Facets and Uses of Strategy - Essay Example

?Facets and uses of strategy I. Introduction The word “strategy” is a by-word among organisations, firms, businesses, and individuals. What exactly is strategy? Why do organisation and people need strategy? How do firms, businesses, organisations and people use strategy? What are some of the conditions for strategic though and practice? II. Need for strategy by various organisations and people Organisations and peoples need strategy because they have goals and objectives. The goals and objectives are pursued in a world or contexts in which there are rivals, resource contexts, obstacles, stakeholders that affect the realization of goals and objectives, and a list of forms of organisation and tools to choose from. Rivals can have the same goals and objectives like ours. The nature of goals and objectives may be such that their realisation can accommodate only one individual or organisation or only a few individuals and organisations. Thus, strategy must have something to say on how several rivals should be dealt with so an organisation or individual can outsmart rivals. Resources are only available in limited states of abundance and scarcities. Individuals and organisations must therefore took stock of the most relevant resources for meeting goals and objectives and must establish a resource use policy or resource use combinations consistent with the resources that are available in terms of quantity, profile, and abundance. There are also rivals that can be competing for the same resources as well as in the realisation of the same objectives and goals. Goals and objectives are often pursued wherein there are obstacles to their realisation. The obstacle can be apparent or may only emerge in the course of pursuing the goals and objectives. Thus, strategy must be able to identify obstacles and anticipate the possible emergence of obstacles as goals and objectives are pursued. In the pursuit of goals and objectives, there are stakeholders involved. Some of the stakeholders can be tapped as possible allies while others can turn up to be supportive of rivals. Strategy can involve tapping allies as well as neutralizing possible, potential, or likely allies of rivals. Finally, strategy must employ a combination of tactics of specific activities or programs that can lead to the realisation of goals and objectives in the shortest possible time. It can involve the combination of various forms of organisations, activities, and tools. III. Use of strategy by firms and non-firms Strategies are used by military organisations, businesses, and non-profit organisations. According to MacMillan and Tampoe (2000, p. 170), a business strategy defines the following: the scope of a business the consumer’s current and future needs that it wants to address within its scope of business the specific capabilities that will give its business a competitive advantage and the general conduct that will allow a business to gain territory within its area of business. Earlier, Porter (1996, p. 64) asserted that the essence of strategy is to choose of activities that are different from what rivals do. It can involve cost leadership, differentiation and focus (1996, p. 67). According to Porter (1996, p. 68), at the core, strategy is “the creation of unique and valuable position, involving a different set of activities”. It involves positioning, positioning trade-off, as well as operational effectiveness (Porter 1996, p. 67-68). Alone, however, operational effectiveness is not strategy (Porter 1996, p. 78). Strategy covers what not to do, making trade-offs in competing, and combining activities (Porter 1996, p. 70). It is about a whole system of activities and not just a collection of activities (Porter 1996, p. 70). Strategy also involves forging a fit among activities (Porter 1996, p. 77). Mintzberg (1987, p. 11) described that strategy have two essential characteristics: they are planned in advance and are developed consciously and purposefully (1987, p. 11). At the same time, however, Mintzberg (1987, p. 11) stressed that the field of strategic management does not have only one definition of strategy and that, further, the word “strategy” has been used implicitly in many different ways. According to Mintzberg, strategy can also be called as a pattern or even as a pattern in action (1987, p. 12-13). Mintzberg (1987, p. 15) has identified strategy as a position or as means of locating an organization in an environment. Thus, based on the definition, strategy becomes a mediating force or match between an organization and the environment (Mintzberg 2007, p. 15). Strategy can also be called as the deployment of resources in manner that is most likely to defeat one’s adversary (Minzberg 1987, p. 15). Economists define strategy as the creation of situation for economic rents and finding ways to sustain them (Mintzberg 1987, p. 15). Politicians may use strategies to subvert legitimate political forces (Mintzberg 2001, p. 16). For Williamson (1991, p. 75), strategy can also be called as economizing. Williamson stressed (1991, p. 75) that the best strategy is to economize significant cost excesses. Williamson (1991, p. 76) even stressed that economy is even the best strategy. Economizing and effective adaptation and elimination are also some of the best strategies (Williamson 1991, p. 77). Whittington (2001, p. 26) conceive of strategy as a device meant to “simplify reality into something managers can actually cope with; plans may just be managerial security blankets, providing reassurance as much as guidance”. According to Whittington (2001, p. 26), strategy can be beyond choosing markets and policing performance and can cover developing competencies. In war, military men use both strategy and tactics. Military men, for example, may sacrifice a small armed force to divert the enemy from attacking the main armed force. Military commanders can lose in a battle but the lost is calculated so one can win the war. In chess, strategy may require one to sacrifice a rook, a pawn, or knight so the Queen can be captured for an eventual checkmate. The same is true for business. IV. Conditions for strategic thought and practice In this section, I identify what I consider some of the principles that represent best the more important strategic thought and practice. I have identified the said principles based on my review how strategy is used in war, business, and in meeting organisational objectives. 1. Strategy involves identifying the key elements or steps for success and how the activities are to be combined to ensure success. In business, for example, strategy must identify the key elements of firm behaviour that must be implemented to ensure profitability, survival, and perhaps even industry leadership and market dominance. 2. Strategy can involve the use of personal or firm image. Personal or organisational image is the visual, character, and traits that an organisation or individual would want to be seen by the public, by his rival, by the world, or by his or her consumer. In business, strategy involving deciding what firm image that a firm wants to be projected on the business can be crucial to holding market leadership among consumers. For instance, one option is for a business firm is project itself as a name associated with quality and durability. A business firm can also project that the product line that the business firm sells are associated with status, fashion, and taste. A business firm can also choose to emphasize on business ethics and good corporate citizenship. The firm image can be crucial in politically-charged scenarios in which a main bulk of consumers may be concerned on the environment, how the firm treats its employees and the union, and how it conducts ethical transactions in society. 3. Strategy can involve the use of posture. Posture is the course of action that we want the public, our rivals, or our enemy to see in ourselves whether the actual course of action that we intend on making is consistent or not with our posture. In a competitive environment, the use of posture as an element of firm strategy can prove useful. A firm can use posture to enhance its leading position in the industry. For example, an issue may be affecting the entire industry and the posture it makes on industry issues can help the firm earn the respect of rivals thereby enhancing the leading position of the firm in the industry. 4. Strategy may involve feigning when required to the situation. Feigning means appearing to do or appearing to be doing a course of action that is different from our intended or actual action. Feigning can be useful for firm acquisitions. Given a competitive environment, a firm may feign lack of interest or even a high interest in a business to hide its basic intent to dominate an industry. 5. Strategy can involve sacrificing one part so that the whole can win or survive. A business organization can sacrifice one or two business units in the interest of consolidating its foothold on an area of business. For example, a business organization may be into real estate, restaurant, food, and other businesses but may decide to sell the other business to concentrate on a particular business. 6. Strategy can involve the use of surprise. A business organization can use surprise as an important element in dominating an industry. When rivals are both aiming to dominate in an industry, for example, a firm may use secrecy or surprise in acquiring firms one by one. For the objective of dominating a particular industry, the rival firm must be drawn into a false sense of security as a firm buys out the other rival firms. 7. Strategy can involve the concentration of forces in a certain location. Investments can be withdrawn from a particular investment area to be concentrate in a particular investment area as competition becomes tough and as the concentration of capital or forces becomes necessary for market dominance. 8. Strategy involves the combination of tactics. Tactics are relatively short-term or specific action with specific objectives while strategy can involve several short-term or specific actions, each of them with specific objectives. Taken separately, several tactics may appear inconsistent but taken as a whole a set of tactics may be consistent within a strategy. In establishing a chain of stores for example, a firm may use a combination of purchase, actual establishing of stores, or licensing/franchising to multiply quickly a chain of stores in a particular area or even worldwide. 9. Strategy can involve the use of several forms of organisation. Within the contexts of licensing, a firm can consider the establishment of partnerships or corporations if the interest is to have stores that are fully-owned or dominated by a firm. 10. Strategy considers the situation as a whole while tactics consider a specific situation and circumstance only. A strategic plan must guide managers on what to do given the possible changes in the terrain of the local market. A business owner of large network of stores, for example, cannot afford to micromanage each store. He or she must rely on the branch managers for managing the firm. However, many of the managers will be likely new and may lack experience. Nevertheless, with a corporate strategy document, it will be possible for a business organisation to communicate with the business managers would exactly they can do given the possible changes or the anticipated scenario that can take place in their markets. 11. Strategy involves a long-term horizon or timeline while tactics can involve only a short period like a day, a week, or a month. In contrast, strategy usually involves a time horizon of several months or years. It is not feasible to communicate or impress to managers what they must do each day and everyday. Thus, for strategic management to be efficient, strategy must cover a longer time horizon of perhaps several months. 12. Strategy can involve the use of strategic alliances that is different yet similar with tactical alliances. Strategic alliances, for example, can be found with long-term suppliers while tactical business alliances can be made when firms, for example, are faced with short-term problems like road cut offs or temporary market problems. For example, instead of sourcing supplies from the long-term suppliers, supplies can be sourced from occasional suppliers with short-run changes in market conditions. 13. Strategy can involve a tactical retreat for concentrating forces in a certain area, deceiving rivals, preservation, and redeployment. A business can temporarily withdraw from a certain market in order to concentrate on a select market and the firm can return to that market later when the situation improves. 14. Strategy must be able to anticipate the possible changes that may take place on a long time horizon and must indicate to the individual and organizations the elements for survival or meeting objectives given the changes that are bound to take place within a longer time horizon. Given 5,000 branches or close to this number or when the number of stores is higher, it will not be realistic for an overall manager to assist the managers handle their businesses. It becomes important therefore to formulate a set of strategy guidelines so managers can lead over a long period even without close guidance. V. Concluding statements Thus, based on the foregoing, People and organizations have various needs for strategy and conceive strategy both differently and yet similarly. Common elements can be identified but perhaps the most essential feature is that strategy contains the key elements for an individual or an organization to survive or meet objectives over a long time horizon. The scope of strategy can be vast so long as strategy contains the key elements for individual or organization survival and meeting its objectives. References MacMillan, H. and Tampoe, M., 2000. Strategic management: Process, content, and implementation. Oxford University Press. Mintzberg, H., 1987. The strategy concept I: Five Ps for strategy. California Management Review, Fall, 11-23. Porter, M., 1996. What is strategy? Harvard Business Review, November-December: 11-78. Williamson, O., 1991. Strategizing, economizing, and economic organization. Strategic Management Journal, 12, 75-94. Whittington, R., 2001. What is strategy—and does it matter? Padstow: Thomson Learning. Read More