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Strategy Formulation Analytical concepts (Hierarchies of strategy…
Strategy Formulation Analytical concepts
The concept of strategy
A hierarchy of strategy concepts has emerged over the past quarter of a century as a response to the needs of practitioners to improve the ways they match their organizations resources and skills with the changing characteristics and demands of their various environments
Two different views
Three authors to focus
Kenneth Andrews and Igor Ansoff
Strategy is the patter of objectives, purposes or goals and major policies and plans for achieving these 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
PLUS, viewed strategy as the "common thread" among and organization's activities and product/markets that defined the essential nature of the business that organization was in and planned to be in the future
Strategy formulation process differed on three major points:
The breadth of the concept of strategy
-goals and objectives-
The components, if any, of strategy
-What are the components of-
The inclusiveness of the strategy formulation process
-The goal setting is part of the strategy formulation process-
Goals, objectives, and goal structure
Goals: The ultimate, long-run, open-ended attributes or ends a person or organization seeks
They are not achievable since they are not bounded.
Objectives: the intermediate-term targets that are necessary but not sufficient for the satisfaction of goals
Objectives can be realized, however, since they are simple milestones in the never-ending pursuit of goals.
All objectives have four components
1)The goal or attribute sought
2) an indez for measuring progress toward the goal or attribute
3)a target or hurdle to be achieved
4) a time frame within which the target or hurdle is to be achieved
Major functional area policy decisions and operating policies
All organizations must establish such policies in order to guide effectively their day-to-day decision making
Concepts and components of strategy
An organization's strategy to be a statement of the fundamental means it will use, subject to a set of environmental constraints to try to achieve its objectives.
It is circumscribed by two observations
First, A descriptions of the most important patterns of these resource deployments
Second, to accomplish any objectives, and organization also will have to interact with an external enviroment
The need for all organizations to be both effective and efficient that there are four components to any organization's strategy
Scope
Resource deployment
Competitive advantages
Synergy
Hierarchies of strategy
Corporate strategy
in today's complex business firm must deal with operating divisions, groups of divisions, and even separate legal business entries. Scope and resource deployments among business are the primary components of corporate strategy
Business strategy
At the business level, strategy focuses on how to compete in a particular industry or product / market segment. Scope becomes less important than at the corporate level and is concerned more with the product/market segmentation choices and with the stage of product/market evolution. Synergy becomes more important
Functional area strategy
The principal focus of strategy is on the maximization of resource productivity. Synergy and the development of distinctive competences
Construct for visualizing strategy
Corporate strategy
The principal visual constructs are business portfolio matrices that help to depict the firm's scope, the major component of corporate strategy.
Business strategy
There are three construct than can help identify
1) product-positioning matrix
2) policy decision three
3) functional area resource deployment matrix
Corporate strategy for actual or potential dominant product line firms
Visual construct used
1) product / mission matrix
2) diversification matrix
Characteristics of good strategy statements
Strategy statements should possess four characteristics
They should describe each of the major components of the organization's strategy
They should indicate how the strategy will lead to the accomplishment of the organization's objectives
The strategy should be described in functional, rather than physical, terms
The strategy statement should be as precise as possible