How Organizations Can Make Productive Decisions - Essay Example

Strategic change does not take place simply because it is considered to be desirable; it takes place if it can be made to work" - Johnson & Scholes (Exploring Corporate Strategy) Introduction to the Strategic Plan A strategy can simply be defined as a plan or a series of steps that one uses to get to a pre-set target or to achieve a particular goal. When applied to an organization and a corporate, it becomes the business strategy and hence is more focused on utilizing the available resources in the most effective and efficient way so as to fulfill the expectations of the varied stakeholders. It can even be perceived as a set of actions or series of plans to maximize profits. Further elaborating, strategy is about which markets the business has to compete in and how will it manage to do that (differentiating factor) and where does it see itself in a set period of time. These, along with many other factors combine to form a strategic plan for a business (Carroll 1993). This further is usually divided into three parts namely the corporate level, the business level and the operational level strategy. Where corporate level strategy is the overall goal or plan of the organization, the business level is a little narrow and focuses on how each will compete within a particular market and lastly the third one is how different units of the business will achieve the business level strategy. For example, a local caterer will have a corporate strategy which will be providing catering services for different occasions, whereas the business level strategy will be to provide special and custom edited services to the various clients and finally for this purpose the operational level strategy will include the training of workforce to provide high quality service and chef training to adjust food according to the client’s individual requirements (Barry 1998). Introduction to Strategic Management After we have understood what exactly business strategy is, we can now move on to discuss what strategic management in meticulous does. In simple words, strategic management includes the decisions and plans related to the strategies working within an organization. It is a series of steps that form a never ending cycle. In simple words one thing follows the other and is an ongoing process. A strategy is very important because it makes sure that the organization is able to achieve its short term and long term goals and satisfy the various stakeholders. Therefore it is of utmost importance that these strategies are planned and regulated in the best possible way so as to have the result up to the desired mark (Stonehouse 2004). But before this cycle starts off it is very important that the goals of the company are clearly recognized and defined. Apart from the goal there is a mission statement which defines the purpose of the existence of the firm. These all are very important before a strategic plan is designed because the firm needs to make sure that the plan is in accordance with the overall purpose of the organization and it is not contradicting with the goals of the firm (Morgan 2002). Moreover apart from this, it is also important to recognize the individual stakeholders and their interests and expectations from the business. It is they who need to be satisfied at the end of the day and thus it is very important to understand what exactly it is that they want from the business. The above diagram simplifies the complex process of managing strategies. Strategic Analysis It starts off with the analysis of the current situation. Analysis is basically determining the present scenario in which the business is operating. This includes both the internal as well as the external view. This is done by a number of different means, for instance there is a SWOT analysis in which the strengths, weaknesses, opportunities and threats for an organization are measured (Lavia 2004). Apart from this there is the BCG matrix analysis in which the product portfolio or the set of products are analyzed to determine which is the most productive and profitable product and which product should be shut down in order to secure resources and to increase overall profitabililty. It is very important that this step is carried out thoroughly so that one can know exactly where the company stands a chance to logically determine which direction to move in and how much effort will be required to get to the pre-set target (Agor 1989). So to be successful in achieving one’s target, it is very important that one has a fair idea as to the present standing of the firm or organization. As already mentioned, there are several different ways of analyzing the current scenario and situation and the choice will depend on the type of goals that a firm has on its agenda (Crittenden 1997). Strategic Choice The next step is to determine an appropriate strategy for achieving the set target. In this, a series of steps is planned and a layout is prepared which will be the guiding aid throughout the whole implementation process. This stage uses the information gathered from the previous step. In this, there is usually a requirement for pooled expertise. That is, people from many different departments namely finance, marketing, production and many others have to work hand in hand to derive a strategy that best fits all their different requirements and is also beneficial overall for the firm (Gordon 2005). Usually this involves derivation of the alternative strategy and then the strategy that is optimum is chosen. In this every alternative is thoroughly evaluated as to be aware of the possible requirements that might arise within the implementation process. Implementation This is the real test that evaluates the potential of the strategy and this indeed is the step where most organizations fail. No matter how well the strategy is planned, if it is not implemented in a smart and professional manner there is a high possibility that it will not produce the desired outcome. While the organizations are in this step some unexpected situations are created on a few occasions. The probability of this happening is very high in today’s circumstances because of the volatile situation of markets worldwide (Ulijn 2000). Changes are occuring at the rate of lightening and companies need to respond to these changes in the implementation stage so that strategy is not only effeciently followed but is also deemed as fully effective. This step is not the end of the process, once the plan is implemented there is a dire need to check again and to make sure that the goal, for which the strategy was planned, is achieved or at least the firm is geared in the right direction in order to achieve the same. And once again there is no end to this process because by the end of the cycle, either the goal is extended or a new goal is discovered (Fleet 2001). For instance, a firm which had the goal of becoming the top firm in its line of business, once it gets there its goal will switch to maintaining its position as the market leader and it will have a different strategic plan to pursue this goal. Extending the above mentioned example of the caterer, if he plans to carry out the strategic management first he will conduct an analysis of the present situation and scenario. For example, he chooses the SWOT analysis mentioned and explained above then he will look both internally as well as externally and for example if he discovers that the taste of their food is their strength and the opportunity is the increase in eating out culture then he may choose a strategy of opening an outlet or a diner. This would be the choice of strategy to maximize the earnings. Once he had set his goal he will break it down into small achievable targets for instance buying a place, renovating it, hiring more staff, etc. After he has made a list of things to do he will move on to the implementation stage where he will carry out the above-mentioned steps until he has succeeded in opening a diner. From step to step he will also evaluate to make sure that the firm is moving on the right track to opening a new outlet. Problems Involved in the Strategic Management Process Just because the process of management has been captured in three simple steps and the trail and sequence has been clearly identified and explained, it does not mean that the process is very simple and generic. The process has no fixed or standard method and it differs from case to case. Moreover complication and confusion can occur at any point in time. Further, even if the whole process is carried out smoothly it does not guarantee a return up to the expected standard. This is the reason we will take complications or problems under a separate heading so that we can discuss some of the problems in depth and keep them as a word of caution (Bryant 1997). These problems will deal both with the limitation of the functioning of an organization and other issues that are beyond the control of that firm. Along with highlighting the problems the following section will also provide some suggestions. The first step as we already mentioned is analyzing and evaluating the current scenario and position. This is a difficult job because before that everyone in the organization needs to understand what exactly the goal of the organization is. Once the goal has been clearly communicated to all the internal stakeholders it will be easier for them to choose an analyzing technique that will best suit them. Once the above mentioned challenge is surpassed and the correct analyzing technique is selected then is the time to conduct research, both inside and outside the firm to have an accurate hold of the current internal position and the market scenario in which the firm is operating within (Waring 1998). For example, SWOT analysis is chosen. There is a general tendency amongst people to see the strengths and neglect the weaknesses. This is not as simple as it may sound. It is very dangerous because it means the competitors are given an opportunity to build upon the limitations of one’s firm. Further this means that one loses the chance to improve upon one’s limitations and move ahead, progress and stay ahead of competition. Another problem arises when the turn comes to look outside the firm. It is usually easier to collect internal information in comparison to the external one. It is difficult to predict the opportunities or problems that may arise (Siegel 1999). This is because circumstances created by the actions of competitors or unexpected turns of the economy cannot be accurately measured even with the most advanced research tools. These were just some examples of the problems that may arise while conducting a thorough analysis of the present circumstance. Another problem which is prevalent, no matter what analysis technique is used is the fast changing circumstances. In the duration from when the research is conducted and till when it is used the circumstances or some aspect of the environment has usually altered. This means that considering the change in circumstances a new set of options has to be created and almost the entire process has to be repeated. The second step after the analysis is forming options and choosing the optimum solution (Liou 2000). This as mentioned before requires contribution from people with varying expertise and a synergy is required of personnel belonging to different departments. This is a challenge in itself. There is a popular management problem referred to as the tunnel vision, which is the people and departments have a narrow scope and think of their own benefit or that of their department. They tend to ignore the overall benefit of the organization. This ends up in an organization having departments with competing and sometimes even contradicting interests instead of those that are well-coordinated and synchronized (Chrisman 2005). This becomes a hurdle in the path of the proper policy formation regarding the framework or a series of steps that are to be set and followed when it comes to strategic management. They debate and make it a personal or ego issue rather than keeping it focused on the issue at hand. Arriving at a strategy that suits everyone equally is a difficult job. This can be made easier if there is a strategic manager who would keep the idea that they all are moving towards the same goal and to keep their workings synchronized and in one line. He can also be there to solve the conflict between people and keep them task-focused instead of individual-focused. This way, less resources and time will be wasted in deriving various options or in selecting the best ones (Raghuram 1994). One further problem is to come up with a strategic plan and present it in such a way that it is viewed desirably by all stakeholders, both internal and external. This becomes a problem because sometimes the interests of the individuals are contradicting. For example shareholders usually desire an immediate return whereas the directors and managers look for the long term interest of the company and believe in making sacrifices in the short run. Thus a suitable strategy would be the one that gives the best return both in the long run as well as in the short term (Ingman 2002). Once a decision regarding the plan to be followed is made, it is time to go ahead and implement the plan. The whole idea is to use the laid out plan and breakdown the work in simpler divisions which can be carried out by different people and together they can achieve a great result. Sometimes, firms use diagrams and techniques to find out the optimum way of carrying out all the required series of steps to get to the target that was set up within the first step. Need for Strategic Change As we already discussed that the strategic plan for each and every company has to be tailor-made and designed, firms can benchmark against each other but they cannot copy the strategic plan of another firm, leave that apart, they cannot even copy their own plan. Along with time, there is a need for change in the strategic plan. One act which was a requirement of one firm or a firm at one particular time may not be the requirement in the future (Delener 1999). This means that once a desirable strategy may not be that suitable or attractive at another time. This proves the point that a change in strategy is not implemented when the plan is desirable but also when it is required by the firm at that particular time. This requirement can be well analyzed by the method mentioned above and then a suitable strategy is derived keeping the requirements of that time and the present environment in mind (Snow 2000). Thus the importance of the strategic change is quiet clear and it is also apparent that an organization has to go through a thorough process before it can derive a strategy of its own that best fits its various requirements and also that of its varied stakeholders (Estabrooks 1995). This means that the decision makers and planners have to be extremely careful at each and every step of the process and they need to take into account all three, the business, the task and also the general environment while designing a strategic management plan. Bibliography AGOR, Weston. (1989). Intuition & Strategic Planning; How Organizations Can Make Productive Decisions. The Futurist, Vol. 23, November BARRY, Bryan. (1998). A Beginners Guide to Strategic Planning. The Futurist, Vol. 32, April BRYANT, Scott. (1997). Strategic Management. Public Management, Vol. 79, October CARROLL, Archie. (1993). Three Types of Management Planning: Making Organizations Work. 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