Strategy Management- Definitions & Processes
Definitions of Strategy
Kenneth Andrews defined strategy as “the pattern of major objectives, purposes or goals and essential policies or plans for achieving the goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.” This definition of strategy emphasizes on purpose and the means by which purpose will be achieved. It also emphasizes on the values and the cultures that the company stand for.
Kenichi Ohmae defines strategy as “the way in which a corporation endeavors to different itself positively from its competitors, using its relative strengths to better satisfy customer needs.” Ohmae’s definition highlights the competitive aspect of strategy and the strengths required to satisfy customer needs. This definition thus aims at customer satisfaction as the driver of the strategy.
According to Glueck, “Strategy is the unified, comprehensive and integrated plan that relates the strategic advantage of the firm to the challenges of the environment and is designed to ensure that basic objectives of the enterprise are achieved through proper implementation process”
This definition of strategy lays stress on the following:
- Unified comprehensive and integrated plan.
- Strategic advantage related to challenges of environment.
- Proper implementation ensuring achievement of basic objectives.
Another definition of strategy is given below which also relates strategy to its environment. “Strategy is organization’s pattern of response to its environment over a period of time to achieve its goals and mission”
This definition lays stress on the following:
- It is organization’s pattern of response to its environment.
- The objective is to achieve its goals and missions.
However, various experts do not agree about the precise scope of strategy. Lack of consensus has lead to two broad categories of definitions:
Strategy as action inclusive of objective setting and strategy as action exclusive of objective setting.
Strategy as Action, inclusive of Objective Setting
Chandler made an attempt to define strategy as “the determination of basic long term goals and objective of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals”. This definition provides for three types of actions involved in strategy:
- Determination of long term goals and objectives
- Adoption of courses of action
- Allocation of resources
Strategy as Action, exclusive of Objective Setting
This is another view in which strategy has been defined. It states that strategy is a way in which the firm, reacting to its environment, deploys its principal resources and marshal’s its efforts in pursuit of its purpose. According to Johnson & Scholes strategy is “the direction and scope of an organisation over the long period, ideally which seeks to match its resources to its changing environment and in particular its markets, customers or clients so as to meet stakeholder’s expectations”. Michael Porter has defined strategy as “Creation of a unique and valued position involving a different set of activities. The company that is strategically positioned performs different activities from rivals or performs similar activities in different ways”
The people who believe this version of the definition call strategy a unified, comprehensive and integrated plan relating to the strategic advantages of the firm to the challenges of the environment.
After considering both the views, strategy can simply be put as management’s plan for achieving its objectives. It basically includes determination and evaluation of alternative paths to an already established mission or objective and eventually, choice of best alternative to be adopted.
Process of Strategy
There are mainly two processes which are generally used in the strategy management.
Prescriptive Strategic Process
“A prescriptive strategy is one whose objective is defined in progress and whose main elements have been developed before the strategy commences.” Such an approach usually starts with an analysis of the outside environment and the resources of the company. The objectives of the organisation are then developed from this. There then follows the generation of strategic options to achieve the objectives, from which one (or more) may be chosen. The chosen option is then implemented.
Advantages of Prescriptive Strategic Process
- Clear objectives provide focus on the Business.
- Objectives can be Translated into Targets against which performance can be measured and monitored.
- Resources can be allocated to specific objectives and efficiency can be judged.
- The approach is logical and rational.
- It structures complex information, defines and focuses business objectives, establishes controls, and sets targets that performance can be measured.
Criticisms of Prescriptive Strategic Process
- There are commonly major Difference between designed and realized strategy.
- Rigid Planning in a dynamic and turbulent business environment can be uncreative.
- Rigid loyalty to plans may mean missed business opportunities.
- It is possible and better to go without the short-term benefit in order to obtain the long-term good.
- The chief executive has the information and authority to choose between options.
- It is overly prescriptive because the business environment can be very disordered and complex.
Emergent Strategic Process
An emergent or learning strategy does not have the similar set objective. The whole process is more experimental with various possible outcomes depending on how matters extend. “An emergent strategy is one whose final objective is undecided and whose elements are developed during the course of its life, as the strategy proceeds.” Thus the early stages of emergent strategy may be similar to prescriptive strategy analysis of the environment and resources. But then the process becomes more round, knowledge and experimental.
Advantages of Emergent Strategic Process
- Emergent strategy increases flexibility in a chaotic environment, allowing the business to respond to pressure and develop opportunities.
- Changing Stakeholder connections can mean that strategy is often, of necessity, emergent.
- Consistent with actual practice in organisations.
- Motivation issue of customer is to consider.
- Experimentation is allowed to take place of strategy.
- Opportunity for inclusion of culture and politics of organisation.
Criticisms of Emergent Strategic Process
- There is a danger of “strategic drift” as objectives are not clear.
- It is more difficult to assess performance as targets are less well defined.
- Impracticable to expect board members to allow business to function without objectives.
- Group resources need to be allocated between demands of competing operating companies.
- Abdicates responsibilities for final decisions by involving political groups and individuals.
- Removes aspects of rational thinking from decision making.
- Management control becomes unclear as actions to be undertaken are not planned in advance.
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- Management Discussion & Analysis- Nature, Scope, Objectives
- PEST Analysis- Meaning, Analysis & Application
- TOWS Matrix- Rules, 4 Matrix Strategies & Limitations
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