The Theoretical Constructs behind the Concept of Strategy - Literature review Example

QUESTION: Analyze the theoretical constructs behind the concept of strategy and evaluate the role of planning in organizational strategy.  Compare and contrast three strategic planning models that are used in organizations today and determine which strategic planning model(s) would be most effective in the modern organization. Introduction There are several factors that come together to determine how competitive an organization or a company can be in today’s business environment. There are two major scopes of competitiveness, which are identified as internal or intrinsic, and external or extrinsic competition (Kaplan, 2013). To be competitive, it is important that the leadership of the organization identifies the areas of strengths and weaknesses among its competitors so that strategies can be developed to improve performance. It is essential that the leadership uses those identified areas of strengths and weakness to develop and implement a set of systematic and orderly strategies that will be in line with the goals of the organization (Church, 2013). The paper will critically analyze the theoretical constructs behind the concept of strategy, because for organizations to stay competitive, the leadership must focus on the internal and external operational environment. The paper will include a discussion on the role of planning in organizational strategy, knowing that in the absence of effective planning, strategy is an unaccomplished dream. The response to the question will compare three major types of strategic planning models and how strategic planning might be implemented at the workplace The Concept of Strategy Strategy is a concept that is used in almost all aspects of an individual’s life. People make up the organization, and it can be assumed that strategy will be an important area of any organization. Ohmae (2012) explained strategy as a method that is chosen by individuals to assist in the achievement of a desired goal or to solve an identified problem. From this proposal, one would understand the theoretical basis of strategy to be a means to an end. Strategies do not solve problems or accomplish goals, but they are used to solve the problems or accomplish the goals. In all cases, there ought to be a people factor behind strategy to ensure that the strategy can be effectively executed or implemented. Within an organization, the people factor is always influenced by leadership and the degree to which employees are ready to support their leaders to succeed (Church, 2013). Strategy is not always useful for getting what the organization wants but also for overcoming what it does not want. This is an important theoretical construct of strategy, which when overlooked might result in organizations doing the wrong thing with the right thing or underutilizing the importance of strategy (Goparaju, Shah & Kambou, 2004). The idea was presented earlier by Porter (1996) who proposed that the essence of strategy was to ensure that there was the selection of a unique and valuable position that was rooted in systems of activities that was much more difficult to match. From that argument, one might recognize that strategy involves a push within the organization that includes the use of planning to achieve the strategic goals. Similarities and Differences of Strategic Planning Models It is necessary that leaders select a strategic planning model that combines a strategy with a plan for the organization. Organizational managers have always had the option of selecting among several strategic planning models that include: a) “vision-based or goals-based strategic planning, b) issues-based planning, c) alignment model, d) scenario planning, e) “organic” (or self-organizing) planning, and f) real-time planning” (McNamara, n.d., ¶ 1). Three of the strategic planning models—vision or goal-based strategic planning, issue-based planning, and real-time planning—will be discussed below. Vision-Based or Goals-Based Strategic Planning Many organizational leaders consider the vision-based or goal-based strategic planning model as the most popular and commonly used strategic planning model. This model has been identified to be ideal for highly stable markets where companies or organizations have the choice to concentrate more on the purpose, goals, and action plans of the organization (Kaplan, 2013)., The vision-based or goal-based strategic planning model allows organizations to focus more on themselves and how they can become well placed on the market and remain competitive. The model is unique in the sense that it is made up of several units, coming together to make up one common model. Goparaju, Shah, and Kambou (2004) identified four major aspects of the vision-based or goal-based strategic planning model—purpose of the organization including the vision and values of the organization; the organization’s goals that are connected to the purpose; the strategies that will allow the organization to achieve its goals; and the action plan that the organization uses to realize the goals. Similarities and Differences among Vision-Based or Goal-Based Model and Other Two Models The vision-based or goal-base strategic planning has been deemed ideal for small but busy organizations because the model does not focus on other competitors. In such small organizations, the vision-based or goal-based strategic planning is conducted by the top-level management because these individual are in the best position to determine the appropriate value of the model for such small organizations. The issue-based strategic planning model is considered ideal for small organizations that have limited resources just as the vision-based or goal-based strategic planning (Goparaju, Shah, & Kambou, 2004). However, with the real-time strategic planning, the organization would need to be focused on making adjustments to the model to remain relevant. The organization would need to be well- organized and have a strong reputation that could undergo criticisms as these rapid changes are made (McNamara, n.d). Implementation of the models is another area where there can be major difference between the vision-based or goal-based strategic planning model and the real-time strategic planning. In most organizations where the real-time strategic planning is used, it is accompanied with the decentralized system of organizational governance and is implemented within various divisions and departments (Garret, 2010). As such of the vision-based or goal-based strategic planning model is always considered ideal to be implemented by top-level management and in a centralized format. The issue-based strategic planning has been found to share that similarity with the vision-based or goal-based where implementation is done in a centralized format and by top-level management. For most organizations, using the vision-based or goal-based strategic planning model some of the systematic processes that are included in the implementation are demonstrated below. Figure 1: Overview of the Goal-Based Strategic Planning Model Adapted from Garret (2010, p. 34) In the vision-based or goal-based strategic planning model, personnel involvement is important because the overall planning is likely to be done by the top-level management. Without a carefully executed plan to involve other stakeholders below the top-level management, there is the tendency that the model will not be understood by the others and might not be supported by them (Immelman, 2005). Based on this possible lapse that can be recorded with the vision-based or goal-based strategic planning model, a lot of smaller and medium scale organizations have opted for a more inclusive model such as the issues-based planning model. Issues-Based Planning The issue-based strategic model is prescribed for organizations that are limited in terms of resources and but are operating in a dynamic and competitive marketplace (Kaplan, 2013). There is emphasis on what is happening in the external environment so that the company can strategically place itself in a position that makes it possible to compete with or overtake the competitors. In this model, one can say that there is the need to identifying the weaknesses of a company and correcting them as is the case with goal-based planning while focusing on the strengths of competitors and finding ways to rival those strengths. Because organizations that use the issue-based planning are limited in resources and yet have several major issues to deal with, the leaders depend on the outcome of the strategies to gain impressive recognition in the competitive business environment (Goparaju, Shah and Kambou, 2004). That concept might be compared to the proverbial competition with one’s brains instead of competing with one’s strength. Some of the specific concerns that make up the issues-based strategic planning model include but are not limited to concerns of finances, marketing, staffing, and competition. Depending on the matter that arises in the company, the leadership could formulate a special strategic plan that might place the organization ahead of its competitors. Although there has been much discussion of the impact of competitors, Hatch (2007) argued that the use of issues-based planning might work best when dealing with specific internal organizational matters. Most often the initial step in issue-based strategic planning is the leadership would engage in a Strength, Weaknesses, Opportunities, and Threats (SWOT) analysis (Ghazinoory, Abdi, & Azadegan-Mehr, 2011) to understand the impact of the problem on the organization. Similarities and Differences among Issue-Based Model and Other Two Models The issues-based strategic model presents similarities and differences with the other two approaches. In terms of the duration of utilization, both the issues-based planning and real-time planning were considered appropriate for short-term strategies that addressed immediate concerns (Nyamu–Musembi, 2013). Goals are long term objectives that revolve around the organization’s mission and vision statement and are used for long term strategies that place the organization on the path to survival. Again, the issues-based planning and real-time planning are both used to ensure competitiveness, as the goal-based strategic planning model seeks to ensure survival rather than competition. Between the issue-based planning and the vision-based or goal-based planning there are similarities. In both models, the organizational planners implement an action plan in rolling out their strategies. In the use of the real-time planning however, such action plans are mostly absent, given the fact that the organizations use the model as an ad-hoc to achieve quicker results. To use the issues-based strategic plan, managers will go through four major steps as depicted below. Figure 2: Overview of the Issues-Based Planning Adapted from Garret (2010, p. 40) From the diagram above, one would note that the organization using this strategic planning model will always want to stay abreast with the major issues so that by addressing the key issues, the larger competitive challenges will be addressed in a collective manner (Codrington, 2012). It would thus be concluded that issue-based planning is easy to practice since implementers do not have to worry about industry wide challenges but only on specific issues, as and when they come up. Real-Time Planning The real-time strategic planning model is considered to be a new model that is proactive, pragmatic, and radical in its approach. The style deviates from the conventional strategic planning models—vision-based or goal-based and issues-based strategic planning models (Church, 2013). As the name implies, the real-time planning strategic model makes use of situational events to identify real-time and yet continuous approaches to fixing organizational problems (Immelman, 2005). Some managers have actually described the real-time planning as a hybrid model that seeks to take the advantages of the merits in other models and put them together in a way that works for an organization. The non-chronological aspect of the strategic version is viewed as a risky model and should not be implemented in small and upcoming organizations that do not have the luxury of investigating of investigating other strategies because they do not have the brand equity of other competitors (Nyamu–Musembi, 2013). In effect, the real-time planning is considered to be an ideal strategic planning model that assists companies to compete with their external rivals. As a hybrid, the model would look into what acts as the negatives of the organization that needs to be corrected to make the organization competitive, and what is being done right by the competitors of the organization that needs to be counteracted. According to Hatch (2007), the complex real-time planning procedures work optimally when management uses a decentralized organizational structure that ensures that planning is not controlled by few individuals but is embraced by the whole organization. Similarities and Differences among Real-Time Model and Other Two Models Although the real-time model is unique, it shares similarities with the vision-based or goal-based and issues-based strategic planning models. The issues-based strategic planning model and the real-time strategic plan deals directly with competitors and how competitors are structuring their organizations. In effect, both models require relevant information on the competitive business environment in order to be successful. The same cannot be said about the use of goal-based planning as it is mostly effective within an organization and is based on how the organization might correct its mistakes to become attractive to customers. As part of the differences, the real-time planning is not as systematic as the other two strategic planning models, which are considered to be conventional (Edwards & Fowler, 2002). The real-time planning model works within a real-world situation where there is emphasis on the use of simulations and business modeling. Based on the conditions they are presented with, managers using this model will seek to find a number of simulations to idealize new processes that can work best before implementing them. As a result, this model is classified as time-consuming in some cases (Garret, 2010). In an effort to overcome the time-consuming nature of the model, organizational leaders use this model with a decentralized system of governance where the procedures are implemented at the department level rather than at the larger organization level. Most Effective Strategic Planning Model in Modern Organizations In selecting the strategic planning model that is most effective for today’s modern organizations, it is important to know the characteristics and needs of each unique organization. According to Codrington (2012), today’s modern organization is faced with the fast moving pace and changes in the business environment. The business environment is becoming highly competitive and global. There is no denying the fact that globalization is making today’s modern organization both opportune and challenged. Based on those conditions, the selection of a strategic planning model must be chosen in a way that rightly addresses the competitive and fast moving pace of the business environment. From the overview and analysis of the three strategic models above, one would accept that the vision-based or goal-based strategic planning model is not suitable in today’s competitive environment. The vision-based or goal-based strategic plan fails to acknowledge the competitive strategies being used by contenders of the organization. Rather, it focuses on ways of building internal mechanisms to make the organization attractive to the consumer (Herman & Renz, 2008). As Garret (2010) proposed, the consumers are repeatedly looking for changes among organizations and so continue to compare organizations to determine the most competitive and the ones that meet their needs. The goal-based strategic planning model focuses on long-term purposes when today’s modern organization is constantly changing and because there is no room for rapid change, this model would not be appropriate for the today’s fast paced and changing organizations. Because the business environment continues to change quickly, it is important that the strategic planning model used by the organization will be one that is based on short-term planning. From the above discussion, the issues-based and real-time strategic planning models would be found to be ideal for today’s modern organization. However, when the two are compared, the real-time strategic planning model would be more appropriate. The real-time strategic planning model presents a hybrid method that incorporates most of the advantages and merits that the issues-based model would offer (Hatch, 2007). Once an organizational leaders choose the real-time strategic planning model, it would enable the organization to have the advantage of dealing with the in-house and extrinsic competitiveness. Internally, the organization would be concerned with ensuring and promoting healthy competition among its human resources to ensure that each individual becomes a highly engaged and valuable participant who supports the success of the organization. This means that organizations that have been using the vision-based or goal-based model will not have much difficulty switching to the real-time model. This is because the goal-based model or vision-based model have similar processes as the real-time model. Another factor that makes the real-time model very appropriate in today’s market is the assertion that the model recognizes the need for the shared responsibility approach through the use of decentralized system of organizational structure. That structure has been termed as democratic, people centered, and highly involving (Codrington, 2012). That way, it would be possible to ensure that all stakeholders become part of the strategic planning process instead of leaving the planning and implementation to top-level management. Implementing the Strategic Plan in Today’s Modern Organization Having recognized the strategic planning model that might work best in today’s modern organization, it is important to look into the specific factors that would be involved in the implementation of the model. Nyamu–Musembi, (2013) cautioned that failure to apply the appropriate implementation procedures could render the strategic plans as useless, as though they never existed. Herman and Renz (2008) proposed that to effectively implement the strategic plan, there the leaders should ask four major questions—who, where, when, and how. The question of who refers to the need to appreciate the fact that there must be a human or people factor to the implementation. By this, the manager ought to identify all stakeholders whose inputs are needed to make the implementation successful. Once the people are identified, it will be possible to tell the kind of resources that each of these individuals need to make the implementation success. In some cases, some of those employees require additional training (Herman and Renz, 2008). With the use of the decentralized approach, it is important for the managers to ensure that all participants within the organization have the necessary skills and knowledge needed to execute the major components of the implementation process. The question of where identifies the places within the organization where the planning will be effective. Edwards and Fowler (2002) noted that it is not always prudent that strategic planning models are implemented to cover all aspects or levels of the organization. Asking the question of where therefore makes it possible for the managers to acknowledge places within the organization where the plan would be most useful. The opinion of Ohmae (2012) focused on the when of implementation. The researcher noted that wrong timing could be as wrong as a wrong strategic plan. The implementer should always be a good teller of time to discern the right time to introduce a particular strategic plan. The implementation should only be conducted once the company identifies the specific needs that must be addressed. In the absence of proper analysis, a strategic plan would only be implemented for cosmetic reasons and might not achieve the intended goals. Finally, as Immelman (2005) posited, the question of how relates to the strategy because it focuses on the processes that the organization has to follow to successfully execute the plan. The question of how will mostly include the series of activities and timelines within which that leaders will take specific action. Conclusion Strategy is the plan of action that requires careful planning by the implementer. As the discussion indicates, when planning is incorporated with strategy, the concept of strategic planning is created. Strategic planning embraces the human factor and allows the process to become tangible. Strategy without the human element is abstract and theoretical—a concept. Through planning, a means to implement the strategy is created. For all organizational leaders who want to use strategic planning, it is necessary that the selection of a strategic planning model will be based on a thorough understanding of the differences that exists between various forms of strategic planning models. There are core differences between the models that will allow each to fit well for some organizations and not for others. The discussion provided evidence that careful and meticulous planning is critical before the implementation stage of any strategy. The lack of proper procedures could render the entire strategic plan useless if the best practices are not followed during the implementation of the strategic plan. Edwards and Fowler (2002) warned that organizational leaders should be all inclusive in the implementation of their strategic plans. Such inclusiveness makes the implementation process both effective and efficient. References Church, M. (2013). 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