Strategy development
This will vary from organisation to organisation
Sometimes we think of a strategic plan as a written document; a route map that the organisation may follow to move from its current position to where it wants to be
Not all strategies involve writing a formal strategic plan
Strategy development processes are how strategy develops within organisations
Types of strategy
Throughout the 20th century a number of approaches to strategy formulation and development were distingushed, the most common being planned or intended strategy and emergent strategy
Planned strategy
Strategy formulated through a conscious process
It is a plan and conceived by managers
The intended, traditional approach to strategy development is most appropriate in relatively stable contexts
Strategic planning is a routine process that organisations go through a planning cycle, usually annually and often associated with the budgetary and investment appraisal process
Emergent strategy
Theory devised by Mintzberg which focuses on firm strategy adapting over time rather than following a deliberate plan
In the 21st century, many organisations found it difficult to plan more than a year or two ahead
The strategy formation plan commences with the environmental analysis and SWOT, which is then used to define strategic challenges and problems in terms of opportunity and threat
Various strategies to compete, add value and serve target markets are then identified, evaluated and selected
The organisation will consider a range of alternative initiatives to meet such challenges, such initiatives may require capital investment or the allocation of internal resources and may require reorganisation, business process engineering, the acquisition and implementation of new information systems and technologies, culture change etc
The planning process begins at the corporate and higher level and once a general direction is agreed, it is cascaded down throughout the organisation
Each part of the organisation can then consider its specific targets, goals and associated plans that should fit within the overall approach - once agreed they will be implemented typically through the allocation of resources
This formal and planned approach utilises the organisation's purpose, its vision, mission and goals along with more specific strategic objectives as input
Occasionally the organisation purpose may be reconsidered and a new vision, mission or set of goals developed
The role and nature of strategic planning and strategy formulation have evolved and the concept of emergent strategy gain prominence
There is no planning involved
A realised strategy that was never intended
Comes about through everyday routine, activites and process in organisation; it is gradually shaped over time and based on experience rather than theoretical positioning
Most suitable in the context of change or uncertainty, where a formalised plan runs the risk of becoming outdated very quickly
Do not have an endpoint or goal in mind, not grand plans but a series of decisions taken in response to feedback from the results of previous decisions
Involves experimentation and learning being able to react and respond to changes in the external environment
Sometimes business opportunities occur in unexpected ways, the emergent approach to strategy allows organisations to exploit these opportunities which a more planned approach may reject
Organisational purposes
Establishing organisation purpose through the mission, vision and objectives or goals is often the starting point for strategy development
Strategic plans may involve changing the mission statement to reflect a new organisation direction
Establishing an organisational purpose and the presence of explicit vision, mission and value statements can have a powerful motivational impact upon the workforce
Understanding the organisational purpose can help to provide a framework for understanding what an organisation is about
In strategic terms, there are five questions an organisation needs to ask itself, the answers to these questions will have a significant influence on how the organisation sees itself and how it is perceived by others
What do we do - and what should be doing?
What kind of organisation. do we wish to be?
What is the relative importance of shareholders and stakeholders?
Do we want the organisation to grow?
What relationship will the organisation have with its immediate environment and with society in general?
The purpose offers a strategic direction for an organisation over the long term
It is expressed in terms of a vision and mission statement but also fundamental goals
An organisations vision is a challenging and imaginative picture of the organisations future - it can shape present day behaviour
Employees and other stakeholders can compare the present day state of the organisation with the future intention and use this to drive the need for action and change
The mission of an organisation is a general statement of an organisations purpose, its reason for existence, the nature of its businesses and the customers it seeks to serve
The mission statement should guide the actions of the organisation, make clear its overall goals, provide a path and guide decision making
It delivers the framework or context within which the organisations strategies are formulated - it is a similar to a goal for what the organisation wants to do for the world
taken together or individually, the vision and the mission statements help to provide inspiration to employees - they represent fundamental goals for the organisation and are often translated into more specific objectives
Organisational objectives are specific commitments an organisation makes, based on the mission. The values of the organisation will be embedded in the mission and objectives of the organisation
Levels of strategy
Although the alignment of strategic initiatives is a corporate wide effort, considering strategy in terms of levels, i.e a hierarchy is a convenient way to distinguish among the various responsibilities involved in strategy formulation and implementation
Corporate level strategy
A whole company plan or pattern of decisions identifying where the company will compete (in terms of geography, product and industry) and which resources will be used
In a large organisation, usually devised by a dedicated strategy function or department or the officers and directors of the organisation
Strategic decisions taken at the corporate level will refer to the overall scope and direction of the organisation, the markets and territories within which it is involved, establishing development priorities, mergers and acquisitions and the allocation of resources between different parts of the organisation
The corporate strategy of an organisation is often outlined in very broad terms, many organisations publish the main points of their corporate strategy on the organisation's website, brochure or annual report
Business level strategy
A subunit plan or pattern of decisions identifying how to compete and. add value under the umbrella of the corporate strategy
Where organisations aim to satisfy different markets and different customer groups, they often develop strategic business units (Part of an organisation for which there is a distinct external market for goods or services that is different from another SBU) to compete in particular markets
Where SBUs target different markets, their different business level target different markets, their business level strategy will be different because the customers are different
Very few businesses target an entire market, instead they choose a particular segment of a market
Business level strategies support and help to realise the overall corporate strategy
Business strategy describes how the organisation competes within an industry or market
Functional level strategies
Long range plans made by the functions of the business (eg operations, marketing, finance) which support the competitive advantage being pursued by the business level strategy
Concerned with co-ordination the functional areas of the organisation so that each functional area upholds and contributes to individual business level strategies and the overall corporate level strategy
Each functional area will develop its own strategy that fits with the business and organisational strategy
When reviewing a larger organisation, lthere is likely to be a marketing strategy, HR strategy and IT strategy