Approaches to Strategy Development - Research Paper Example

Approaches to Strategy Development Approaches to Strategy Development Strategy development is an iterative undertaking. Ifthere were no alterations in the world, organizations would only come up with a single strategy and stick to it. However, the world is turbulent and this means that various organizations face varied challenges that demand that they use different strategies to be able to move ahead. In a world that is constantly changing, there is need to come up with a development strategy that gives organizations the opportunity to project the future and to use the gotten projection in sync with its culture, mission, strengths and weaknesses to chart how it needs to match into the future (Sterman, 2000). This paper will discuss how different approaches to strategy development might be appropriate in different organizations. How Strategy Shapes Structure Wherever business executives sit to deliberate on their corporate strategy, they always begin by critically examining the industry or the existing environmental conditions from which they operate in. they then follow this by examining both the strong and weak points of their competitors. With the industry and competitive aspects in scope, they then set out to establish a unique strategic position that can give them an opportunity to outperform their competitors. In order to attain such a competitive advantage, an organization has to come up with development strategies that differentiate it from other organizations that are dealing in the same products and it does this mostly by lowering their prices. This also calls for the organization to place its value chain strategically and to come up with manufacturing, marketing, and human resources development strategies in the process. This then gives the organization room to set up its budgetary allocations for its operations (Sterman, 2000). Using the above analogy, one thing that comes out clearly is that the options that any organization has are defined by the environment under which it operates and this means that strategy is impacted by structure. It is therefore logical to conclude that an organization that sells its goods online would have a varied development strategy from another organization that has physical shops for its goods and services. This “structuralist” approach has been the subject of discussion for over three decades now and more organizations are adopting it in the new model of industrial organizational economics. According to this new paradigm, the performance of an organization is greatly dependent on how it conducts itself and this conduct is in turn greatly impacted by the existing structural factors. In this case, such factors include aspects such as the number of suppliers as well as buyers that the organization has and the prevalent barriers that the organization has in its endeavour to penetrate the market. This international viewpoint where corporate decisions are affected by causality flows from outside factors calls for organizations to set up unique development strategies that favour their unique positions (Sterman, 2000). Building the Strategy Development In essence, there is minimal activities in the survival of a business are as noteworthy or ignored as that of planning a strategy for succeeding. In most cases, entrepreneurs teeming with nothing but confidence and passion get into business that is bound to fail because they never take time to develop a strategy that distinguishes them from their competitors. The tendency among most of these entrepreneurs is to start a business, try out several approaches that have worked among other entrepreneurs then discard what does not. In many instances, entrepreneurs are take action and they therefore find the whole process of developing a strategy a needless undertaking. However, without a blueprint, it becomes so hard for such a business venture to succeed. Although businesses that lack well-defined strategies might get some level of success in the short term, they find themselves edged out of business the moment that competitive conditions become stiff (Patil, & Shah, 2010). In the current competitive international market, any organization that is not thinking strategically is defenceless. As mentioned earlier, each business is bared to the numerous forces of a fast transforming cutthroat environment and in the coming days, small business managers can expect the competition to further hot up. From drastic political changes around the world to enormous technological changes, the truth is that the business market is greatly changing and it will need well placed business strategies for businesses to survive the onslaught. Although the changing business environment presents numerous challenges for organizations, it also brings with it an enormous potential for organizations that have working strategies to capitalize on (Akkermans, & Dellaert, 2005). Building a Competitive Advantage For an organization such as an online fashion retailer, the main goal of coming up with a strategic plan is to gain a competitive edge over other fashion retailers that market their products online. Given that technology is available to all companies operating online, such a retail company needs to come up with a strategy that sets itself apart from its competitors. Such a strategy should also create value for their clients and it should be hard for their competitors to replicate. For such an organization however, developing a competitive advantage on itself is not sufficient since the main key of continual success is developing a competitive advantage that can be sustained in the long run (Mariany, et al, 2012). This is gotten by its ability to exploit its major competencies that gives them the aptitude to serve their selected target market in a better way than their competitors. For a company carrying most of its activities online, the core competencies might be in hiring a strong team of information technology experts who can be able to reach a wider online market than their competitors (Akkermans, & Dellaert, 2005). The strategy that is employees by an organization carrying its operations online differs greatly with those of a small to medium enterprise that produces something like computer games. While the fashion retailer with an online presence might only be interested in hiring competent software developers, the company dealing in video games might find that their core competencies is developing superior quality games, customer service, being innovative, responding quickly to client complaints and being flexible. Such a company would do better by creating animated games or by creating virtual magical experiences for their customers. In most cases, a company might lose focus and this leads to a scenario where their competitive edge slips to other companies’ majority of them being upcoming (Mariany, et al, 2012). Although the online and the small business enterprise need to develop unique strategies for their businesses, there are some factors that remain constant. Regardless of the nature of business operations, the core competencies become the heart of each organization’s competitive advantage and they often last for a long period. In most cases, the market, clients, and competitors might transform over a period of time but the core competencies are firm enduring and they form the basis of everything that a company does. In order for an organization to have a competitive edge, its key competencies should be hard to copy and they should offer their clients a tangible benefit. Unlike companies with an online presence where everything revolves around technological advancements, the core competencies of an SME have everything to do with their size. In most cases, SME’s have a unique closeness to their customers and unlike bigger multinationals; they are also more likely to innovate. This means that their small size is in itself an advantage that gives them the ability to do things that their big competitors cannot achieve (Caro, 2005). In trying to develop strategies, one thing that companies operating in different environments should know is that no single organization can be everything to everyone. In most cases, the online fashion retailer might be tempted to venture into physical sales of their clothes. While this might work for some time, it creates confusion to its clients since it cannot differentiate them from their competitors. Such an online fashion retailer can use their creativity to ensure that they maintain a competitive edge among their other competitors. The best thing about developing such core competencies is that it does not require large amounts of money and this means that no business can give an excuse as to why they have failed to develop strategies that will guarantee their competitive edge. The only thing that is necessary is for an organization to be creative, and use their imagination and vision to find out the things that it does well that are significant to their customers. Although organizations have numerous ways that they can use to acquire a competitive edge, developing a strategy based on their core competencies gives them an opportunity to develop a competitive edge founded on what they do best (Caro, 2005). When it comes to the aspect of developing a strategy for creating a competitive edge, small to medium enterprise companies have various natural advantages as compared to their competitors. In most cases, small companies usually have leaner product lines as well as more distinct customer bases something that gives them an opportunity to establish a close relationship with their clients as well as definite geographic market locations. It is evident that, business people in most instances are more connected to their and this offers them inside knowledge on better ways to meet needs and wants of their clients. Due to the simple nature of their business structures, SME owners are often in touch with their customers, in most cases labouring side by side with them and this gives them an opportunity to discuss about various strategies one on one. In addition to this, small companies often find that strategic management comes to them in a more natural way than larger organizations that are usually dogged by bureaucracy. However, a company selling its products online does not have the same opportunities when it comes to strategic management as an SME simply because their operating environment is varied. Strategic management has the capability of increasing the effectiveness of an SME but companies must foremost have a process that is tailored to satisfy their needs as well as the unique nature of their business. It is inappropriate to apply the strategic development methods to a small business simply because all of them have unique characteristics. Unlike big businesses, small SME companies should adopt a short planning perspective and work hard to ensure that the employees and even external parties are actively involved in formulating the development strategy. Instead of just planning, such small businesses should take much time in strategic thinking as well and this can best be done by marrying long-range objectives to their daily operations (Brun, & Castelli, 2008). The Strategic Management Process Developing a clear vision is critical in strategy development. From the days of old, the greatest thing that has been driving businesses has been developing a target and then rallying everyone to reach it. A highly prosperous business is the one that has the potential to create a vision and communicate the same enthusiasm to those around them. The biggest importance for vision in developing strategy is that vision offers direction and determines the decisions that an organization takes. While, vision is critical to effective strategy development, this does not always apply across organization. While vision is significant in ensuring the success of SME companies, the same thing does not apply in organizations with their operations online. This is because while such a company should have a clear vision of what it wants, the various technological advancements demands that businesses work hard to keep at pace with the numerous technologies that happen almost on daily basis. In most cases, developing a strategy for such a company demands that on top of knowing what they need to achieve, the main focus of their companies should be to develop strategies that match the current technologies (Brun, & Castelli, 2008). Another thing that businesses should be focused in is developing an effective mission statement that tries to define the kind of business that they are involved in. In reality, establishing a business purpose is critical since it grants a business some sense of direction. Perhaps mission statements are the only universal thing that businesses need to adopt in developing their approaches to strategic development. However, just like the vision statement, a company’s mission statement must take into account the nature of the business and the entrepreneur must realize that the environment that they operate in is the one that should define their mission statement. This means that no two companies can have the same mission statement since it is this writing on paper that dictates how they approach their target market (Zhenxiang, 2011). While sizing up one’s competitors is the most ideal way for a business to determine its view and position in the market, it is also imperative to note that not every competitor demands the same level of consideration while developing a strategic plan. For an SME, direct competitors are ideal since the company uses them to compare prices and to find out the core competencies that their rivals have failed to take into consideration and capitalize on those. However, for a company that has an online presence, the major thing that they can learn from direct competitors is mostly on the technologies that their competitors have failed to utilize and then use those to introduce themselves to their target market. From the above analogy, it is therefore clear that no single business can use the same approaches in their strategic development and attain any substantial growth in the face of rising competition and constantly changing business environments (Zhenxiang, 2011). References Akkermans, H., & Dellaert, N. (2005). The Rediscovery of Industrial Dynamics: The Contribution of System Dynamics to Supply Chain Management in a Dynamic and Fragmented World. System Dynamics Review 21 (3): 173-86. Brun, A., & Castelli, C. (2008). Supply Chain Strategy in the Fashion Industry: Developing a Portfolio Model Depending on Product, Retail Chanel and Brand. International Journal Production Economics 116: 169-181. Caro, F. (2005). The Effect Rotation on Consumer Choice and its Impact on Competition. International Series in Operation Research and Management 131: 63-79. Mariany, L., et al. (2012). Applying System Dynamics Approach to the Fast Fashion Supply Chain: Case Study of an SME in Indonesia. The Asian Journal of Technology Management 5 (1): 42-52. Patil, R. & Shah, J. (2010). Strategy Development Based on Recourse Model for Very Short Life Cycle Products. International Journal Production Economics 128: 3-10. Sterman, J. (2000). Business Dynamics System Thinking and Modeling for a Complex World. Singapore: McGraw-Hill Zhenxiang, W. (2011). Case Study of Online Retailing Fast Fashion Industry. International Journal of e-Education, e-Business, e-Management and e-Learning 1 (3) Read More