Does Business Strategy Affect Organisational Performance - Research Proposal Example

Does business strategy affect organisational performance? Table of Contents Introduction 3 2.Significance of this thesis 4 3.Literature Review 5 3.1.Impact of diversification strategy on organizational performance 5 3.2.Impact of leadership strategy on organizational performance 6 4.Data and Methodology 7 4.1.Data collection 7 4.2.Research philosophy 7 4.3. Research approach 8 4.4.Data collection instrument 8 5.Expected result 9 6.Scope and Limitations 9 Reference List 11 1. Introduction In a varied and ever-changing business environment, organizations are continuously seeking to align several business strategies in order to bring upon improvement in their core competency as well as gain significant competitive advantage. This is precisely because the capability of an organization to counter against this ever completive business environment is largely grounded over the effectiveness and efficiency of organizational strategy. By having the know-how of the ways in which business strategies can be applied in an appropriate manner as well as the ways the ways in which it can be harmonized with the organizational goals and objectives enables the organization to come closer to achieving business success (Tallon, 2007). It has been seen that aligning business strategies with organizational goals and objectives is a top priority for organizations as it enables them to bring upon improvement in their performance in many different ways (Peppard, 2010). Business strategy is a very broad area that encompasses numerous strategies that are formulated to fulfil a particular purpose. Although these strategies have a unique functionality of their own but they also serve a common purpose and that is to enhance a company’s performance and henceforth profitability (Kock and Guillen, 2001). Leadership strategies implemented by managers have a significant impact on the engagement level of employees which in turn improves their performance and henceforth enhances their productivity (Ardichvili, 2001; Apospori, Papalexandris and Galanaki, 2005). For example implementation of team or sound style of leadership strategy, where concern is given both towards employee welfare and productivity, enables managers to enhance the level of commitment among their subordinates which gets reflected back through their stupendous performance. Appropriate leadership strategy does not alone guarantee improved organizational performance and profitability. Alongside that marketing strategy, control strategy, information technology and their subsequent incorporation into overall organizational strategy is what enables companies to achieve success both in terms of performance and profitability. A significant proportion of researches have been done in the field of organizational strategies concerning their significance to organizational performance and profitability. The thesis will cater to highlight a majority of those literatures and thereafter conduct a practical study that will explain the extent to which business strategies enables organizations to improve performance and profitability. 2. Significance of this thesis The aim of this research study is to develop an enhanced understanding of the impact of business strategy on organization performance. Business strategy is a field of research that has been explored by several researchers throughout the world. This is what has helped modern day researchers to learn about different perspectives that research scholars had to present which in turn enabled the researchers to form their own opinions. That is how the various aspects and dimensions of business strategy have been developed and subsequently understood. This thesis caters do the same by adding some relevant ideas to the already existing body of literature. In order to be able to conduct this research in appropriate manner the following objectives and question needs to be achieved and answered respectively: To understand the impact of diversification strategy on organizational performance and profitability To understand the impact of leadership strategy on organizational performance and profitability. Does strategic planning affect firm performance and profitability? What factors are taken into consideration while formulating business strategy? While several empirical researches have been done that examines the importance of business strategies, very few literatures have actually commented on the impact of such strategies on organizational performance and profitability. Moreover not many literatures in this particular field of research have used any of the Middle Eastern countries as the research context and this is where the relevance of this research lies where the researcher will be primarily researching upon the companies listed in the Saudi Arabian stock market. Besides that another significance of this research lies in the mythology that will be applied. While majority of the researches have adopted a quantitative approach by measuring organizational performance in terms or productivity and profitability, this research will take an entirely different approach where CEOs and managers of five Saudi Arabian publicly listed companies will be interviewed. This interview will give the researcher a more holistic view regarding the topic of this research. 3. Literature Review 3.1. Impact of diversification strategy on organizational performance An extensive of literature exists suggesting the fact that diversification strategy should have a positive impact on organizational performance precisely because it enables organizations to realize economies of scale and scope. In addition to that the risk minimization effects, market power effects as well as learning effects of diversification strategy enables an organization to gain significant competitive advantage against competitors (Piscitello, 2004). Majority of the experiential researches that studied the impact of diversification strategy on organizational performance have been shaped into four types. The first type is the inverted U shaped where a non linear relationship exists between diversification strategy and organizational performance. With an increase in the degree of diversification to an average level there is an improvement in the organizational performance. However, after that level is surpassed the performance deteriorates slightly. This curvilinear relationship between organizational performance and diversification strategy depends largely on the level of diversification (Gary, 2005). The second category of researches highlights a positive, negative as well as no impact of diversification strategy on organizational performance. The third category of researches state that the impact of diversification strategy on organizational is based on the type of diversification (related and unrelated), where related diversification has considerably greater positive impact on organizational performance than unrelated diversification strategy (Lins and Servaes, 2002). The fourth category of researches state that the impact of diversification on overall organizational performance depends largely on the country where the company operates in. Majority of researches have revealed that diversification strategies are more likely to have a positive impact on performance of an organization based in a developing country (Chakrabarti, Singh and Mahmood, 2007). 3.2. Impact of leadership strategy on organizational performance The leadership strategy adopted by managers has a significant contribution towards improving organizational performance and hence achieving success. The leadership behaviour exhibited by the managers has a critical role in enhancing the level of engagement among employees. The relationship that exists between managers and their subordinates is a crucial determinant of organizational success. Organizations give huge priority towards motivating their employees by taking their opinions into consideration while making vital decisions (Engagement for success, 2014). Managers more often than not adopt a team or sound style of leadership where they put equal concern to both employee welfare as well as productivity. This enables them to enhance the engagement level among their employees who in turn becomes more committed towards their job. Consequently, a significant improvement is witnessed in organizational performance which in turn amplifies the organization’s profitability (Bakker and Schaufeli, 2008). Employee engagement is arguably the most frequently discussed topic among organizational managers. Enhancing employee engagement has more often than proven to be rewarding for majority of organizations. Most of the consultancy firms have stated that there is a statistically significant positive correlation between employee engagement and organizational profitability which is realized through amplified sales and productivity, enhanced level of customer satisfaction and increased employee retention. Numerous literatures have provided conclusive evidences about the fact that employee engagement has had a positive impact on organizational outcomes. Empirical research scholars such as Bakker and Schaufeli (2008), Markos and Sridevi (2010) and Harter, Schmidt and Hayes (2002) have revealed that thorough engaged employees have a extraordinarily positive influence on the level of customer satisfaction, profit , productivity, employee retention and safety. An engaged employee not only improves the performance of an organization but also that of his/her peers who in turn contributes towards organizational growth. A thorough literature review of both these organizational strategies suggests the fact that if formulated and implemented appropriately these strategies will always have a positive impact over organizational performance. Thus in order to confirm the ideas set forth by empirical research scholars the researcher will be conducting a robust unstructured interview with top level executives whereby the importance of these strategies as well as their resultant impacts can be analysed. 4. Data and Methodology 4.1. Data collection Extraction of data is perhaps one of the most pivotal activities that are conducted in an exploratory research study. The fundamental rational behind the relevance of prudent data collection is the fact that accurately collected data enables a researcher to ensure that the research study is valid, reliable as well as appropriate. As far as extraction of data for this particular thesis is concerned, it will be done through an amalgamation of both secondary and primary sources of information. The primary data collection will be done directly on filed with the help of an unstructured interview conducted with executives holding managerial positions in 5 Saudi Arabian public companies. This will enable the researcher to have an elaborate explanation of the research issues that are needed to be addressed. As far as the collection of secondary data is concerned, they will be collected mostly through peer reviewed scholarly journals, electronic and printed version of books, authentic and relevant websites, as well as several trustworthy online databases. The unstructured interview combined with an extensive literature review will allow the researcher to develop a deeper understanding of the research issue which in turn will enable the individual to fill the gap that lies within the existing body of literatures (QAA, 2012). 4.2. Research philosophy This thesis will involve a detailed qualitative analysis of the feedbacks obtained from the research participants taking part in the unstructured interview. Given the fact that this research is absolutely qualitative in type, that is why application of an interpretive research philosophy would be the most appropriate strategy. The underlying rationale behind the implementation of such a research philosophy is the fact that it will allow the researcher to gain an understanding about reality through interruption in and subjective exploration of reality (Mukherji and Albon, 2009). According to Somekh and Lewin (2004), the nature and type of research study is also another factor that should be taken into consideration while selecting an appropriate research philosophy. This thesis is micro-sociological in nature which necessitates the adoption of interpretive research philosophy. This is particularly because of the fact that interpretive research philosophy is very beneficial in terms of analysing micro-sociological types of issues such as human behaviour, perception or intension about a particular case or issue (Spradley, 1979; Plummer, 1983). Such is the same in this thesis as well as where the researcher’s main objective is to analyse the perception of corporate officials regarding the ways in which business strategies impact organizational performance and profitability. The qualitative research tools that are mainly utilized in interpretive research are focus group interviews, close ended as well as open ended questionnaire surveys, personal interviews, action research and participant observation. Among the aforementioned tools, the research has considered the use of unstructured personal interview format. 4.3. Research approach As far as giving a rigid shape to this thesis is concerned, the researcher has considered inductive research approach to be best fit model that can fulfil the above mentioned purpose. Given the fact that this thesis will initially explore a generalized issue and thereafter the research field will be narrowed down where specific aspects of the research issue will be discussed, adopting inductive research approach will be the most suitable strategy (Blaxter, Hughes and Tight, 2006). Besides that according to Saunders, Lewis and Thornhill (2009), inductive research approach is a social model that will serve as a solid foundation thereby enabling the researcher to translate the results of this research study in simplified yet strong conclusion. The fundamental requirement of this thesis is to study as well as make an assessment of the perceptions of CEOs and managers of Saudi Arabian countries regarding the effect of organizational strategies in firm performance and profitability and this is precisely the reason why inductive research approach will be used. The facts that have been mentioned in this particular section justified the adoption of inductive research philosophy. 4.4. Data collection instrument In order to achieve the objectives set for this research, the researcher will be conducting an unstructured interview with top level executives of 5 Saudi Arabian publicly listed firms. The questions of the interview will be prepared in such that they cover all the aspects of the research objectives that need to be achieved. Research scholars have often resorted to the use of unstructured interviews and in those cases it has served as an efficient tool of assistance enabling scholars to gather critical information in great depth and detail. The underlying reason behind the researcher’s choice to select an unstructured interview process is that it will help the individual to develop an understanding regarding the perception of every respondent in terms of the research issue that is being addressed. Another pivotal attribute of an unstructured interview format is that it offers both the researcher as well as the respondents with an enhanced level of flexibility giving both the entities the option to counter question. In that way they will be able to create a learning environment enabling the researcher to gain a broad view regarding the research topic. All the facts stated above provide a justification for the usage of this data collection instrument. 5. Expected result It is expected that business strategies that are appropriately formulated and implemented will always have a positive impact on organizational performance and profitability. The various organizational strategies are expected to contribute in their own ways towards organizational growth and success. The thesis will definitely point out the various factors that are taken into consideration while business strategies are formulated. In addition to that, it is expected that the thesis will also set forth in-depth explanations of the ways in which different strategies are implemented and their resultant impact on the organizational performance thereby enabling the researcher to develop an understanding regarding the significance of such strategies. Moreover, the thesis will also provide a detailed description of the negative impacts caused to the company due to improper strategy formulation and execution. 6. Scope and Limitations As far as the scope of this study is concerned, further research can be conducted regarding various other strategies such as human resource, information technology, marketing, operational, control and international expansion and so on and so forth and their resultant impact on the organizational performance profitability. In addition, research can be conducted for a different country which has not been previously done as it will enable researchers to understand whether the pattern of impact is same for every country or not. Moreover, the companies can be categorized into industries whereby researchers can carry out industry wise analysis and comment on whether there are any changes in strategic impacts according to industries. The limitation of this thesis lies in the fact the sample only consists of 5 respondents representing 5 companies which is not adequate enough to draw conclusive inferences for addressing a broad topic such as organizational strategy. The researcher only involves a qualitative analysis which might forbid the researcher from conducting a robust research by carrying out trend or relationship analysis and hence restrict the options of discussing the results in detail. The interview questions might not cover all the aspects of the research issue that is being addressed. Finally another limitation is the biasness that may be associated with the answers provided by the respondents. Reference List Apospori, E., Papalexandris, N. and Galanaki, E., 2005. The motive and responsibility profile of Greek CEOs: comparing entrepreneurs and professionals. Leadership & Organization Development Journal, 26(2), pp. 141-162. Ardichvili, A., 2001. Leadership styles of Russian entrepreneurs and managers. Journal of Developmental Entrepreneurship, 6(2), pp. 169-188. Bakker, A. B. and Schaufeli, W. B., 2008. Positive organizational behaviour: Engaged employees in flourishing organizations. Journal of Organizational Behavior, 29, pp. 147-154. Blaxter, L., Hughes, C. and Tight, M., 2006. How to Research. 3rd ed. New York: McGraw-Hill International. Chakrabarti, A., Singh, K. and Mahmood, I., 2007. Diversification and performance: Evidence from East Asian firms. Strategic Management Journal, 28, pp. 101-120. Engagement for success, 2014. The four enablers of engagement. [online] Available at: [Accessed 13 June 2014]. Gary, M., 2005. Implementation Strategy and Performance Outcomes in Related Diversification. Strategic Management Journal, 26, pp.643-664. Harter, J. K., Schmidt, F.L. and Hayes, T. L., 2002. Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology, 87, pp. 268-279. Kock C. and Guillen M.F., 2001. Strategy and Structure in Developing Countries: Business Groups as An Evolutionary Response to Opportunities for Unrelated Diversification. Industrial and Corporate Change, 10(1), pp. 77 113. Lins, K.V. and Servaes, H., 2002. Is Corporate diversification beneficial in emerging markets? Financial Management, 31, pp. 5-31. Markos, S. and Sridevi, M. S., 2010. Employee Engagement: The Key to Improving Performance. International Journal of Business and Management, 5(12), pp. 89-96. Peppard, J., 2010. Unlocking the performance of the Chief Information Officer. California Management Review, 52, pp. 73-99. Piscitello, L., 2004. Corporate Diversification, Coherence and Economic Performance. Industrial and Corporate Change, 13(5), pp.757-787. Plummer, K., 1983. Documents of Life: An Introduction to the Problems and Literature of a Humanistic Method. New South Wales: Allen & Unwin. QAA, 2012. Student Experience Research 2012. [pdf] QAA. Available at: [Accessed 13 June 2014]. Saunders, M., Lewis, P. and Thornhil, A., 2009. Research Methods for Business Students. 3rd ed. New Jersey: Pearson Education. Somekh, B. and Lewin, C., 2004. Research Methods in the Social Sciences. California: SAGE. Spradley, J. P., 1979. The Ethnographic Interview. New York: Rinehart and Winston. Tallon, P. P., 2007. A process-oriented perspective on the alignment of information technology and business strategy. Journal of Management Information Systems, 24, pp. 227-268. Zeidan, H., 2009. The Blake Mouton Managerial Grid Identifying five different leadership styles. The Certified Accountant, 39, pp. 82-85. Read More