A strategy is an organisational plan, which involves putting a specific plan into action. In other words a strategy shows how a business will achieve its goals. , thus enabling an organisation to turn its values into action. These values are of course what a company stands for. Today the most popular approach is called the Strategic Management Approach, as the approach to strategy has changed since 1995. The Strategic Management Approach refers to the overall design of the organisation, which can be determined only when equal importance is given to the attainment of goals and to policy/ strategy.
The key issues for a manager following this approach are goal setting, strategy formulation, administration, and strategic control. Strategic Management Approach has different levels, which includes Corporate Level Strategy, Business Unit Strategy and Functional Level Strategy. Corporate Level Strategy Here top management is in control and they decide what they want to achieve, with regards to the profitability, market standing or innovation of a corporation. There are two approaches to corporate level strategy: the Values-Based Approach and the Corporate Portfolio Approach .
In the Values-Based Approach, the values or beliefs of managers and workers about how the firm should conduct business, are the key to setting long-term direction . The Corporate Portfolio Approach on the other hand evaluates each of the corporation’s various business units with respect to the market place and its own internal make-up. Large corporations has a number of business units, which are actually seperate organisations that it owns, but a strategic role is developed for each unit with the goal of improving overall performance.
This is an analytical approach, guided by market opportunities and tends to be initiated and controlled by top management only. Business Unit Strateqy This is a strategy formulated to set the goals of a particular business that produces a particular type of product or service. The manager of a business unit must analyse environmental forces and come up with a programme for influencing or defending these forces. Functional Level Strategy This is a strategy for specific functional areas such as marketing or finance, which are located inside business units.
The separate marketing and finance business functions must each develop a strategy to put into effect the higher-level strategies. They are more detailed than organisational strategies and have shorter time horizons. Therefore being based on short term and their purpose being to communicate these goal, describe actions needed to achieve them, and to create an environment that encourages objective achievement. – 2 – Plans on the functional level are developed by middle level managers, and must be co-ordinated in order to minimise conflict and improve goal getting.
Each functional area has different responsibilities and therefore different priorities. Sales normally want high stock levels, which are costly, whereas the Finance Department wants low stock levels. Conflicts like these can only be settled by reference to overall strategy. Structure and Strategy Successful implementation of strategies depends on how the organisation’s activities are divided, organised and co-ordinated. The chances of success are far greater when structure matches strategy. If, for example, a top manager is forming a strategy for a large firm with many divisions, he should take all the divisions into account.
Operationalising Strategy Operational plans provide the details needed to incorporate strategic plans into the organisation’s day-to-day operations and falls into two classes: Sinqle-Use Plans This is plans only used until the goal is achieved. A single-use plan is a detailed course of action for programmes, projects and budgets. Standing Plans These are used to save time, because similar situations are handled in a standard manner. Standing plans are standardised approaches to situations that happen again and again.
Following are important procedure tools for implementing strategy and gaining greater commitment from employers. Annual Goals These identify precisely what must be accomplished each year in order to achieve goals, as well as provide managers with targets. These targets must be measurable and co-ordinated, because different units need to interact with one another. Manaqement by Obiectives (MBO) This is a formal set of procedures that establishes and reviews progress towards common goals for managers and subordinates. Major areas of responsibility are clearly defined in terms of measurable results, being:
Commitment to the programme Top-level goal setting Individual goals, where each manager or subordinate has job responsibility and goals Participation, which can vary enormously Autonomy in implementation of plans (self-governing) Performance review based on measurable performance Reward Systems These shape individual and group behaviour. They motivate employees to direct their performance towards the organisation’s goals. Effective strategies involve discussion and communication with others, favouring both businesses and employees. Also playing a vital role in Developing a Strategy.