applied to business strategy formulation for a business that is good in parts is no good at all!

Consequently, corporate level strategy should be a balanced blend of the processes shown above along with good design, judgment, intuitive thinking and emergent learning. In response to the most dynamic era of business development, strategy formation should be about transforming old, linear and static business reactions to vibrant, active and flexible responses to demand and challenges that come in the organization's way. Thorough consideration to all aspects of a business' strategy formulation will result in the organization being more viable to grow in the age of rapid change.

"Because we underestimate how much variation can be caused simply by luck, we see patterns where none exist. It's no wonder that management theory is dominated by fads: every few years, new companies succeed, and they are scrutinized for the underlying truths that they might reveal. But often there is no underlying truth; the companies just happened to be in the right place at the right time. In 1999, after all, it was hard to find a business book that didn't hold up Enron as the embodiment of one important principle or other. Of course, some strategies and structures work better than others, but real meaning emerges only over the long term.

James Surowiecki