Making Good Ideas Happen
Strategic Management, A Decision-Making Process Through Which Management's Intentions Are Realized
Strategic Management
Strategic management is a broad discipline; its scope spans the entire strategic decision-making structure/process of an organization. It involves an on-going decision-making process through which management intentions and ideas are formulated, implemented and evaluated to accomplish an organization's mission and achieve its vision. Strategic management process can be defined in terms of the management functions of planning, organizing, leading and controlling.
The strategic management process is more than a set of procedures and rules to follow; it is a philosophical approach to business based on a strategic foundation of a business organization - mission, vision, and values, and the decisions made in accordance to achieve a company's goals. Strategic management is primarily concerned with the formulation, implementation, and evaluation of good strategies to move an organization from its current position to a future position in order to secure a sustainable competitive advantage
A good strategy must resolve relevant strategic issues and solve associated problem(s). The concept of strategy can be viewed as a particular form of social activity. The scope of strategy can be understood in terms of Art Likke's model: Ends, Ways, and Means; where the ends are the objectives, the ways are the courses of action, and the means are available resources. The means are used in certain ways to achieve the desired ends. Strategy is simply the ways. The Ends, Ways, and Means components of a strategy may be understood as individual elements, but the essence of strategy is the interaction of these elements into a coherent, cohesive whole (a system). In a conceptual sense, strategy is a system whose outcomes are more than the sum of its parts. Good strategy involves an astute courses of actions (ways) in where the impact of the means are magnified. Poor strategy subtracts from the available means; it destroys the strengths you have.
Strategic management is a broad discipline; its scope spans the entire strategic decision-making structure/process of an organization. It involves an on-going decision-making process through which management intentions and ideas are formulated, implemented and evaluated to accomplish an organization's mission and achieve its vision. Strategic management process can be defined in terms of the management functions of planning, organizing, leading and controlling.
- Planning - This involves managers establishing (setting) organizational goals and creating courses of action (action plans)to achieve them. Management makes strategic decisions to set a direction for the organization. Management can develop a number of different strategic options (alternatives) from which to select/choose the best option (courses of action). While planning, managers typically, conduct an in-depth analysis of the organization's current state of affairs, taking into consideration its vision and mission, and evaluating what resources are available to meet organizational objectives. While planning, managers usually evaluate internal and external factors that may affect the execution of the plan, such as PESTEL factors, competitors, and customers. They also establish a realistic time line for achieving the goal/goals based on the organization's available finances, personnel and resources as determined through SWOT analysis. A planning system to support strategic planning is a essentially, a structured (designed) process that organized and coordinates the activities of the managers who do the planning.
- Organizing - This function assembles all the resources - human, physical, financial - in a way that provides the best possible use for each. It involves developing organizational structure and allocating human resources to the roles/positions in the structure to ensure the accomplishment of the tasks/work. The purpose of organizing is to distribute the resources and delegate tasks to personnel to achieve the goals established in the planning stage. During the organizing stage, managers strive to create a work environment conducive to productivity. Managers typically take employees' motivation and aptitude into consideration when matching employees with roles and tasks that best fit their abilities. Systems that support managers' activities include: organizational systems, motivational system, etc.
- Leading - Leading is about having skills, communication aptitudes, and ability to motivate those you manage. Leading focuses on managing people, such as individual employees, teams, and groups, rather than tasks. Managers usually incorporate different leadership styles and change their management style to adapt to different situations. Examples of situational leadership styles such as: Directing, Coaching, Supporting, and Delegating.
- Controlling - This is the process of evaluating the results of execution of the plan and making adjustments to ensure that the organizational goals are achieved. During this controlling stage, managers perform tasks such as training employees as necessary and managing deadlines. Managers monitor monitor employees and evaluate the quality of their work. They can perform performance appraisals and give employees feedback. Managers may need to make adjustments such as: Budget adjustments, and Staffing adjustments.
The strategic management process is more than a set of procedures and rules to follow; it is a philosophical approach to business based on a strategic foundation of a business organization - mission, vision, and values, and the decisions made in accordance to achieve a company's goals. Strategic management is primarily concerned with the formulation, implementation, and evaluation of good strategies to move an organization from its current position to a future position in order to secure a sustainable competitive advantage
A good strategy must resolve relevant strategic issues and solve associated problem(s). The concept of strategy can be viewed as a particular form of social activity. The scope of strategy can be understood in terms of Art Likke's model: Ends, Ways, and Means; where the ends are the objectives, the ways are the courses of action, and the means are available resources. The means are used in certain ways to achieve the desired ends. Strategy is simply the ways. The Ends, Ways, and Means components of a strategy may be understood as individual elements, but the essence of strategy is the interaction of these elements into a coherent, cohesive whole (a system). In a conceptual sense, strategy is a system whose outcomes are more than the sum of its parts. Good strategy involves an astute courses of actions (ways) in where the impact of the means are magnified. Poor strategy subtracts from the available means; it destroys the strengths you have.
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Formulation
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Implementation
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Execution
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Evaluation & Control
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Strategy Statement
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Strategy Formulation
Strategy formulation is the process of using available knowledge from analysis of the organization's internal and external environments, to identifying and document the intended direction of the organization and the optimum set of viable strategies at the corporate, business, and functional levels. Strategy formulation is part of strategic management, and is concerned with the selecting the most appropriate and effective strategies (courses of actions) to achieve strategic objectives. Strategy formulation involves using several analytical tools such as SWOT analysis, PESTEL analysis, etc., to figure out the best approaches (ways) to use available organization resources. Formulating a strategy involves using available knowledge from analyzing the organization's internal and external environments, to identifying and document the intended strategy enabling it to accomplish to mission and achieve the vision. This is an integrated set of strategic choices that uniquely positions the firm in its environment - general environment, industry and market - so as to create sustainable advantage and superior value relative to the competition.
Strategy formulation produces a clear set of recommendations, with justifications, for using available organizational resources (means) with selected approaches for accomplishing the organization's mission to achieve the vision. A good recommendation includes the intended direction and the actionable steps to reach the strategic goals, and should be: effective in solving the stated problem(s); practical, i.e., can be implemented in this situation with the resources available; feasible within a reasonable time frame; cost effective; acceptable to key stakeholders in the organization. Always, there is an end in sight, and that is the organizational goals of the firm and vision. Strategy formulation creates a structure to guide strategic management decisions in transforming the organization to better achieve its vision.
The leadership team of a business, generally, develops its intended and deliberate corporate strategy to help respond or react to the organization's external environment. The vision sets out the reasons for the organization's existence and the "ideal" state that organization aims to achieve; the mission identifies major goals and performance objectives. Both are defined within the context of the organization's philosophy and values and provide the basis for the development and evaluation of intended and emergent organization strategies. Typically, strategy is formulated at various levels in an organization where strategy exists, such as corporate, business, operations, and functional areas. The strategies identified at these various levels can be viewed as a layered system (Strategy engine) with well specified relationships between each of the layers.
Formulating Corporate Level Strategy
Corporate strategy formulation is the process by which a company using available knowledge establishes and documents its corporate strategy. Corporate strategy formulation takes a portfolio management approach to strategic decision-making. It involves:
Corporate strategy formulation is concerned with selecting an optimal set of businesses and determining how they should be integrated into a corporate whole, to create a portfolio of businesses that is worth more than the sun of its parts. This requires management to not only consider how to gain a competitive advantage in each of the lines of businesses the firm is engaged in, but also which businesses they should be in, in the first place. It involves decisions and choices that determine the long-term orientation of the organization, and the development of corporate activities that evaluate current positions and identifies investment priorities for the businesses. Some of the considerations and may include, for example, the following:
It is useful to organize the corporate level strategy considerations and initiatives into a framework, based the various ways the organization can achieve its corporate objectives:.
Corporate strategy focuses on how to manage resources, risk, and return across the firm. Leaders responsible for strategic decision-making have to consider many factors, including allocation of resources, organization design, portfolio management, and strategic trade-offs. By optimizing all of those factors, a leader can hopefully create a portfolio of businesses that is worth more than the sun of its parts. Corporate strategy formulation involves creating a long-term plan that defines the overall goals, scope, and direction of the entire organization.
Corporate Strategy
A deliberate corporate strategy is a plan, goal, and a commitment to specific set of courses of action that the company should follow to capitalize on opportunities provided by the external environment or mitigate the risk of threats to the mission. While the objective of each goal may differ, the ultimate purpose of a corporate strategy is to improve the company.
A company's corporate strategy may be to focus on sales, growth or leadership. A company may also use corporate strategy to prioritize resources. The purpose of corporate strategy is to create company value, and to motivate employees to work toward that value, or set of goals. The goals are are an indication of what the company as a whole is trying to achieve and become. Corporate strategy allows your business to be proactive, durable and efficient.
Types of Grand Corporate Strategies
Grand strategies are major, overarching strategies that shape the course of a business organization. They are focused on the long-term goals of the organization. Grand strategy can be classified into the following categories/types such as:
Grand strategy is concerned with how the organization's means (capabilities and resources) can be used to advance and achieve the organization's strategic priorities.
Formulating Business Level Strategy
Business level strategy formulation is the process of crafting a number of viable business strategy options and selecting the best (most appropriate and feasible) option that will build or improve the company's competitive advantage/position. Business level strategies are formulated for specific strategic business units and relate to distinct product-market areas, and the business unit's competitive position. Business level strategy formulation involve decisions that are primarily concerned with how a company will approach the marketplace - where to play - and how we will compete and win.
The decisions on where and how to play provide answers to the following:
Businesses need to find the right markets (target markets) and locations to compete in, and make sure their value proposition is the right one for the the right customers and right locations Value proposition is a statement describing the value that a company or product/service offers to the customer. It answers the question "why should the customer buy our product/service?".
The decisions on how to win provide answers to the following:
Creating competitive advantage, is the primary concern of competitive strategies. Successful competitive strategies usually involve building uniquely strong or distinctive competencies in one or several areas crucial to success and using them to maintain a competitive edge over rivals.
Business level strategy formulation documents a clear set of plans, actions, and goals that outlines where and how a business will compete, and win in the chosen market(s), and industries. Business strategy can be defined in terms of the following strategy scope elements:
Business strategy formulation is the process of outlining the decisions and actions a company plans to take to reach its goals and objectives. Business strategy is a master plan that is designed to help a company reach specific goals. It highlights the market opportunities that the business wants to explore, steps for performing it and the resources required to put it into practice. Business strategy is focused on creating value and competitive advantage for a business. It outlines the actions a company takes to compete effectively in particular markets, and serves as the foundation for a company's functional strategies. A business strategy helps different departments/functions work together, ensuring departmental and functional level decisions support the overall direction of the company.
Brand strategy is the holistic approach behind how a brand builds identification and favourability with customers and potential customers. Brand strategy encompasses several different brand elements such as: voice, storytelling, brand identity, brand values, and overall vibe. Brand strategy helps inform the different choices you make as a business.
Generic Strategies
Generic strategies are ways of gaining competitive advantage - In other words, developing the "edge" that gets you the sale, and takes it away from your competitors. A company can consider formulating competitive strategy by using generic strategies as the fundamental choices, and then adding various competitive tactics. Competitive tactics is the set of policies and procedures that a business uses to gain competitive advantage in the market place. Generic strategies refers to the alternative methods an organization uses to position itself, competitively, in an industry. These may include:
Note that no one generic strategy is better than another. An organization can be successful using any one of these strategies A choice of one of these generic strategies provides the foundation for a business strategy, however there can be many variations and elaborations; among these are competitive tactics such as: Timing tactics - when to enter a market, market location/positioning tactics - where and how to enter and/or defend, and cooperative strategies. An organization needs to choose the right strategy based on the industry environment factors (what competitors are doing), and also where the organization's strengths lie (core competencies). A business needs strong and differentiated capabilities to compete successfully. For example, if you are pursuing a cost leadership strategy, you need capacity, great supply chain management, and a culture that drives cost out of the system.
Business Strategy
A business strategy establishes the company's approach to where and how it will successfully compete and win in business. Business strategy highlights the market opportunities that the business wants to explore, the steps/actions to take, and the resources to put the actions into practices. Business strategy provides the company with the basis for making the right investments in; what products - goods and services - to offer, and strong capabilities that give the company competitive advantage and differentiates it from competitors. Gaining competitive advantage over other firms is what makes a business successful. A company has competitive advantage whenever it can attract customers and defend against competitive forces better than its rivals.
A Business Level Strategy provides a way for organizations to provide value to customers by exploiting an organization's core competencies and capitalizing on its strengths, using them as competitive advantage to win business from its competitors and become successful. Business strategy can help you create better products or services, offer better pricing, make it easier to buy, or create a benefit that your customers want/need. Competitive Strategy is concerned with how the organization competes within the chosen markets and industries, as constrained by competitive priorities (established through the SWOT analysis). Competitive strategy is concerned with creating competitive advantage through creating a unique selling proposition for your business. It involves pursuing an ongoing process of brand management, pricing evaluation, distribution strategy and operational efficiencies in creating, maintaining, and improving your competitive advantage in your market place and increasing customer preference and loyalty, sales, profits and market share. A competitive strategy is implemented by a set of policies and procedures that a business uses to gain a competitive advantage in the market. It involves the process of identifying and executing actions that allow a business to improve its competitive position.
Types of Business Strategy
Business strategy is a tool to help organizations define the methods and tactics (function actions) they need to take within their company to reach their business goals. Business strategies act as a foundation for developing operations and functional strategies. Some examples of business strategic options include:
Business strategy identifies clear set of plans and actions that outline how an organization will compete and win in particular markets with current portfolio of products and services. A business strategy helps different functional departments work together, ensuring departmental decisions support the overall direction of the company.
Formulating Operations Level Strategy
Operations Strategy formulation is the process - a set of procedures - that a company can adopt to establish the way it goes about making the actual decisions, taken over time, that shape the operations strategy of a company. Operations strategy formulation involves comprehensive analysis (identification and evaluation) of the strengths and weaknesses of operations capability - resources, processes, and people - and the determination of infrastructure and structure required to support the business strategy. An analysis should be conducted to determine how the elements of structure and infrastructure support or hinder the business strategy, and what needs to be done to optimize their usefulness and verify operational capabilities.
A company's structure is related to the physical attributes of operations. A company's infrastructure is composed of its policies and systems governing a number of activities such as capital budgeting, equipment selection, organizational structure, etc.
Operations strategy formulation involves first consider the corporate or business strategies, and market analysis/needs; then consider determining the competitive priorities - cost, time, quality, and flexibility - of the firm and how to handle them. These competitive priorities
then translating these priorities into production requirements in terms of performance objectives. which drive the structure and infrastructure decisions of the firm.
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Components of Operations Strategy
Operations strategy consists of a series of decisions that organizations take in order to implement their competitive business strategies. These decisions that comprise an operations strategy can be grouped into different elements or components of the strategy, such as:
Operations strategy is essentially, about the different ways of aligning plans, activities, and objectives.
Structure and Infrastructure Decisions
Operations strategy is the whole system of decisions that are aimed at shaping both the long-term capabilities of operations, regardless of the type of operations, and their contribution to overall strategy achievement. The realized operations strategy is the total pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to the overall business strategy. These decisions can be categorized as structure or infrastructure decisions.
The elements or components of structural decisions category include:
Structural decisions have several remarkable strategic implications, they require substantial financial investments, and have great effects on physical assets. They have long term impact, and are not easily reversible, once they have been taken. A company's structure is related to the physical attributes of operations.
The elements of infrastructural decisions and practices may include:
Infrastructural decisions relate to systems used to enhance enhance the utilization of structural resources, and the control of those resources so the business achieves a high level of productivity. Infrastructure decisions affect organizational culture control systems, workforce, quality management and leadership. Their cumulative effects can be difficult and costly to change, just like the structural ones are.
Operations Strategy
Operations strategy is the set of decisions an organization makes, regarding those various operations they take, in the production and delivery of products - goods and/or services. Operations strategy is the system of decisions that a firm makes to achieve long-term competitive advantage. It is the collective concrete actions chosen, mandated or stipulated by corporate strategy and implemented in the operations function. Operations strategy specifies how the firm will employ its operations capabilities to support the business strategy. Each organization strategy requires a tailored operations strategy. Operations strategy works in tandem with overall business strategy, helping organizations to achieve their long-term goals and improve competitiveness. Operations strategy acts like a plan to specify the structure and usage of resources. Operations strategy drives a company's operations function, the part of the business that produces and distributes goods and services.
The realized/real operations strategy of a company, is the set of the actual operations management decisions that are taken over time, and shape the operations of a company. Operations strategy is the logic underlying operations management decisions.
Operations strategy focuses on maximizing the efficiency and effectiveness of production of services or goods while minimizing operating costs. Operations strategy focuses on maximizing the efficiency and effectiveness of production of services or goods while minimizing operating costs. Operations strategy focuses on reducing process costs, and improving profits for the entire business. Operations strategy helps operations management optimize the use of resources, people, processes and technology. Operations strategy helps align the organization's operations with the overall goals and objectives, and enable it to more effectively compete in the market.
Common Types of Operations Strategies
Operations strategies revolve around the core business processes such as production, supply chain, distribution, logistics, etc. Operations strategies may also revolve around capacity of production facilities, their location, product lines procurement, etc. Operations strategy may also include strategies such as product development, market penetration, customer engagement, etc.
Operations strategy formulation revolve around a number of strategy areas including:
Some common types of operations strategies an organization can use to enhance efficiency, boost capabilities and improve competitive advantage, includes:
An effective operations strategy considers a company's long-term objectives and creates steps that cohesively bond business plans with resources, capacity, time, location, and competition.
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Operations strategy binds the various operations decisions and actions into a cohesive consistent response to competitive forces/factors by linking firm's infrastructure decisions relating to policies, programs, systems, and actions into a systematic response to the competitive priorities chosen and communicated by the corporate or business strategy.
Operations Strategy Formulation
Operations strategy formulation is a decision making process that shapes an organization's long-term plans to achieve the objective of its mission statement. Operations strategy formulation process is concerned with structure and infrastructure decisions that shape the operations strategy. Operations strategy formulation is the practical process of articulating the various objectives and decisions that make up the operations strategy.
design decisions about operations systems an operations strategy, giving the contents and types of decisions that form its nucleus/core. The design of an operations strategy shows long-term aspirations and intent.
Operations strategy formulation involves the identification of existing processes and technology in place to support the business strategy. Formulating operations strategy involves defining the processes, resources, and systems that business will use to produce and deliver products - goods and services - to the market.
A comprehensive overall strategy for operations takes into account total operations resources available to an organization. An operations strategy can have many different components, including:
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When developing operations strategy management should give due consideration to the strategic positioning of the firm i.e. the requirements mandated by corporate and business strategy, market requirements, as well as competitive priorities and how you will handle them by the types of operations strategy employed.
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The operations strategy must then be aligned with the company's business strategy (top-down view) to enable the company to achieve its long-term plan.
By developing operations strategies, a company can examine and implement effective and efficient systems for using resources, personnel and work processes. To develop an organization's operations strategy, first consider the corporate or business strategy, and a market/needs analysis. Then consider the competing priorities of cost, time, quality, and flexibility, and how you will handle them.
In service-oriented companies, basic operations strategies can be used to link long-term and short-term corporate decisions and create an effective management team.
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Operations strategy supports in linking operational level decisions, i.e., both long-term and short-term, to corporate and business strategy. This linking can be considered a process of making key operations decisions by maintaining consistency with the overall objectives of the organization, from a strategic point of view. An organization's operations strategy works in tandem with its overall business strategy, helping the organization achieve its long-term goals and improve competitiveness in te market place.
Operations strategy can be helpful in the planning of processes and tasks, and aligning them with the larger goals of the organization.
Operations strategy helps a company examine and implement effective and efficient systems to achieve the corporate objectives. Ensuring the system works efficiently and effectively toward the organization's overall goals is a priority for for many of these businesses.
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The role of operations strategy is to provide a plan for the operations function so that it can make the best use of its resources. By developing operations strategies a company can examine and implement effective and efficient systems for using resources, personnel and the work processes. When implemented successfully, operations strategies strengthen a company's overall strategy and may help achieve market place advantage over the competition. It can also improve an organization's competencies and infrastructure allowing it to better serve customers and keep or extend its competitive advantage over others in the market.
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Operations strategy (as a plan) specifies the policies and plans for using the organization's resources to support its long-term competitive strategy.
Operations strategy is crucial for competitiveness and success. The main focus of operations strategy is on specific capabilities related to operations that facilitate an organization in gaining competitive advantage. Operations strategies connect the firms programs, policies, guidelines and workforce in a way that allows each part of the organization (functional areas) to support others in achieving a common goal. The benefits of having an operations strategy within the organization includes: employee efficiency, resource management, and department/functions cooperation.
Strategic Options/Choices
Strategic options are goal-oriented alternatives that an organization has towards the uncertain external environment. It is not only the choice but also the obligation of the management to choose the best possible alternative from the options. Strategic choices are decisions taken in accordance with the organization's mission and vision, and influenced by elements such as judgment, bargaining, and analysis. Strategic choices have influence over the years and decades, and even beyond the lifetime of the project that implements that choice.
Strategic choices are the result of the strategic decision-making process. Strategic decision-making is the process of charting a course based on long-term goals and a longer term vision. It involves selecting the best or most appropriate strategy from the stock of alternatives that serves the company's objectives conducting a SWOT analysis to examine the strengths and weaknesses of the organization, and determining opportunities that can be exploited. Strategic decision-making should be done in context with the organization, its mission, needs, resources, vision, and other similar considerations. Then evaluate each of the options; each will have its own advantages as well as disadvantages. This involves a lot of brainstorming and making tough decisions and choices. After evaluation, select one or multiple options based on the organization's needs and circumstances. Also, the management needs to decide how these options will place to use and practice. Some of the key techniques for the generation of strategic options include: Using the Ansoff Matrix, Using Porter' Generic Strategies, Using BCG Analysis, and Using SWOT Analysis. The decision-making process is continuous, and the management should continue looking for better options even when it has chosen one.
Usually, strategic choices selected for implementation are expressed as high-level statements that resonate with the board, and executive level management. Ensure the strategic choices are sound and described in statements that clearly communicate what top management wants and expects. The statements should be expressed in terms that middle-level and line management would understand; such as the products and services to offer and in which markets; what resources, capabilities, and competencies are needed to support these products and services; how to acquire or build these resources.
Strategy formulation is the process of using available knowledge from analysis of the organization's internal and external environments, to identifying and document the intended direction of the organization and the optimum set of viable strategies at the corporate, business, and functional levels. Strategy formulation is part of strategic management, and is concerned with the selecting the most appropriate and effective strategies (courses of actions) to achieve strategic objectives. Strategy formulation involves using several analytical tools such as SWOT analysis, PESTEL analysis, etc., to figure out the best approaches (ways) to use available organization resources. Formulating a strategy involves using available knowledge from analyzing the organization's internal and external environments, to identifying and document the intended strategy enabling it to accomplish to mission and achieve the vision. This is an integrated set of strategic choices that uniquely positions the firm in its environment - general environment, industry and market - so as to create sustainable advantage and superior value relative to the competition.
Strategy formulation produces a clear set of recommendations, with justifications, for using available organizational resources (means) with selected approaches for accomplishing the organization's mission to achieve the vision. A good recommendation includes the intended direction and the actionable steps to reach the strategic goals, and should be: effective in solving the stated problem(s); practical, i.e., can be implemented in this situation with the resources available; feasible within a reasonable time frame; cost effective; acceptable to key stakeholders in the organization. Always, there is an end in sight, and that is the organizational goals of the firm and vision. Strategy formulation creates a structure to guide strategic management decisions in transforming the organization to better achieve its vision.
The leadership team of a business, generally, develops its intended and deliberate corporate strategy to help respond or react to the organization's external environment. The vision sets out the reasons for the organization's existence and the "ideal" state that organization aims to achieve; the mission identifies major goals and performance objectives. Both are defined within the context of the organization's philosophy and values and provide the basis for the development and evaluation of intended and emergent organization strategies. Typically, strategy is formulated at various levels in an organization where strategy exists, such as corporate, business, operations, and functional areas. The strategies identified at these various levels can be viewed as a layered system (Strategy engine) with well specified relationships between each of the layers.
Formulating Corporate Level Strategy
Corporate strategy formulation is the process by which a company using available knowledge establishes and documents its corporate strategy. Corporate strategy formulation takes a portfolio management approach to strategic decision-making. It involves:
- Visioning - Setting the high-level direction of the organization - namely the vision, mission, and values as well as goals. The strategic goal might be: "to become competitive and overtake other organizations within the industry in terms of appeal, product, or other factors"; "please stakeholders and customers"; other goals might include: financial stability, profit, development, restructuring, liquidation, market penetration, etc.
- Portfolio Management - analyzing (looking across all of) a firm's portfolio of businesses to determine how to create the most value, with due considerations given to the company's goals, mission, vision, current state (strengths and weaknesses), and external environment factors. The goals
- Objective(s) - Developing the visioning aspects of the corporate strategy and turning them into a series of of high-level objectives for the company. Strategic objectives are the big-picture goals for the company, they describe what the company will do to try to fulfill its mission. Having strategic objectives in place allows a company to measure its progress. Clearly communicating these objectives to personnel ensures that everyone is focused on the highest-priority tasks and is operating under the same assumptions about the company's future.
- Resource Allocation - This refers to the decisions which concern the most efficient allocation of human and capital resources in the context of the stated goals and objectives. Resource allocation involves planning, managing and assigning resources in a form that helps to reach a company's strategic goals. In an effort to maximize the value of the entire firm, leaders must determine how to allocate resources the various organizational units or business units to make the whole organization greater (more valuable) than the sum of its parts.
- Organization Design - In corporate strategy formulation, organization design ensures that employees organize the structure of the company in a way that maximizes efficiency. This may involve determining the hierarchy of the company, or how the company makes decisions.
- Prioritization - This involves identifying strategic trade-offs, and balancing risk and return on investment to ensure that the desired levels of risk management and return generation are being pursued. Since it’s not always possible to take advantage of all feasible opportunities, and because business decisions almost always entail a degree of risk, companies need to take these factors into account in arriving at the optimal strategic mix. By optimizing decisions across all of these factors, a leader can hopefully, create a portfolio of businesses that is worth more than just the sum of its parts.
Corporate strategy formulation is concerned with selecting an optimal set of businesses and determining how they should be integrated into a corporate whole, to create a portfolio of businesses that is worth more than the sun of its parts. This requires management to not only consider how to gain a competitive advantage in each of the lines of businesses the firm is engaged in, but also which businesses they should be in, in the first place. It involves decisions and choices that determine the long-term orientation of the organization, and the development of corporate activities that evaluate current positions and identifies investment priorities for the businesses. Some of the considerations and may include, for example, the following:
- Which industry or industries should the company compete in?
- What should be the geographical scope of operations - national, international, or global?
- Should we diversify our business, and if yes, at what level?
- How should the company be organized in terms of: product development, marketing, production, sales, customer service, and distribution? Which of these have to be in-house and which are going to be outsourced?
- Should the company enter into alliances or make acquisitions?
It is useful to organize the corporate level strategy considerations and initiatives into a framework, based the various ways the organization can achieve its corporate objectives:.
- Grand Strategy - Grand strategies are major, overarching strategies that shape the course of a business organization. They are focused on the long-term goals of the organization. Grand strategies establish how to prioritize and mobilize resources to ensure perceived interests or goals. The types of grand strategies may include: growth strategy, stability strategy, retrenchment strategy, liquidation strategy, etc.
- Portfolio Management strategy - This is concerned with making decisions about the portfolio of lines of business (LOBs) or strategic business units (SBUs), not the company's portfolio of individual products. The most important strategies developed at this level address queries on whether a business should diversify or focus on concentration. Portfolio matrix models can be useful in reexamining a company's present portfolio.
- Parenting strategy - This strategy is concerned with how to allocate resources and capabilities and activities across the portfolio of businesses. How we allocate resources and manage capabilities and activities across the portfolio? Where do we put special emphasis, and how much do we integrate various lines of business? What is the manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units?. Answering these questions involves evaluating and making decisions on the following: Priorities in allocating resources? what are critical success factors in each business unit, and how can the company do well in them? Coordination of activities (e.g., horizontal strategies) and transfer of capabilities among business units? How much integration of business units is desirable?
Corporate strategy focuses on how to manage resources, risk, and return across the firm. Leaders responsible for strategic decision-making have to consider many factors, including allocation of resources, organization design, portfolio management, and strategic trade-offs. By optimizing all of those factors, a leader can hopefully create a portfolio of businesses that is worth more than the sun of its parts. Corporate strategy formulation involves creating a long-term plan that defines the overall goals, scope, and direction of the entire organization.
Corporate Strategy
A deliberate corporate strategy is a plan, goal, and a commitment to specific set of courses of action that the company should follow to capitalize on opportunities provided by the external environment or mitigate the risk of threats to the mission. While the objective of each goal may differ, the ultimate purpose of a corporate strategy is to improve the company.
- Objective(s) - Strategic objectives are the big-picture goals for the company: they describe what the company will do to try to fulfill its mission. Having strategic objectives in place allows a company to measure its progress. Clearly communicating these objectives to personnel ensures that everyone is focused on the highest-priority tasks and is operating under the same assumptions about the company's future.
- Courses of Actions - These are the different ways the organizations can use its available resources (means) to achieve the corporate objectives. These include: Parenting Strategies, Portfolio Management Strategies, and Grand Strategies.
- Means - Resources and organizational capabilities required to execute those strategies - courses of actions.
- Enabling Environment - This is the broad external environment in which the organization exists and operates. It is comprised of a number of factors/systems such as Political, Social/Society, Economic, Environmental, Technology, and Legal factors/systems. The enabling environment factors can influence and impact the operation of a business organization, and is the source of opportunities as well as threats. This external environment is analyzed with respect to the organization's vision, mission, and values to assess opportunities that may be exploited and threats that have to be mitigated with appropriate mitigation strategies.
A company's corporate strategy may be to focus on sales, growth or leadership. A company may also use corporate strategy to prioritize resources. The purpose of corporate strategy is to create company value, and to motivate employees to work toward that value, or set of goals. The goals are are an indication of what the company as a whole is trying to achieve and become. Corporate strategy allows your business to be proactive, durable and efficient.
Types of Grand Corporate Strategies
Grand strategies are major, overarching strategies that shape the course of a business organization. They are focused on the long-term goals of the organization. Grand strategy can be classified into the following categories/types such as:
- Growth strategy - A growth strategy is a plan or goal for the organization to create considerable growth in different areas; such as overall growth, or specific areas such as sales, revenue, or company size. Companies can accomplish growth strategies through concentration or diversification, horizontal/vertical integration, as well as through mergers & acquisitions.
- Stability strategy - A stability strategy is a plan or goal for the organization to stay within its current industry or market because it is already succeeding in its current situation. This strategy maintains the company's success by continuing practices that work for the company. To do this, the company might invest in areas in which they re doing well, such as customer satisfaction.
- Retrenchment strategy - A retrenchment strategy is a plan that encourages the company to change paths to improve the business. This might mean switching business models or changing markets. A company might achieve this by either switching the business's pathway or by removing parts of the business.
- Reinvention Strategy - This is a plan for a company to reinvent, or redesign aspects of its business, including significantly changing a good or service. An example could be converting a physical stores into an online store.
Grand strategy is concerned with how the organization's means (capabilities and resources) can be used to advance and achieve the organization's strategic priorities.
Formulating Business Level Strategy
Business level strategy formulation is the process of crafting a number of viable business strategy options and selecting the best (most appropriate and feasible) option that will build or improve the company's competitive advantage/position. Business level strategies are formulated for specific strategic business units and relate to distinct product-market areas, and the business unit's competitive position. Business level strategy formulation involve decisions that are primarily concerned with how a company will approach the marketplace - where to play - and how we will compete and win.
The decisions on where and how to play provide answers to the following:
- Which markets will we target?
- What products and services will we bring to market?
- What are strengths and weaknesses?
- How should the company monitor the industry environment so that its strategies conform to the market needs?
Businesses need to find the right markets (target markets) and locations to compete in, and make sure their value proposition is the right one for the the right customers and right locations Value proposition is a statement describing the value that a company or product/service offers to the customer. It answers the question "why should the customer buy our product/service?".
The decisions on how to win provide answers to the following:
- How will we position ourselves against our competitors?
- What type of resources and capabilities should the company develop in order to gain competitive advantage over competitors?
- What unique approaches will we apply to create new markets?
Creating competitive advantage, is the primary concern of competitive strategies. Successful competitive strategies usually involve building uniquely strong or distinctive competencies in one or several areas crucial to success and using them to maintain a competitive edge over rivals.
Business level strategy formulation documents a clear set of plans, actions, and goals that outlines where and how a business will compete, and win in the chosen market(s), and industries. Business strategy can be defined in terms of the following strategy scope elements:
- Objective(s) - Strategic objectives are the big-picture goals for the business unit: they describe what the business unit will do to try to fulfill the organization's mission. Having strategic objectives in place allows a business unit to measure its progress. Clearly communicating these objectives to personnel ensures that everyone is focused on the highest-priority tasks and is operating under the same assumptions about the company's future.
- Courses of Action(s) - These are the different ways the business unit can use its available means (resources) to create value and competitive advantage in order to achieve its business goals. Value is created by employing assets such as products/services, customers, brand, etc. Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. Competitive advantage is created through competitive strategies. These factors allow an organization to generate more sales or superior margins compared to its market rivals. Businesses and consumers purchase one product instead of another when the products are similar, because customers believe that one of the products has a difference (value) they want/need. The difference could be a cost (a lower price), better warranty, or more status. It could be that the product is healthier, more environmentally friendly, more reliable, or some other benefit.
- Means - Resources and organizational capabilities required to execute those strategies - courses of actions. Some examples of distinctive competencies are: Superior technology and/or product features; Better manufacturing technology and skills; Superior sales and distribution capabilities; Better customer service and Convenience.
- Enabling Environment - This is the broad environment in which business units operate; it includes industry, markets, and geographies. This is the enabling environment that sets the scope for capacity development.
Business strategy formulation is the process of outlining the decisions and actions a company plans to take to reach its goals and objectives. Business strategy is a master plan that is designed to help a company reach specific goals. It highlights the market opportunities that the business wants to explore, steps for performing it and the resources required to put it into practice. Business strategy is focused on creating value and competitive advantage for a business. It outlines the actions a company takes to compete effectively in particular markets, and serves as the foundation for a company's functional strategies. A business strategy helps different departments/functions work together, ensuring departmental and functional level decisions support the overall direction of the company.
Brand strategy is the holistic approach behind how a brand builds identification and favourability with customers and potential customers. Brand strategy encompasses several different brand elements such as: voice, storytelling, brand identity, brand values, and overall vibe. Brand strategy helps inform the different choices you make as a business.
Generic Strategies
Generic strategies are ways of gaining competitive advantage - In other words, developing the "edge" that gets you the sale, and takes it away from your competitors. A company can consider formulating competitive strategy by using generic strategies as the fundamental choices, and then adding various competitive tactics. Competitive tactics is the set of policies and procedures that a business uses to gain competitive advantage in the market place. Generic strategies refers to the alternative methods an organization uses to position itself, competitively, in an industry. These may include:
- Cost Leadership Strategy - This strategy is for organizations that want to compete for a broad customer base, based on price. The organization is trying to be the lowest cost producer. Common mechanisms to drive down costs include: establishing rigid cost controls; building state-of-the-art facilities to produce at scale at a low cost; outsourcing to countries with lower wages. To be effective, this strategy requires your product or service to be standardized. This strategy can help defend your business against Porter's five (5) forces.
- Differentiation Strategy - This strategy is for firms that want broad customer base, based on their uniqueness. With differentiation strategy an organization is attempting to establish and maintain meaningful differences between the firm and its competitors. Typically, firms with this strategy will focus on building unique features to win in the marketplace. Common mechanisms to differentiate include: Superior quality; Customer service; Design; Uniqueness.
- Focused Strategy - This is a specialization strategy. The focus dimension of a competitive strategy recognizes that either a cost advantage or differentiation strategy can be applied to a more narrow (niche) market.
- Focused Cost Leadership Strategy - These organizations compete on price but also stand out because they focus on serving a niche market. Common mechanisms to adopt a Focused Cost Leadership Strategy include:Focusing on serving a small group of customers; By uniquely understanding the needs of your niche market, you can cut costs to serve the needs of that market. This strategy can help defend your business against Porter's 5 Forces in the same way that broad cost leadership strategy can.
- Focused Differentiation Strategy - This strategy is very similar to that of a differentiation strategy except that it is focused on a very narrow segment of the market. These firms compete by offering unique features to a small market segment. Common mechanisms to focus include: Select a profitable narrow subset of the market; Focus on areas where competition is weakest; Focus on areas where product substitution is difficult.
- Integrated Cost/Differentiation Strategy - This is a hybrid strategy. This strategy involves producing low-cost products with differentiated features. This strategy is about simultaneously focusing on two drivers of competitive advantage: cost and differentiation.
Note that no one generic strategy is better than another. An organization can be successful using any one of these strategies A choice of one of these generic strategies provides the foundation for a business strategy, however there can be many variations and elaborations; among these are competitive tactics such as: Timing tactics - when to enter a market, market location/positioning tactics - where and how to enter and/or defend, and cooperative strategies. An organization needs to choose the right strategy based on the industry environment factors (what competitors are doing), and also where the organization's strengths lie (core competencies). A business needs strong and differentiated capabilities to compete successfully. For example, if you are pursuing a cost leadership strategy, you need capacity, great supply chain management, and a culture that drives cost out of the system.
Business Strategy
A business strategy establishes the company's approach to where and how it will successfully compete and win in business. Business strategy highlights the market opportunities that the business wants to explore, the steps/actions to take, and the resources to put the actions into practices. Business strategy provides the company with the basis for making the right investments in; what products - goods and services - to offer, and strong capabilities that give the company competitive advantage and differentiates it from competitors. Gaining competitive advantage over other firms is what makes a business successful. A company has competitive advantage whenever it can attract customers and defend against competitive forces better than its rivals.
A Business Level Strategy provides a way for organizations to provide value to customers by exploiting an organization's core competencies and capitalizing on its strengths, using them as competitive advantage to win business from its competitors and become successful. Business strategy can help you create better products or services, offer better pricing, make it easier to buy, or create a benefit that your customers want/need. Competitive Strategy is concerned with how the organization competes within the chosen markets and industries, as constrained by competitive priorities (established through the SWOT analysis). Competitive strategy is concerned with creating competitive advantage through creating a unique selling proposition for your business. It involves pursuing an ongoing process of brand management, pricing evaluation, distribution strategy and operational efficiencies in creating, maintaining, and improving your competitive advantage in your market place and increasing customer preference and loyalty, sales, profits and market share. A competitive strategy is implemented by a set of policies and procedures that a business uses to gain a competitive advantage in the market. It involves the process of identifying and executing actions that allow a business to improve its competitive position.
Types of Business Strategy
Business strategy is a tool to help organizations define the methods and tactics (function actions) they need to take within their company to reach their business goals. Business strategies act as a foundation for developing operations and functional strategies. Some examples of business strategic options include:
- Product differentiation - This type of differentiation strategy may be based on innovative technology, pricing, features and design. Companies can differentiate their products by highlighting the fact that they have superior technology, features, pricing, or styling. With differentiation strategy, firms target to achieve market leadership.
- Improve customer experience - Customer experience refers to the sum of all interactions a customer has with a business, both pre and post sales. The customer experience strategy defines the actionable plans in place to deliver a positive, meaningful experience across those interactions.
- Pricing - When it comes to pricing strategy, businesses can differentiate either by keeping their prices low to attract more customers, or give the products aspiration value by pricing them beyond what most ordinary customers could afford.
- Cross-sell more products - Focus on selling additional products to the same customer.
- Improve customer retention - This strategy requires you to identify key tactics and projects to retain your customers.
- Grow sales from new products - This strategy involves introducing new products into the market and updated products that are able to keep up with trends. It requires the company to invest in research and development in order to constantly innovate.
- Technological advantage - Obtaining a technological advantage to achieve better sales, improved productivity or even market domination.
Business strategy identifies clear set of plans and actions that outline how an organization will compete and win in particular markets with current portfolio of products and services. A business strategy helps different functional departments work together, ensuring departmental decisions support the overall direction of the company.
Formulating Operations Level Strategy
Operations Strategy formulation is the process - a set of procedures - that a company can adopt to establish the way it goes about making the actual decisions, taken over time, that shape the operations strategy of a company. Operations strategy formulation involves comprehensive analysis (identification and evaluation) of the strengths and weaknesses of operations capability - resources, processes, and people - and the determination of infrastructure and structure required to support the business strategy. An analysis should be conducted to determine how the elements of structure and infrastructure support or hinder the business strategy, and what needs to be done to optimize their usefulness and verify operational capabilities.
A company's structure is related to the physical attributes of operations. A company's infrastructure is composed of its policies and systems governing a number of activities such as capital budgeting, equipment selection, organizational structure, etc.
Operations strategy formulation involves first consider the corporate or business strategies, and market analysis/needs; then consider determining the competitive priorities - cost, time, quality, and flexibility - of the firm and how to handle them. These competitive priorities
then translating these priorities into production requirements in terms of performance objectives. which drive the structure and infrastructure decisions of the firm.
- Structural decisions are the ones that define the shape of the building blocks associated with a particular operation. They are directly related to the tangible aspects of operations, such as: process technology for manufacturing, vertical integration, facilities - location, capacity, and variety of product manufacturing. Structural decisions define the overall tangible shape and architecture of the operations.
- Infrastructural decisions or practices, comprise just operational practices or decisions that correspond to operations managers exclusively. These decisions may be considered as strategic or tactical choices because they refer to the people, systems, policies, practices, procedures and organization which support the value creation processes (i.e., goods manufacturing or service production) and enable them to perform their function.
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Components of Operations Strategy
Operations strategy consists of a series of decisions that organizations take in order to implement their competitive business strategies. These decisions that comprise an operations strategy can be grouped into different elements or components of the strategy, such as:
- Product Operations - Product operations management look to streamline processes; analyze data regarding their products and use it to prioritize tasks, and help product management decide which elements of a product to prioritize.
- Designing and Positioning the Production System - This element includes choosing the type of processing system, production design, and finished goods inventory plan, etc. for each main line of product in the business plan. Production systems are of two (2) types: Systems focused on Products; and Systems focused on Processes.
- Focusing Production/Manufacturing and Service Facilities - One of the important elements of operations strategy is to plan for different production facilities to achieve some sort of specialization in each of them. This allows the production facility to gain a command over achieving specific objectives because the equipment, procedures, and supporting systems can focus on certain limited tasks for a particular set of customers.
- Design and Development of Product/Service - The design and development process involve different stages and phases such as: generating ideas, making the feasibility reports, designing and testing prototypes, preparing a production model, evaluating production related economies of scale, market-based testing of the product/service, taking feedback, and developing final design and initiating production.
- Inventory Management - [TBD]
- Supply Chain Optimization - [TBD]
- Quality of Final Product - [TBD]
- Selection of Technology and Process Development - An essential aspect of operations strategy is to determine the way of producing products/services. This includes making decisions and plans on every detail of processes and facilities in production. To achieve the optimum level of production, the analysis of the selected product for production is conducted for the process and appropriate technology. Operations managers face various challenges in taking such decisions due to the availability of lots of options or alternatives.
- Resource Allocation - This involves the continuous allocation of resources such as: cash, capital, workforce, machines, materials, capacity, equipment, services, etc. The allocation of these resources must be done in such a way that helps in achieving the goals of operations up to a maximum extent. Allocating these resources at the right time and place of production shows the efficiency level of production managers. Economical production can be achieved by utilizing resources in an optimal way. A sound operations strategy is required to obtain superior quality products, minimize wastage and optimum utilization of available resources.
- Planning of Capacity, Facility, and Layout - These are key decision areas critical to achieve competitive advantage, are creating layout, facilities, and location for the production of products/services, .The expansion of the manufacturing unit in the future also depends on these decisions related to the land and equipment acquisition for production, and location of new manufacturing units.
Operations strategy is essentially, about the different ways of aligning plans, activities, and objectives.
Structure and Infrastructure Decisions
Operations strategy is the whole system of decisions that are aimed at shaping both the long-term capabilities of operations, regardless of the type of operations, and their contribution to overall strategy achievement. The realized operations strategy is the total pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to the overall business strategy. These decisions can be categorized as structure or infrastructure decisions.
The elements or components of structural decisions category include:
- Facilities: Size, Capacity and Location - Facilities operations decisions refer to size, capacity and plant location(s). Factory capacity refers to the level and variety of manufacturing output.
- Location - Plant location may depend on a number of factors, such as: location of raw materials, location of markets, availability of transportation and communication systems, qualification of workforce, etc. Globalization can also affect location decisions as firms have to be competitive within a unique market.
- Process technology - This may refer to manufacturing process technology. Firms may produce either high volumes of standardized homogeneous and undifferentiated products, or low volumes of differentiated products, specific to customers' preferences by using general equipment or manufacturing machines. Innovative information technologies let firms develop and exploit new automation manufacturing technologies that give these firms more flexible and efficient solutions to material requirements planning or operations engineering.
- Vertical Integration - Managers have to decide which raw materials or components are necessary to be internally developed and which ones must be externally bought. Vertical integration can be useful choice to get economies of scale.
Structural decisions have several remarkable strategic implications, they require substantial financial investments, and have great effects on physical assets. They have long term impact, and are not easily reversible, once they have been taken. A company's structure is related to the physical attributes of operations.
The elements of infrastructural decisions and practices may include:
- Quality Management - This defines the expected quality from the consumers view point as well as established policies and procedures that the company intends to adopt towards attaining such quality levels. Quality management can be defined from two (2) points of view. A simple quality control process oriented towards reducing the number of defects in final products; It is just an inspection process. The other view is considering quality management as an operations philosophy on trying to erode any source of defects. :
- Workforce/Human Resources - This relates to decisions on how to recruit, motivate and retain the staff with necessary skills and talents.
- Inventory Management - This relates to decisions about inventory ordering and holding, and how to optimize the process in order to ensure consumers' satisfaction, enhanced supplier capabilities and effective production schedule.
- Organizational Structure - This refers to corporate structure and business structure. Corporate structure is the business arrangement created in response to demands of corporate strategy. Corporate structure decisions result in different organizational units, each focusing on different tasks or specialties. To achieve unity of effort by combining the activities of these diverse units, the organization relies on integrative methods and mechanisms provided though structural integration.
- Planning and Control Systems - Production planning and control systems contribute to the productivity of resources by ,making it possible to accurately match the supply of capacity and inventory to demand.
- New Product/Service Design - Product/service design processes dictate the product or service attributes that will provide the customers the value they seek.
- Process Capacity and Design - This defines how the product - good or service - is produced (i.e., the production processes utilized and the specific technology, quality, human resource, and capital investments that the management will undertake in order to determine majority of the company's basic cost structure.
- Supply Chain Management - This relates to decisions on how to integrate supply chain into the company's operations and strategy It includes decisions on what will be purchased when it will be purchased, whom it will be purchased from and the conditions for such purchases. Procurement is the process of getting the goods and materials your company needs.
Infrastructural decisions relate to systems used to enhance enhance the utilization of structural resources, and the control of those resources so the business achieves a high level of productivity. Infrastructure decisions affect organizational culture control systems, workforce, quality management and leadership. Their cumulative effects can be difficult and costly to change, just like the structural ones are.
Operations Strategy
Operations strategy is the set of decisions an organization makes, regarding those various operations they take, in the production and delivery of products - goods and/or services. Operations strategy is the system of decisions that a firm makes to achieve long-term competitive advantage. It is the collective concrete actions chosen, mandated or stipulated by corporate strategy and implemented in the operations function. Operations strategy specifies how the firm will employ its operations capabilities to support the business strategy. Each organization strategy requires a tailored operations strategy. Operations strategy works in tandem with overall business strategy, helping organizations to achieve their long-term goals and improve competitiveness. Operations strategy acts like a plan to specify the structure and usage of resources. Operations strategy drives a company's operations function, the part of the business that produces and distributes goods and services.
The realized/real operations strategy of a company, is the set of the actual operations management decisions that are taken over time, and shape the operations of a company. Operations strategy is the logic underlying operations management decisions.
Operations strategy focuses on maximizing the efficiency and effectiveness of production of services or goods while minimizing operating costs. Operations strategy focuses on maximizing the efficiency and effectiveness of production of services or goods while minimizing operating costs. Operations strategy focuses on reducing process costs, and improving profits for the entire business. Operations strategy helps operations management optimize the use of resources, people, processes and technology. Operations strategy helps align the organization's operations with the overall goals and objectives, and enable it to more effectively compete in the market.
Common Types of Operations Strategies
Operations strategies revolve around the core business processes such as production, supply chain, distribution, logistics, etc. Operations strategies may also revolve around capacity of production facilities, their location, product lines procurement, etc. Operations strategy may also include strategies such as product development, market penetration, customer engagement, etc.
Operations strategy formulation revolve around a number of strategy areas including:
- Corporate Strategy - Overall company strategy, driving the company mission and interconnected departments/functions. This type of operations strategy adhere to a company's mission statement and aligns itself to a larger corporate strategy. Businesses using this type of operations strategy develop production initiatives, key performance indicators, and decision-making processes based on strategic plan determined by company's leadership and stakeholders.
- Customer-Driven Strategies - This operations strategy is customer centric, and intended to improve customer experience. Companies using this type of strategy make operations decisions based on the customer experience. Some examples include: a rental car company that eliminates long lines at the airport, or a customer support/call center that eliminates waiting times. These are market based strategies that enable the organization to meet the needs and desires of a target market. These strategies must allow a company to evaluate and adapt to changing environments, continuously enhancing core competencies, and developing new strengths on an ongoing basis. This type of operations strategy aligns with sales and marketing strategies to manage and fulfill customer expectations, and contributes to building loyalty and referral business.
- Core Competencies Strategy - Core competencies are the strengths and resources within a company. This type of operations strategy revolves around the main strengths of a company's business model. By identifying the best core business processes within an organization; this type of operations strategy focuses on leveraging existing strengths to maximize profitability. By identifying its core competencies a company can develop processes such as customer satisfaction, product development, and building professional relationships with stakeholders. This type of operations strategy involves developing the company's key strengths and resources. Core competency based strategies are resource-based strategies, and may include having well-trained staff, optimal business locations, and marketing and financial strengths.
- Competitive Strategies - This type of operations strategy involves a company developing its operations processes to distinguish their products or services from competitors based on identified competitive priorities and established competitive advantage. A company can change their operations strategy to move towards a competitive advantage based on higher quality product, faster lead time during production, etc..
- Product Development - Operations strategy around product (good/service) development aim to develop compelling products and services that resonate with a firm's customers. Operations strategy behind the development of products - goods and service - should consider design, innovation, and added value. When developing a product - good or service - a company should consider the wants and needs of its customers, how it stands against the competition, and how its technical measures relate to its customers' needs. Companies should consider packaging services with immediately observable and psychological benefits and support services. This type of operations strategy resolves around the quality control of existing products or services as well as the development of new products and services. Businesses using this model often determine their operations strategies based on research and ideas from product managers.
- Supply Chain Strategy - This strategy refers to the process of creating excellence through superior delivery capabilities. One type of supply chain operations strategy might be to reduce product costs through bulk purchases, or production line automation. Another, might look at offering product customization to deliver more customer value, while simultaneously making the delivery of goods more efficient.
- Market penetration strategy - This focuses on capturing larger segments of the target customer market. This strategy has several potential focus areas: a business can decide to attract customers away from competitors; or it can attract nonusers that have no experience with your business or with a competitor. Another focus of this strategy is employing one or more geographic locations, centered around a target demographic. Businesses can also try to add more value to existing clients, thereby enticing increased spending on product or service upgrades. For example, an insurance company might define market penetration success by the number of new automobile policies sold. In this regard, it may also decide to hire additional insurance sales agents, open additional branch offices in new locations, partner with online portals, etc. to gain additional customers.
- Location Strategy - This related to decisions as to how near the company and its products should be to the consumers, suppliers, and talent while taking into consideration costs, infrastructure, logistics, and government.
- Layout Strategy - This relates to integrating capacity needs, personnel levels, inventory requirements, and technology in order to ensure that material, people, and information efficiently flow through the company.
Some common types of operations strategies an organization can use to enhance efficiency, boost capabilities and improve competitive advantage, includes:
An effective operations strategy considers a company's long-term objectives and creates steps that cohesively bond business plans with resources, capacity, time, location, and competition.
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Operations strategy binds the various operations decisions and actions into a cohesive consistent response to competitive forces/factors by linking firm's infrastructure decisions relating to policies, programs, systems, and actions into a systematic response to the competitive priorities chosen and communicated by the corporate or business strategy.
Operations Strategy Formulation
Operations strategy formulation is a decision making process that shapes an organization's long-term plans to achieve the objective of its mission statement. Operations strategy formulation process is concerned with structure and infrastructure decisions that shape the operations strategy. Operations strategy formulation is the practical process of articulating the various objectives and decisions that make up the operations strategy.
design decisions about operations systems an operations strategy, giving the contents and types of decisions that form its nucleus/core. The design of an operations strategy shows long-term aspirations and intent.
Operations strategy formulation involves the identification of existing processes and technology in place to support the business strategy. Formulating operations strategy involves defining the processes, resources, and systems that business will use to produce and deliver products - goods and services - to the market.
A comprehensive overall strategy for operations takes into account total operations resources available to an organization. An operations strategy can have many different components, including:
- Production System - [TBD]
- Facilities - [TBD]
- Products - {TBD]
- Technology - [TBD]
- Resources - [TBD]
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When developing operations strategy management should give due consideration to the strategic positioning of the firm i.e. the requirements mandated by corporate and business strategy, market requirements, as well as competitive priorities and how you will handle them by the types of operations strategy employed.
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The operations strategy must then be aligned with the company's business strategy (top-down view) to enable the company to achieve its long-term plan.
By developing operations strategies, a company can examine and implement effective and efficient systems for using resources, personnel and work processes. To develop an organization's operations strategy, first consider the corporate or business strategy, and a market/needs analysis. Then consider the competing priorities of cost, time, quality, and flexibility, and how you will handle them.
In service-oriented companies, basic operations strategies can be used to link long-term and short-term corporate decisions and create an effective management team.
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Operations strategy supports in linking operational level decisions, i.e., both long-term and short-term, to corporate and business strategy. This linking can be considered a process of making key operations decisions by maintaining consistency with the overall objectives of the organization, from a strategic point of view. An organization's operations strategy works in tandem with its overall business strategy, helping the organization achieve its long-term goals and improve competitiveness in te market place.
Operations strategy can be helpful in the planning of processes and tasks, and aligning them with the larger goals of the organization.
Operations strategy helps a company examine and implement effective and efficient systems to achieve the corporate objectives. Ensuring the system works efficiently and effectively toward the organization's overall goals is a priority for for many of these businesses.
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The role of operations strategy is to provide a plan for the operations function so that it can make the best use of its resources. By developing operations strategies a company can examine and implement effective and efficient systems for using resources, personnel and the work processes. When implemented successfully, operations strategies strengthen a company's overall strategy and may help achieve market place advantage over the competition. It can also improve an organization's competencies and infrastructure allowing it to better serve customers and keep or extend its competitive advantage over others in the market.
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Operations strategy (as a plan) specifies the policies and plans for using the organization's resources to support its long-term competitive strategy.
Operations strategy is crucial for competitiveness and success. The main focus of operations strategy is on specific capabilities related to operations that facilitate an organization in gaining competitive advantage. Operations strategies connect the firms programs, policies, guidelines and workforce in a way that allows each part of the organization (functional areas) to support others in achieving a common goal. The benefits of having an operations strategy within the organization includes: employee efficiency, resource management, and department/functions cooperation.
- Objective(s) - Strategic objectives are the big-picture goals for the company: they describe what the company will do to try to fulfill its mission. Having strategic objectives in place allows a company to measure its progress. Clearly communicating these objectives to personnel ensures that everyone is focused on the highest-priority tasks and is operating under the same assumptions about the company's future.
- Courses of Actions - These are the different ways the organizations can use its available means (resources) to achieve the corporate objectives. These include: Parenting Strategies, Portfolio Management Strategies, and Grand Strategies.
- Means - Resources and organizational capabilities required to execute those strategies - courses of actions.
- Enabling Environment - The concept of enabling environment is an all inclusive concept that involves all outside factors and influences that impact the operation of a business, and is the source of opportunities as well as threats. The external environment is analyzed with respect to the organization's vision, mission, and values to assess opportunities that may be exploited and threats.
Strategic Options/Choices
Strategic options are goal-oriented alternatives that an organization has towards the uncertain external environment. It is not only the choice but also the obligation of the management to choose the best possible alternative from the options. Strategic choices are decisions taken in accordance with the organization's mission and vision, and influenced by elements such as judgment, bargaining, and analysis. Strategic choices have influence over the years and decades, and even beyond the lifetime of the project that implements that choice.
Strategic choices are the result of the strategic decision-making process. Strategic decision-making is the process of charting a course based on long-term goals and a longer term vision. It involves selecting the best or most appropriate strategy from the stock of alternatives that serves the company's objectives conducting a SWOT analysis to examine the strengths and weaknesses of the organization, and determining opportunities that can be exploited. Strategic decision-making should be done in context with the organization, its mission, needs, resources, vision, and other similar considerations. Then evaluate each of the options; each will have its own advantages as well as disadvantages. This involves a lot of brainstorming and making tough decisions and choices. After evaluation, select one or multiple options based on the organization's needs and circumstances. Also, the management needs to decide how these options will place to use and practice. Some of the key techniques for the generation of strategic options include: Using the Ansoff Matrix, Using Porter' Generic Strategies, Using BCG Analysis, and Using SWOT Analysis. The decision-making process is continuous, and the management should continue looking for better options even when it has chosen one.
Usually, strategic choices selected for implementation are expressed as high-level statements that resonate with the board, and executive level management. Ensure the strategic choices are sound and described in statements that clearly communicate what top management wants and expects. The statements should be expressed in terms that middle-level and line management would understand; such as the products and services to offer and in which markets; what resources, capabilities, and competencies are needed to support these products and services; how to acquire or build these resources.
- Which industry or industries should the company compete in?
- What should be the geographical scope of operations - national, international, or global?
- Should we diversify our business, and if yes, at what level?
- How should the company be organized in terms of: product development, marketing, production, sales, customer service, and distribution? Which of these have to be in-house and which are going to be outsourced?
- Should the company enter into alliances or make acquisitions?
- Objective(s) - Strategic objectives are the big-picture goals for the company: they describe what the company will do to try to fulfill its mission. Having strategic objectives in place allows a company to measure its progress. Clearly communicating these objectives to personnel ensures that everyone is focused on the highest-priority tasks and is operating under the same assumptions about the company's future.
- Courses of Actions - These are the different ways the organizations can use its available resources (means) to achieve the corporate objectives. These include: Parenting Strategies, Portfolio Management Strategies, and Grand Strategies.
- Means - Resources and organizational capabilities required to execute those strategies - courses of actions.
- Enabling Environment - This is the broad external environment in which the organization exists and operates. It is comprised of a number of factors/systems such as Political, Social/Society, Economic, Environmental, Technology, and Legal factors/systems. The enabling environment factors can influence and impact the operation of a business organization, and is the source of opportunities as well as threats. This external environment is analyzed with respect to the organization's vision, mission, and values to assess opportunities that may be exploited and threats that have to be mitigated with appropriate mitigation strategies.
Strategy Implementation
Strategy Implementation is a function of the strategic management process. Strategy implementation is the organizing function of the strategic management process, and it is concerned with turning selected formulated strategy into action for attaining the desired results established during strategy formulation. The nature of strategy implementation requires an organization to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed. Strategy implementation includes: developing a strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information systems,and linking employee compensation to organizational performance.
Strategy Implementation - Major General Tasks
Since the selected strategy from strategy formulation has to be realized (implemented and executed), this raises an issue of compatibility with the existing and current resource obligation, structures of the organization, policies involves, and system of administration. Strategy implementation revolves around the management of people, resources, and business processes. Successful implementation depends on Even though strategy implementation is unique to each organization, there are some major general tasks management must perform well to successfully implement the strategy; these may include:
Strategy implementation is the responsibility of managers at different levels in the organization (top, middle, and line management) focused on building capacity through projects and programs to strengthen or enhance the organization's strategic assets utilized in creating value for customers and stakeholders.
Strategy implementation is not an event, rather it is an ongoing process to close the gap between the current organizational capabilities and what the corporate and business strategy calls for. It involves managing change in the organization's internal environment which then allows the organization to successfully adapt /respond to the changing external environment in which the organization exists and operates in, but does not control. Effective strategy implementation provides the context for successful strategy execution. Strategy is implemented through the use of projects, programs, and portfolios.
Together, projects, programs, and portfolios combine to deliver the beneficial change required to implement, enable and satisfy the strategic intent of an organization.
Implementation assumes the existence of an operations systems (e.g., payroll system, performance management system, employee compensation and benefits system, employee on-boarding system, etc.). All required resources including funding must be secured at this point prior to execution of the plan.
Strategic Implementation Plan
Strategic implementation process refers to the concrete steps that you take to turn your strategic plan into action. Implementation planning is the act of developing a tactical plan to realize an initiative. Strategy implementation is one way by which an organization's objectives, strategies, and policies are put into action through development of initiatives (programs and projects), budgets and procedures. The implementation tactics you use and the steps you take will depend on the specific undertaking, organization, and goals. Implementation involves the creation of a number of plans that are linked to appropriate control systems within the organization, such as: budgeting, operations systems and incentive systems. These plans may include: action plans, implementation plan, and operational plans, and tactical plans..
The implementation plan is a document that you use to describe the implementation approach. Typically, it outlines the resources, assumptions, short and long term outcomes, roles and responsibilities, and budget. It is a complex mix of decisions and activities on managing people, strategy, and operations in creating "fits" between the ways things are done and what it takes for effective strategy execution to make the strategy work as intended. Implementation plan includes several different components that need to be coordinated and managed through the assignment and direction of personnel to carry out the plan.
Implementation Plan - Components
The implementation plan will be unique to the project you are working on, so it may include additional components not listed above. The implementation plan is more holistic and addresses other variables that affect the implementation process such as risks, resources, and team roles and responsibilities. The implementation plan defines the responsibility of top, middle and lower level managers focused on the creation of new strategic assets and/or enhancement and strengthening existing strategic assets needed by the entity in order to build an organization capable of carrying out the strategy and maintaining its ability to achieve future outcomes.
Action Plan
The action plans are schedules for actions to be taken, and policies and procedures that guide resource allocation and prioritization decisions. An action plan focuses exclusively on describing work packages and tasks. The basic elements of the action plan are a list of activities needed for implementation, and time table showing when, responsibilities for each activity, time table of activities, budgeted costs, expected flow of funds, resources needed, etc. Resources are constraints on the course of action. It also involves budgeting - identifying the sources and levels of resources that can be committed to the courses of action.
Operational Plan
The Operations Plan describes milestones, conditions for success and explains how or what portions of a strategic plan will be put into operation during a given operations period. The operations plan is a basic tool that directs the day-to-day activities of organizational staff. An operational plan addresses four basic questions: Where are we now? Where do we want to be? How do we get there? How do we measure our progress?
[TBD]
Strategy implementation consists of all the decisions and actions, and plans required to turn selected strategic choices into reality. Although a manager may talk about "implementing a differentiation strategy", the real implementation of a strategy happens at the bottom of the strategy hierarchy and the organizational hierarchy, through the actions of operational employees who carry out planned tasks that add value to the company's product. Such tasks may include: research and development to add new features, monitoring production to ensure company's products meet high quality standards, and marketing the product to add brand value in the eyes of consumers.
[TBD]
Strategy implementation is all about “how” the activities will be carried out, “who” will perform them, “when” and "how often" will they be performed, and “where” will the activities be conducted. And it does not refer only to the installation or application of new strategies but also to existing strategies that have always worked well in the past years, and are still expected to yield excellent results in the coming periods. Reinforcing these strategies is also a part of strategy implementation.
Strategy Implementation is a function of the strategic management process. Strategy implementation is the organizing function of the strategic management process, and it is concerned with turning selected formulated strategy into action for attaining the desired results established during strategy formulation. The nature of strategy implementation requires an organization to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed. Strategy implementation includes: developing a strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information systems,and linking employee compensation to organizational performance.
Strategy Implementation - Major General Tasks
Since the selected strategy from strategy formulation has to be realized (implemented and executed), this raises an issue of compatibility with the existing and current resource obligation, structures of the organization, policies involves, and system of administration. Strategy implementation revolves around the management of people, resources, and business processes. Successful implementation depends on Even though strategy implementation is unique to each organization, there are some major general tasks management must perform well to successfully implement the strategy; these may include:
- Building a Capable Organization - This means building a sound organization capable of executing the strategy. An organization becomes sound when its employees are competent, its management structure is matched with its requirements and it has high competitive capabilities. Organization-building actions include: developing competent personnel, developing competitive organizational capabilities, and developing dynamic organizational structure.
- Establishment of Strategy Supportive Budget - This ensures that relevant business units/divisions/departments have sufficient budgets to do their work successfully. Senior management responsible for preparing budgets in the company need to take care of the budgetary requirements of each unit. Budgets are financial statements of the resources required to achieve a set of finite objectives or put into action a formulated strategy. Resource allocation as expressed in the budget needs to be carefully linked to strategy. BCG Product Portfolio Matrix is one of the tools that can be used to link resource allocation decisions to choice of strategy. Budgets can be classified into the following categories: Capital Budgets, Revenue Budgets, and Expenditure Budgets.
- Installment of Internal Administrative Support Systems - The term Internal Systems refers to the policies and processes required to ascertain desirable behavior, information system providing strategically critical information on time, and other management and operations systems such as: accounting system, budgeting system, and measurement and reward system. The system directly involved in the implementation of strategy is the project planning system which involves the scheduling of specific tasks for carrying out the project. These internal systems help support the management process and the manner in which managers coordinate and control strategic process.
- Designing Strategy-Supportive Rewards and Incentives - This deals with the planning that helps in associating rewards and incentives with strategy and objectives. The personnel of various departments should be motivated to work towards accomplishing the strategy. The organization should motivate its employees with the help of rewards, incentives, sanctions, controls, and standards.
- Building Strategy-Supportive Corporate Culture - Organizational or corporate culture is the pattern of role-related beliefs, values, and expectations Organizational culture defines the particular way the organization solves problems of survival through adaptation to its external environment and internal integration which is supportive of the strategy. It is a social control system with norms as behavior guides. Rules and norms for behavior within an organization are derived from these beliefs, values, and expectation. Norms of behavior can actually exert more control over employee behavior than a set of objectives and sanctions. Norms can also work to discourage sloppy work which will violate a set of shared values of excellence held by employees. Culture manifests itself in the particular way things are done in an organization including how decisions are made. Culture affects who gets hired, how they get trained (formally or informally), what behaviors get rewarded, who gets promoted, and virtually all organizational procedures and administrative protocols.
- Exercising Strategic Leadership - Leadership is an organizational capability that an organization must possess, at decent levels, to enable leaders and management to effectively organize, coordinate and communicate the organization's direction nd vision to the workforce and keep them motivated and committed to achieve the strategic objectives and goals. This is a potential source of competitive advantage, and therefore, highly essential for successful strategy implementation. It is construed as the ability to anticipate, envision, and maintain flexibility, and empower others to create strategic ,change as necessary. Successful strategic leaders in organizations effectively and gainfully influence the employees' behavior and thoughts. They are capable of creating intellectual capital.
- Establishing Strategy-Supportive Policies and Procedures - Policies and (operating/work) procedures must have conformity with the organization's strategy. Strategy-supportive polices are essential as they provide useful guides for decision-making. Strategy-supportive work procedures or work practices ensure proper support for effective strategy implementation. Well conceived policies and procedures promote the creation of a work climate that facilitates effective strategy implementation.
- Instituting Mechanisms for Continuous Improvement - There are a number of Continuous Improvement Mechanisms that can be used to improve business operations and processes (including products and services). Some examples of these are: Business Process Re-engineering (BPR), Total Quality Management (TQM), and Six Sigma.
- Instituting Best Practices - Best practices are those business activities of either competitors or some other organization that have proven very successful in achieving business goals. A company may have best practices, for example, in exceeding customer expectation, or in motivating employees. A company can identify the best practices of other companies through bench marking.
- Designing Strategic Control Systems - Strategic control systems are management tools used to track an organization's progress toward its strategic goals, identify any issues or problems, and take corrective action, if needed. Strategic controls are designed by management to answer the following questions:(1) Are we moving in the proper direction?; Are our assumptions about major trends and changes correct?; Do we need to adjust this strategy? (2) How are we performing?; Are we meeting objectives and schedules?; How are costs, revenues and cash flows matching projections? Do we need to make operational changes? Strategic controls provide basis for correcting the actions and directions of the organization in implementing its strategy as the external environment situation, and internal situations are developing (changing).
Strategy implementation is the responsibility of managers at different levels in the organization (top, middle, and line management) focused on building capacity through projects and programs to strengthen or enhance the organization's strategic assets utilized in creating value for customers and stakeholders.
Strategy implementation is not an event, rather it is an ongoing process to close the gap between the current organizational capabilities and what the corporate and business strategy calls for. It involves managing change in the organization's internal environment which then allows the organization to successfully adapt /respond to the changing external environment in which the organization exists and operates in, but does not control. Effective strategy implementation provides the context for successful strategy execution. Strategy is implemented through the use of projects, programs, and portfolios.
- Portfolios structure investments in line with strategic initiatives and objectives, while balancing, aligning, and scrutinizing capacity and resources.
- Strategic Initiatives are the means through which a company translates its goals and vision into practice. They are the specific actions or goals an organization adopts to bring its vision to life.
- Programs combine business-as-usual with projects and steady state activities dictated by strategic priorities.
- Projects are transient endeavors that bring about change and achieve planned objectives.
Together, projects, programs, and portfolios combine to deliver the beneficial change required to implement, enable and satisfy the strategic intent of an organization.
Implementation assumes the existence of an operations systems (e.g., payroll system, performance management system, employee compensation and benefits system, employee on-boarding system, etc.). All required resources including funding must be secured at this point prior to execution of the plan.
Strategic Implementation Plan
Strategic implementation process refers to the concrete steps that you take to turn your strategic plan into action. Implementation planning is the act of developing a tactical plan to realize an initiative. Strategy implementation is one way by which an organization's objectives, strategies, and policies are put into action through development of initiatives (programs and projects), budgets and procedures. The implementation tactics you use and the steps you take will depend on the specific undertaking, organization, and goals. Implementation involves the creation of a number of plans that are linked to appropriate control systems within the organization, such as: budgeting, operations systems and incentive systems. These plans may include: action plans, implementation plan, and operational plans, and tactical plans..
The implementation plan is a document that you use to describe the implementation approach. Typically, it outlines the resources, assumptions, short and long term outcomes, roles and responsibilities, and budget. It is a complex mix of decisions and activities on managing people, strategy, and operations in creating "fits" between the ways things are done and what it takes for effective strategy execution to make the strategy work as intended. Implementation plan includes several different components that need to be coordinated and managed through the assignment and direction of personnel to carry out the plan.
Implementation Plan - Components
- Objectives - Outline project objectives; thee are goals or milestones you want to reach. Set your goals and decide what metric your team will use to measure and monitor progress. Identify the goals that the new strategy should achieve. Determine what you hope to accomplish when your project is completed, like whether you hope to win over a new marketing client, or revamp your internal content strategy. Goals help establish a clear picture of what you hope to attain. Without a clear picture of what you are trying to attain, it can be difficult to establish a plan for getting there. Another important aspect of goal setting is to account for variables that might hinder your team's ability to reach the identified goals and lay out contingency plans.
- Scope Statement - Set the scope of your project by conducting research. The project statement should outline the boundaries you've set for your project and broadly define what goals, deadlines, and project outcomes you will be working towards.
- Outline of Deliverables - Deliverables are the tangible products your project delivers. The deliverables can serve as a resource when managing time frames, delegating tasks, and allocating resources.
- Schedule Milestones (Task Due Dates) - Although the project timelines may change as your project progresses, it is important to clarify your expected due dates during implementation panning. Estimate tasks due dates, and schedule milestones around these due dates.
- Allocate Resources - This involves allocation of resources - financial, physical, human, and technological resources - to the departments and function areas responsible for executing the strategy. Resource allocation is a central management activity that allows for strategy execution.
- Designate Team Members Relationships, Roles and Responsibilities - Determine who needs to do what and when. Develop action plans to help determine "what" specific actions or activities need to be carried out by "who", and "when" in order to achieve a goal within the constraints defined by the objective statements. An action plan gives a time table for implementing a strategy. In this phase it can be helpful to document all of the resources available, including the employees, teams and departments that will be involved. Outline a clear picture of what each resource is responsible for achieving, and establish a communication process that everyone should adhere to.
- Map Out Risks - Map out all the potential risks you may face in your project, as identified in your brainstorming strategic risk scenarios.
The implementation plan will be unique to the project you are working on, so it may include additional components not listed above. The implementation plan is more holistic and addresses other variables that affect the implementation process such as risks, resources, and team roles and responsibilities. The implementation plan defines the responsibility of top, middle and lower level managers focused on the creation of new strategic assets and/or enhancement and strengthening existing strategic assets needed by the entity in order to build an organization capable of carrying out the strategy and maintaining its ability to achieve future outcomes.
Action Plan
The action plans are schedules for actions to be taken, and policies and procedures that guide resource allocation and prioritization decisions. An action plan focuses exclusively on describing work packages and tasks. The basic elements of the action plan are a list of activities needed for implementation, and time table showing when, responsibilities for each activity, time table of activities, budgeted costs, expected flow of funds, resources needed, etc. Resources are constraints on the course of action. It also involves budgeting - identifying the sources and levels of resources that can be committed to the courses of action.
Operational Plan
The Operations Plan describes milestones, conditions for success and explains how or what portions of a strategic plan will be put into operation during a given operations period. The operations plan is a basic tool that directs the day-to-day activities of organizational staff. An operational plan addresses four basic questions: Where are we now? Where do we want to be? How do we get there? How do we measure our progress?
[TBD]
Strategy implementation consists of all the decisions and actions, and plans required to turn selected strategic choices into reality. Although a manager may talk about "implementing a differentiation strategy", the real implementation of a strategy happens at the bottom of the strategy hierarchy and the organizational hierarchy, through the actions of operational employees who carry out planned tasks that add value to the company's product. Such tasks may include: research and development to add new features, monitoring production to ensure company's products meet high quality standards, and marketing the product to add brand value in the eyes of consumers.
[TBD]
Strategy implementation is all about “how” the activities will be carried out, “who” will perform them, “when” and "how often" will they be performed, and “where” will the activities be conducted. And it does not refer only to the installation or application of new strategies but also to existing strategies that have always worked well in the past years, and are still expected to yield excellent results in the coming periods. Reinforcing these strategies is also a part of strategy implementation.
Strategy Execution
Strategy execution is one of the three (3) co-incident determinants of the strategic management process including strategy formulation and strategy implementation. Strategy execution takes place within the context of strategy implementation, and is a change control process involving a series of integrated decisions/actions that take place over time, and inextricably change the organization and its relationship with its environments. Strategy execution involves a disciplined and systematic approach to managing - directing, controlling and facilitating - the day-to-day decisions and activities undertaken at all levels in the organization (involving top management through middle management, and front-line managers and workers) that carryout the ongoing pursuit of a strategy and complete it. Successful execution involves decisions about strategy, organization design - structure, information sharing, incentives and controls - within an organizational context of power, culture, leadership and ability to manage change.
Strategy Execution Planning and Plan
After the strategy execution team is formed, its first task is to write the strategy execution plan that guides strategy execution. This involves:
Strategy execution is a disciplined process - a logical set of connected activities that enable an organization to make its strategy work as intended. It is concerned with managing initiatives - this is where strategy is translated into practice or remains on paper - and building adequate organization strategic capability - the organization's ability to harness all its skills, organizational capabilities, and resources - in order to gain competitive advantage, and thus survive and increase its value over time. The focus of strategic capability is on the organization's assets, resources, market position in projecting how well it will be able to employ strategies in the future.
Strategy Execution Management
Strategy execution is the process for executing the strategic choices by means of budgeted resource allocations; focus on getting the work of the business done efficiently and effectively. Execution involves doing things to create "fits" between the way things are done and what it takes to make the strategy work as intended. is an action-oriented process for building a capable organization that can make the selected planned/formulated strategy work as intended, through execution of the initiatives in those plans to realize the actual strategy. It revolves around the management of people resources, and business processes. Strategy execution management tasks may include:
Strategy execution can lead to organizational learning, so the execution flow includes feedback loops and controls. The controls portion comprises feed-forward, concurrent, and feedback controls.
Successful strategy execution involves managing the successful transformation of the organization to better position it to deliver its mission and meet the desired outcomes. Successful strategy execution involves decisions about managing changes to appropriate elements of the Operating Model which is concerned with how resources are organized and operated to get critical work done. Changes to elements of the organization's Operating Model may include: governance, accountability, or culture, and in some cases overhauling the whole structure, when a company's strategy changes.
The successful execution results in a company's actual/realized strategy - typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures. A realized strategy is the strategy that an organization actually follows. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy. Realized strategies are a product of a firm’s intended strategy (i.e., what the firm planned to do), the firm’s deliberate strategy (i.e., the parts of the intended strategy that the firm continues to pursue over time), and its emergent strategy (i.e., what the firm did in reaction to unexpected opportunities and challenges).
[TBD]
Strategy Execution Decisions
Strategy execution involves the decisions and activities the organization undertakes in order to turn the implemented strategy into commercial success. These decisions and activities encompass the thousands of decisions and actions taken every day by executive, middle and line managers, and employees acting according to information they may have, and their own self-interest as influenced by organizational culture, and constrained by organizational policies and procedures. These strategic decisions have to be timely - this refers to "when", in the evolution of changes in the organization, the decisions are made rather than how much time the decision maker has to make the decision.
The execution flow involves both top-down flows and bottom-up flows of decisions.
Once the dyadic information flow is completed, further refinement of the whole process might start again, based on the outcome of this process.
These decisions about change take place within an organizational context of power, culture, leadership, and ability to manage change. This makes it more difficult for managers to control execution.
Execution System
Strategy execution is the continuous process of closing the gap between where the company is, and what the strategy calls for. Execution involves integration of both top-down and bottoms-up flows. The top-down integration involves cascaded flows of coordinated decisions and actions (participation and communication) through the implemented layers of corporate strategy, business strategy and operations strategy in the organization. The bottom up flows of participation and communication of information up to the organization managers through feedback mechanisms.
The ideal execution process for each organization is different, but all include some basic and fundamental building blocks that enable executive management to influence the actions of employees in all areas of the organization that result in effective execution of intended and emergent strategy. These building blocks include:
These building blocks are inextricably linked in a coherent system.
Strategy execution system is a social-technical system that provide the framework to integrates strategic decisions and actions such as:
Strategy execution depends on each member of the organization's daily tasks and decisions, so its vital to ensure everyone understands not only the broader strategic goals, but how their individual responsibilities make achieving them possible.
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In order to exercise control, managers have to take the following steps:
After a strategy is selected, it is implemented over time so as to guide a firm within a changing environment. Managers want to know if the company is headed in the right direction and if current company trends and changes are keeping them on that right path. To answer this question requires the implementation of strategic control.
A firm’s successive strategies are greatly affected by its past history of implemented and executed strategies which determine its current state, emergent strategy, and actual/realized strategy. It is important to reexamine past assumptions, and compare actual results with earlier hypotheses.
[TBD]
Execution management involves integration of the series of decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. The change may be planned or emergent. Successful execution involves decisions about:
These decisions take place within the organizational context of power, culture, leadership and the ability to manage change. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy that closes the strategy-to-performance ('strategy-execution') gap. A company's actual strategy is typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures.
Strategy execution is one of the three (3) co-incident determinants of the strategic management process including strategy formulation and strategy implementation. Strategy execution takes place within the context of strategy implementation, and is a change control process involving a series of integrated decisions/actions that take place over time, and inextricably change the organization and its relationship with its environments. Strategy execution involves a disciplined and systematic approach to managing - directing, controlling and facilitating - the day-to-day decisions and activities undertaken at all levels in the organization (involving top management through middle management, and front-line managers and workers) that carryout the ongoing pursuit of a strategy and complete it. Successful execution involves decisions about strategy, organization design - structure, information sharing, incentives and controls - within an organizational context of power, culture, leadership and ability to manage change.
Strategy Execution Planning and Plan
After the strategy execution team is formed, its first task is to write the strategy execution plan that guides strategy execution. This involves:
- The team establishes a set of ambitious, but practical objectives - This involves translating the objectives of the strategy into clear, concrete, measurable, and feasible operational sub-objectives that are linked to departmental process and individual goals. Progress measurement points (milestones) should be established to ensure that focus is not only on end goals/results, but also on intermediate goals (milestones).
- The team defines concrete tasks and activities that are required to achieve the objectives of the strategy. There should be detailed specification of the individual steps that are required to execute the strategy.
- The execution team assigns clear responsibilities for performing the tasks and activities. This involves assigning responsibilities to actions identified and planned during implementation.
- The execution team develops the strategy execution plan - This involves developing integrated functional strategies by translating the objectives and activities to all organization units impacted by the strategy. Each organization unit must then clearly describe how they will contribute to the realization of the organization's strategy. The strategy is often translated into the annual plan of the organizational unit. The objectives and activities of the annual organizational unit plan tend to be the level at which the progress of the strategy and its execution is monitored.
Strategy execution is a disciplined process - a logical set of connected activities that enable an organization to make its strategy work as intended. It is concerned with managing initiatives - this is where strategy is translated into practice or remains on paper - and building adequate organization strategic capability - the organization's ability to harness all its skills, organizational capabilities, and resources - in order to gain competitive advantage, and thus survive and increase its value over time. The focus of strategic capability is on the organization's assets, resources, market position in projecting how well it will be able to employ strategies in the future.
Strategy Execution Management
Strategy execution is the process for executing the strategic choices by means of budgeted resource allocations; focus on getting the work of the business done efficiently and effectively. Execution involves doing things to create "fits" between the way things are done and what it takes to make the strategy work as intended. is an action-oriented process for building a capable organization that can make the selected planned/formulated strategy work as intended, through execution of the initiatives in those plans to realize the actual strategy. It revolves around the management of people resources, and business processes. Strategy execution management tasks may include:
- Visualize the Strategy - Visualization of the strategy enables shared understanding of what the strategy is. An effective way to visualize the strategy to improve understanding is an illustration that shows the important elements of the strategy and how each related to one another and to the mission goals. Frameworks such as the Strategy Map by Kaplan and Norton, etc. help in this regard.
- Measure the Strategy - The key goals elements of the strategy should be assigned an easily understood performance measure. The full set of strategic performance measures can be organized into a Balanced Scorecard based dashboard to help managers determine the progress or lack there of of the strategy execution.
- Report Progress, Compare and Learn - Your strategy is a hypothesis, its your best estimate of the route to success. It is essential to check your hypothesis at the end of an execution cycle (just like budgets are reviewed monthly to ensure financial commitments are being kept), to ensure the strategy is producing results, versus controlling performance. Compare your initial strategic assumptions with what you have learnt from the reality of the results from the completed execution cycle. In addition, look back at your Strategy Execution Capability as well to ensure it is supportive of your strategy.
- Make Decisions and Update strategy - Strategy execution is much like sailing a boat toward a planned destination. A defined course and full complement of navigational charts will not eliminate the need to remain vigilant, to assess the environment, and to make corrections as conditions change while on the journey. As part of the regular reporting process leaders must make ongoing strategic decisions and update the strategy to keep it current and on course. A company needs to update its strategy based on changes in its competitive environment and on the strategy execution feedback from reporting on the previous cycle, as well as update and fine tune your execution capabilities if necessary. Adjust or revise the strategy as necessary. Implementation is an iterative process, so the work doesn’t stop as soon as you think you’ve reached your goal. Processes can change mid-course, and unforeseen issues or challenges can arise. Sometimes, your original goals will need to shift as the nature of the project itself changes.
- Manage Initiatives - This is about selecting, prioritizing, and executing the right initiatives - those actions/plans - that will lead to achieving specific strategic objectives or closing objective performance gap. Strategic initiatives are new plans or actions to improve strategic asset or solve a strategic problem.
- Manage Projects - Develop a capability in project management to coordinate and control - monitor and report progress - the execution of critical strategic projects focused on improving an organization's delivery on its mission. These projects statements include scope, budget, and start/end dates. One effective strategy for monitoring progress is to use daily, weekly, and monthly status reports, and check-ins to to provide updates; reestablish due dates and milestones, and ensure all teams are aligned.
- Communicate Strategy - Leaders must communicate their visualized strategy to the workforce in a way that will help them understand not only what needs to be done, but why.
- Align Workforce Individual Roles - Set individual performance goals and objectives for managers and employees. Make to link all individual objectives with the strategy at the organization level. Aligning Individual Roles - Senior leadership must ensure that employees at all levels can articulate and evaluate their personal contribution towards achieving specific strategic goals.
- Reward Performance - After explaining the strategy and aligning the workforce to it, senior managers must institute the incentives that drive behaviors consistent with the strategy. Monitor and coach regularly to motivate and provide feedback in the right way.
- Evaluate Performance - Most organizations conduct a formal performance evaluation and review at the end of the individual performance management cycle. The evaluation should answer the basic question; "have the individual performance objectives been achieved?"
- Get Closure on the Project, and Agreement on the Output - Everyone on the team should agree on what the final product should look like based on the goals set at the beginning. When you’ve successfully implemented your strategy, check in with each team member and department to make sure they have everything they need to finish the job and feel like their work is complete.
- Review of How the Process Went - Conduct a retrospective. Once your strategy has been fully implemented, look back on the process and evaluate how things went. Ask yourself questions like:
- Did we achieve our goals?
- If not, why? What steps are required to get us to those goals?
- What roadblocks or challenges emerged over the course of the project that could have been anticipated? How can we avoid these challenges in the future?
- In general, what lessons can we learn from the process?
Strategy execution can lead to organizational learning, so the execution flow includes feedback loops and controls. The controls portion comprises feed-forward, concurrent, and feedback controls.
Successful strategy execution involves managing the successful transformation of the organization to better position it to deliver its mission and meet the desired outcomes. Successful strategy execution involves decisions about managing changes to appropriate elements of the Operating Model which is concerned with how resources are organized and operated to get critical work done. Changes to elements of the organization's Operating Model may include: governance, accountability, or culture, and in some cases overhauling the whole structure, when a company's strategy changes.
The successful execution results in a company's actual/realized strategy - typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures. A realized strategy is the strategy that an organization actually follows. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy. Realized strategies are a product of a firm’s intended strategy (i.e., what the firm planned to do), the firm’s deliberate strategy (i.e., the parts of the intended strategy that the firm continues to pursue over time), and its emergent strategy (i.e., what the firm did in reaction to unexpected opportunities and challenges).
[TBD]
Strategy Execution Decisions
Strategy execution involves the decisions and activities the organization undertakes in order to turn the implemented strategy into commercial success. These decisions and activities encompass the thousands of decisions and actions taken every day by executive, middle and line managers, and employees acting according to information they may have, and their own self-interest as influenced by organizational culture, and constrained by organizational policies and procedures. These strategic decisions have to be timely - this refers to "when", in the evolution of changes in the organization, the decisions are made rather than how much time the decision maker has to make the decision.
The execution flow involves both top-down flows and bottom-up flows of decisions.
- Top-Down: Top-down flows of decisions and actions from corporate strategy decisions through business strategy decisions to strategy implementation decision and actions (participation and communication down and across operating units),
- Bottoms-Up: Bottom-up flows of information resulting from day-to-day decisions and actions taken in operations influencing corporate level strategic decisions,
Once the dyadic information flow is completed, further refinement of the whole process might start again, based on the outcome of this process.
These decisions about change take place within an organizational context of power, culture, leadership, and ability to manage change. This makes it more difficult for managers to control execution.
Execution System
Strategy execution is the continuous process of closing the gap between where the company is, and what the strategy calls for. Execution involves integration of both top-down and bottoms-up flows. The top-down integration involves cascaded flows of coordinated decisions and actions (participation and communication) through the implemented layers of corporate strategy, business strategy and operations strategy in the organization. The bottom up flows of participation and communication of information up to the organization managers through feedback mechanisms.
The ideal execution process for each organization is different, but all include some basic and fundamental building blocks that enable executive management to influence the actions of employees in all areas of the organization that result in effective execution of intended and emergent strategy. These building blocks include:
- Clarifying decision rights and norms - How decisions are made; How people instinctively act or take action.
- Designing Information flows and Mindsets - How data and knowledge are processed; How people make sense of their work and environment.
- Motivators and Commitments (Aligning motivations of employees with organization purpose) - How people are encouraged to perform; How people are inspired to contribute.
- Aligning Organizational Structure and Network to Strategy - How work and responsibilities are allocated; How connections are made beyond the organizational chart.
- Allocation of resources - This is a set of basic activities in implementation that refers to both financial and non-financial resources that are (a) available to the organization and (b) are lacking but required for strategy implementation. How much funding would be needed to support implementation, covering the cost and expenses that must be incurred in the execution of the strategies? Another resource is time - Is there more than enough time to see the strategy throughout its implementation?
These building blocks are inextricably linked in a coherent system.
Strategy execution system is a social-technical system that provide the framework to integrates strategic decisions and actions such as:
- Strategic decisions, and actions taken resulting from those decisions.
- Operations management decisions and activities performed resulting from decisions.
- Observing the outputs and outcomes of strategic actions through reporting and monitoring environment changes.
- Diagnosing the issues resulting from the patterns of organization behavior effected by organization outputs.
- Timely adaptation to changes in environment and timely response to any identified opportunities or threats to achieving the mission objectives and strategic goals.
Strategy execution depends on each member of the organization's daily tasks and decisions, so its vital to ensure everyone understands not only the broader strategic goals, but how their individual responsibilities make achieving them possible.
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In order to exercise control, managers have to take the following steps:
- Setting performance standards - Every function in the organizations begins with plans which specify objectives or targets to be achieved. In the light of these, standards are established which are criteria against which actual results are measured.
- Measuring actual performance,
- Analyzing variance, and
- Taking corrective actions.
After a strategy is selected, it is implemented over time so as to guide a firm within a changing environment. Managers want to know if the company is headed in the right direction and if current company trends and changes are keeping them on that right path. To answer this question requires the implementation of strategic control.
A firm’s successive strategies are greatly affected by its past history of implemented and executed strategies which determine its current state, emergent strategy, and actual/realized strategy. It is important to reexamine past assumptions, and compare actual results with earlier hypotheses.
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Execution management involves integration of the series of decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. The change may be planned or emergent. Successful execution involves decisions about:
- Strategy - This is a hypothesis (educated guess) of the intended approach/means to accomplish specified actions/tasks that contribute to desired goals and objectives. Strategy is achieved through the constant interplay between doing, planning and evaluation in closing the performance gap.
- Structure -
- Coordination -
- Information Sharing -
- Incentives and Controls - []
These decisions take place within the organizational context of power, culture, leadership and the ability to manage change. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy that closes the strategy-to-performance ('strategy-execution') gap. A company's actual strategy is typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures.
Implementation
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The role of managers is to guide the organization towards goal accomplishment. Managers are responsible for combining and utilizing organizational resources to ensure their organizations achieve their purposes.
[TBD]
- Integrating Functional Strategies - Identify and give due consideration to the cross-functional implications of strategy at implementation when the critical issues of strategy are appraised. [Horizontal Integration]
- Develop Tactical plans for functional areas such as marketing, production, personnel, finance, and plant facilities. Implementation requires outstanding collaboration between all members of the various groups throughout the whole organization from top management to line workers.
- Developing budgets that steer resources into those internal activities critical to strategic success.
- Finalizing strategic plan with input from all invested parties.
- Aligning the budget to annual goals.
- Producing various versions of the plan for each group.
- Establishing a system for tracking and monitoring the plan.
- Establishing a performance management and reward system.
- Presenting the plan to the entire organization.
- Building annual department plans around the corporate plan.
The role of managers is to guide the organization towards goal accomplishment. Managers are responsible for combining and utilizing organizational resources to ensure their organizations achieve their purposes.
Strategic Evaluation and Control
Strategic evaluation and control is the process of determining the effectiveness of a given strategy in achieving the organizational objectives, and taking corrective actions when required. Control can be exercised in a number of ways, including: through contingency strategies and a crisis management team. Strategic evaluation can help to assess whether the decisions match the intended strategic requirements. Strategic evaluation, through its process of control, feedback, rewards, and review, helps in a successful culmination of the strategic management process. Strategy evaluation ensures that all key supporting elements of the business management systems including Measures and Rewards, Structures and Processes, Culture and People are aligned behind the chosen strategy and hinged on the mission, vision, values and critical success factors (CSF) of the organization. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan.
Strategy Performance Evaluation
This is a process for making necessary adjustments based on monitoring and control information and strategy performance review.
Performance Evaluation entails the process of evaluating the performance of a strategy, reviewing new developments and initiating corrective action to make adjustments in long-term direction, objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas, and new opportunities. If the corrective actions made are not successful, then repeat the strategic management process.
Strategy evaluation involves the assessment of performance measures collected through monitoring of projects and programs to determine the effectiveness of a strategy in meeting strategic objectives. Evaluation steps may include:.
The evaluation may be based on a set of selection criteria/factors that ensures the chosen strategy will be effective. Strategy evaluation is a necessarily intertwined with strategic control. In practice, the term strategic control is used to include evaluative aspects, because unless the results of an action are known, corrective action cannot be taken.
An effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function/process.
The evaluation method allows an organization to take into consideration a lot of the points that can influence successful implementation before a strategy is executed.
Strategic Control
Strategic Control is concerned with tracking the strategy as it's being executed, detecting any problem areas or potential problem areas suggesting the strategy is incorrect, and making any necessary adjustments. Strategic controls allow you to step back and look at the big picture and make sure all the pieces of the picture a correctly aligned. Ordinarily, a significant time span occurs between initial implementation of a strategy and achievement of its intended results. In an organization during the time you are putting a stategy in place (mobilizing resources), numerous projects are undertaken, investments are made, and actions are taken to implement the new strategy. Meanwhile, the environmental situation and the organization's internal situation are developing and evolving. Strategic control are necessary to steer the company through these events, and avoid pitfalls and obstacles,.towards its long term strategic direction. Strategic controls must provide some means of correcting direction on the basis of intermediate performance and new information.
Strategic control is the process used by organizations to control the formation, implementation and execution of strategies/strategic plans. It is a specialized form of management control and differs from other forms of management control (in particular, from operational control) with respect to its need to handle uncertainty and ambiguity at various points in the control process. Strategic control is focused on the achievement of future goals, rather than the evaluation of past performance. The purpose of control at the strategic levels is not to answer the question "have we made the right strategic choices at some time in the past?", bjt rather, "how well are we doing now in the immediate future for which reliable information is available?". The point is not to bring to light past errors but to identify needed corrections to steer the corporation in the desired direction. And this determination must be made with respect to currently desirable long-range goals and not against the goals or plans that were established at some time in the past.
Strategic Control Systems
Strategic controls systems (processes) are at their core cybernetic in nature; using one or more closed loop controls to ensure that any observed deviations from expected activity or outcomes are highlighted to managers who can then intervene to correct/adjust the organization's future activities.. Strategic controls systems may have controls that are forward looking to give controls that are "future-directed and anticipatory". Strategic control systems necessarily comprise a small set of standard elements, the absence of any one of which makes strategic control impossible to achieve. The four elements include:
The above elements imply an active involvement by senior management in the determination of strategic activities pursued by the component parts of an organization.
Ordinarily, a significant time span occurs between initial implementation of a strategy and achievement of its intended results. In an organization during the time you are putting a stategy in place (mobilizing resources), numerous projects are undertaken, investments are made, and actions are taken to implement the new strategy. Meanwhile, the environmental situation and the organization's internal situation are developing and evolving. Strategic controls are necessary to steer the company through these events, and avoid pitfalls and obstacles,.towards its long term strategic direction. Strategic controls must provide some means of correcting direction on the basis of intermediate performance and new information.
Strategic Control system is concerned with tracking the strategy as it's being executed, detecting any problem areas or potential problem areas suggesting the strategy is incorrect, and making any necessary adjustments. A strategic control system monitors the performance of operations and adjusts the strategy to improve performance. There are five (5) parts to a control system, including:
A strategic control system is concerned with tracking the strategy as it is being implemented, detecting problems or changes in the premises and making necessary adjustments. The strategic control system is built to handle unknowns and ambiguity as it tracks a strategy's implementation and subsequent results. The basic components of the strategic control system generate answers to these two questions:
Strategic control is about the big picture. It focuses on the long-term direction of the organization, monitoring progress toward strategic goals, and making changes or adjustments to the overall strategy as needed. Strategic control is an evaluation exercise focused on ensuring the achievement of your goals.
The types of strategic control systems include:
Strategic control involves actions that may include performance measurements, monitoring, consistent review of internal and external issues and factors, and making corrective actions when necessary.
Strategic control is the process for tracking a strategy as it is being executed, detecting problems or changes in the underlying premises and assumptions, and reporting to appropriate management levels. Data gained at this stage provide feedback enabling the organization to learn and deal better with future strategies.
[TBD]
In strategic control, managers want to know if the company is headed in the right direction, and if current company trends and changes are keeping them on the right path. To answer these questions requires the implementation of strategic controls.
Strategic controls are designed by managers to help them successfully implement and execute the organization's strategies. Managers set up control systems, this typically involves four steps:
These steps must be repeated periodically until the organizational goals are achieved. Strategic control provides managers the tools to regulate and govern their activities through both proactive (feed forward) and reactive (feedback) methods.
Strategic control is concerned with managing organizational financial performance, productivity (output) supplemented with behavior control to ensure the organization efficiently achieves its goals. It involves actions such as monitoring internal and external environments' factors to identify issues and enable you to react to any substantial changes in the business environment.
Strategic control may involve:
Strategic control is concerned with tracking the strategy as it is being implemented, detecting problems or changes in the premises and making necessary adjustments. A strategic control system monitors the performance of operations and adjusts the strategy to improve performance. Strategic control systems make employees more responsive to customers through monitoring and evaluating employees' behavior and contact with customers.
[TBD]
Strategic control involves monitoring a strategy as it is being implemented, evaluating deviations and making necessary adjustments.
[TBD]
Strategic controls are mainly of three types: financial, output and behavior controls.
Strategic managers can measure efficiency by comparing the total inputs with the total outputs (how many units of inputs are used to produce a unit of output). Strategic managers should ensure that financial controls and output controls are supplemented with behavior controls for efficient achievement of goals.
TBD]
A viable strategy is defined in terms of the degree to which the strategy meets the following criteria i.e.,:
The whole point about strategy is that the critical factors determining its quality are often not directly observable or simply measured; and by the time strategic opportunities/threats do directly affect operating results, it may well be too late for an effective response.
Strategic evaluation and control is the process of determining the effectiveness of a given strategy in achieving the organizational objectives, and taking corrective actions when required. Control can be exercised in a number of ways, including: through contingency strategies and a crisis management team. Strategic evaluation can help to assess whether the decisions match the intended strategic requirements. Strategic evaluation, through its process of control, feedback, rewards, and review, helps in a successful culmination of the strategic management process. Strategy evaluation ensures that all key supporting elements of the business management systems including Measures and Rewards, Structures and Processes, Culture and People are aligned behind the chosen strategy and hinged on the mission, vision, values and critical success factors (CSF) of the organization. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan.
Strategy Performance Evaluation
This is a process for making necessary adjustments based on monitoring and control information and strategy performance review.
Performance Evaluation entails the process of evaluating the performance of a strategy, reviewing new developments and initiating corrective action to make adjustments in long-term direction, objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas, and new opportunities. If the corrective actions made are not successful, then repeat the strategic management process.
Strategy evaluation involves the assessment of performance measures collected through monitoring of projects and programs to determine the effectiveness of a strategy in meeting strategic objectives. Evaluation steps may include:.
- Define the strategy to evaluate - Managers need to specify the implemented strategy and the progress results that need to be evaluated. Such results have to be objectively measurable and consistent; and can be defined using goals modeling.
- Outline Predetermined Standards - Managers need to outline standards according to the chosen implemented strategy. These standards often consist of a tolerance of range which defines adequate variations.
- Obtain data to Map Out Onto Set Standards - Data to obtain consists of results from the actions taken on the chosen strategies.
- Measure Performance - Assess the performance of the mapped out data.
- Performance Match Standards -if the performance of the identified strategy achieves the standards within the tolerance range then the process stops here; otherwise, Take Corrective Action.
- Take Corrective Action - The performance measured does not achieve the standards; managers must take necessary actions to resolve and amend the implementation Process.
The evaluation may be based on a set of selection criteria/factors that ensures the chosen strategy will be effective. Strategy evaluation is a necessarily intertwined with strategic control. In practice, the term strategic control is used to include evaluative aspects, because unless the results of an action are known, corrective action cannot be taken.
An effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function/process.
- Performance Evaluation - Performance Evaluation entails the process of evaluating the performance of a strategy, reviewing new developments and initiating corrective action to make adjustments in long-term direction, objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas, and new opportunities. To evaluate performance, firms' need to establish a set of "desired" outcomes as well as the metrics they will use to monitor how well their organizations delivered against those outcomes. Those outcomes may include: achieving certain levels of productivity, revenues, profits, market share, market penetration, customer satisfaction, etc.
- Implementation Evaluation - The implementation evaluation method assists managers in deciding whether or not the chosen strategies are steering the organization in the right direction towards achieving the strategic objectives and mission, It provides an intuitive and model-driven approach to assess the execution feasibility of the chosen strategy implementation. The evaluation method is comprised of the activities defined by the evaluation process.It is important to note that for a given organization and business environment not all strategies are executable.
The evaluation method allows an organization to take into consideration a lot of the points that can influence successful implementation before a strategy is executed.
Strategic Control
Strategic Control is concerned with tracking the strategy as it's being executed, detecting any problem areas or potential problem areas suggesting the strategy is incorrect, and making any necessary adjustments. Strategic controls allow you to step back and look at the big picture and make sure all the pieces of the picture a correctly aligned. Ordinarily, a significant time span occurs between initial implementation of a strategy and achievement of its intended results. In an organization during the time you are putting a stategy in place (mobilizing resources), numerous projects are undertaken, investments are made, and actions are taken to implement the new strategy. Meanwhile, the environmental situation and the organization's internal situation are developing and evolving. Strategic control are necessary to steer the company through these events, and avoid pitfalls and obstacles,.towards its long term strategic direction. Strategic controls must provide some means of correcting direction on the basis of intermediate performance and new information.
Strategic control is the process used by organizations to control the formation, implementation and execution of strategies/strategic plans. It is a specialized form of management control and differs from other forms of management control (in particular, from operational control) with respect to its need to handle uncertainty and ambiguity at various points in the control process. Strategic control is focused on the achievement of future goals, rather than the evaluation of past performance. The purpose of control at the strategic levels is not to answer the question "have we made the right strategic choices at some time in the past?", bjt rather, "how well are we doing now in the immediate future for which reliable information is available?". The point is not to bring to light past errors but to identify needed corrections to steer the corporation in the desired direction. And this determination must be made with respect to currently desirable long-range goals and not against the goals or plans that were established at some time in the past.
Strategic Control Systems
Strategic controls systems (processes) are at their core cybernetic in nature; using one or more closed loop controls to ensure that any observed deviations from expected activity or outcomes are highlighted to managers who can then intervene to correct/adjust the organization's future activities.. Strategic controls systems may have controls that are forward looking to give controls that are "future-directed and anticipatory". Strategic control systems necessarily comprise a small set of standard elements, the absence of any one of which makes strategic control impossible to achieve. The four elements include:
- Articulation of the strategic outcomes being sought,
- Description of the strategic activities to be carried out (attached to specific managed resources) in pursuit of required outcomes,
- Definition of a method to track progress made against these two elements (usually, through monitoring f a small number of performance measures /indicators and associated target values),
- Identification of an effective intervention mechanisms that would allow observrs (usually, the organization's managers) to change / correct / adjust the organization's activities when targets sre not achieved.
The above elements imply an active involvement by senior management in the determination of strategic activities pursued by the component parts of an organization.
Ordinarily, a significant time span occurs between initial implementation of a strategy and achievement of its intended results. In an organization during the time you are putting a stategy in place (mobilizing resources), numerous projects are undertaken, investments are made, and actions are taken to implement the new strategy. Meanwhile, the environmental situation and the organization's internal situation are developing and evolving. Strategic controls are necessary to steer the company through these events, and avoid pitfalls and obstacles,.towards its long term strategic direction. Strategic controls must provide some means of correcting direction on the basis of intermediate performance and new information.
Strategic Control system is concerned with tracking the strategy as it's being executed, detecting any problem areas or potential problem areas suggesting the strategy is incorrect, and making any necessary adjustments. A strategic control system monitors the performance of operations and adjusts the strategy to improve performance. There are five (5) parts to a control system, including:
- Review the goals, objectives and constraints of the operations strategy,
- Monitor conditions and changes in the operations and their environment,
- Measure actual performance in key areas,
- Compare actual performance with plans from the strategy and identify gaps,
- Adjust the strategy to improve performance, moving or adding resources, revising plans, or in the extreme cases changing the whole strategy,
A strategic control system is concerned with tracking the strategy as it is being implemented, detecting problems or changes in the premises and making necessary adjustments. The strategic control system is built to handle unknowns and ambiguity as it tracks a strategy's implementation and subsequent results. The basic components of the strategic control system generate answers to these two questions:
- Has the strategy been implemented as planned?
- Based on the observed results, does the strategy need to be changed or adjusted?
Strategic control is about the big picture. It focuses on the long-term direction of the organization, monitoring progress toward strategic goals, and making changes or adjustments to the overall strategy as needed. Strategic control is an evaluation exercise focused on ensuring the achievement of your goals.
The types of strategic control systems include:
- Premise Control - Every strategy is founded on certain assumptions relating to environmental and organizational forces. Premise control serves to test continuously these assumptions to determine whether they are still valid or not. This facilitates the strategists to take necessary corrective action at the right time than just pulling on with the strategy based on vitiated or invalid postulations.
- Implementation Control - In order to implement a chosen strategy, there is need for preparing quite good number of plans, programs and projects. The purpose of implementation control is to evaluate as to whether these plans, programs and projects are actually guiding the organization towards its pre-determined goals or not. This type of control is a step-by-step assessment of implementation activities. It focuses on the incremental actions and phases of strategic implementation, and monitors events and results as they unfold. Is each action or project happening as planned? Are the proper resources and funds being allocated for each step? There are two (2) basic types of implementation control:
- Monitoring Strategic Thrusts -This is the assessment of specific projects or thrusts that have been created to drive the larger strategy;
- Reviewing Milestones - During strategic planning, you likely identified important points in the implementation process. When these milestones are reached, your organization will reassess the strategy and its relevance. Milestones could be based on time frames, such as the end of a quarter, or on significant actions, such as large budget or resource allocations. Implementation control can also take place via operational control systems, like budgets, schedules, and key performance indicators.
- Strategic Surveillance - If premise and implementation strategic controls are more specific by nature, strategic surveillance, is more generalized and overriding control which is designed to monitor a broad range of events both inside and outside the organization which are likely to threaten the very course of a firm’s strategy. They allow the organization to monitor a broad range of events and conditions inside and outside the company that are likely threaten the successful achievement of the firm's strategic objectives. This provides the opportunity to uncover important, yet unanticipated information.
- Special Alert Control - When something unexpected happens, a special alert control is mobilized. This is a reactive process, designed to execute a fast and thorough strategy assessment in the wake of an extreme event that impacts an organization. The event could be anything from a natural disaster or product recall to a competitor acquisition. In some cases, a special alert control calls for the formation of a crisis team—usually comprising members of the strategic planning and leadership teams—and in others, it merely means activating a predetermined contingency plan.
Strategic control involves actions that may include performance measurements, monitoring, consistent review of internal and external issues and factors, and making corrective actions when necessary.
Strategic control is the process for tracking a strategy as it is being executed, detecting problems or changes in the underlying premises and assumptions, and reporting to appropriate management levels. Data gained at this stage provide feedback enabling the organization to learn and deal better with future strategies.
[TBD]
In strategic control, managers want to know if the company is headed in the right direction, and if current company trends and changes are keeping them on the right path. To answer these questions requires the implementation of strategic controls.
Strategic controls are designed by managers to help them successfully implement and execute the organization's strategies. Managers set up control systems, this typically involves four steps:
- Establish standards
- Measure performance,
- Compare performance,
- Take corrective action as needed
These steps must be repeated periodically until the organizational goals are achieved. Strategic control provides managers the tools to regulate and govern their activities through both proactive (feed forward) and reactive (feedback) methods.
- Proactive control - These systems help in keeping an organization on track, anticipating future events and responding to opportunities and threats.
- Reactive control - These systems help detect deviations after events have occurred and then take corrective actions. Managers can adopt corrective actions through adjustments in the strategy if variations are detected.
Strategic control is concerned with managing organizational financial performance, productivity (output) supplemented with behavior control to ensure the organization efficiently achieves its goals. It involves actions such as monitoring internal and external environments' factors to identify issues and enable you to react to any substantial changes in the business environment.
Strategic control may involve:
- The reassessment of a strategy due to an immediate, unforeseen event. For example, if a company’s main product is becoming obsolete, the company must immediately reassess its strategy.
- Monitoring the progress of strategy Implementation, which often involves a series of activities that occur over a long period time, at various milestones, or intervals at . Managers can effectively monitor the progress of a strategy at various milestones, or intervals to determine whether the overall strategy is unfolding as planned.
- Monitoring internal and external events. Multiple sources of information are needed to monitor events. These sources include conversations with customers, articles in trade magazines and journals, activity at trade conferences, and observations of your own or another company’s operations. For example, Toyota gives tours of its plants and shares the “Toyota Way” even with competitors.
Strategic control is concerned with tracking the strategy as it is being implemented, detecting problems or changes in the premises and making necessary adjustments. A strategic control system monitors the performance of operations and adjusts the strategy to improve performance. Strategic control systems make employees more responsive to customers through monitoring and evaluating employees' behavior and contact with customers.
[TBD]
Strategic control involves monitoring a strategy as it is being implemented, evaluating deviations and making necessary adjustments.
[TBD]
Strategic controls are mainly of three types: financial, output and behavior controls.
- Financial Control - Managers use a financial control system to measure a company’s financial performance. For effective financial control, they establish financial goals (e.g., growth, profitability, return to shareholders) and then measure the actual achievement of those goals.
- Output Control - In the case of the output control system, managers forecast performance goals for each unit and employee. They measure the actual performance of the units and employees. Lastly, they compare the actual performance against the goals already set for them.
When the performance of employees or units is linked to the reward system, the output control itself provides an incentive structure for employee motivation in the organization. - Behavior Control - A behavior control system refers to a comprehensive system of rules and procedures. These are prescribed to direct the behavior/actions of employees at each level of the organization. Rules and procedures standardize the way of reaching the goals. Two forms of behavior control are;
- operating budgets and
- standardization of inputs, conversion activities (programming work activities so that they are done the same way time and again), and outputs.
Strategic managers can measure efficiency by comparing the total inputs with the total outputs (how many units of inputs are used to produce a unit of output). Strategic managers should ensure that financial controls and output controls are supplemented with behavior controls for efficient achievement of goals.
TBD]
A viable strategy is defined in terms of the degree to which the strategy meets the following criteria i.e.,:
- Consistency - The strategy must not represent mutually inconsistent goals and policies.
- Suitability (Appropriateness) - Is the strategy consistent with the organization's mission, values, and operating principles? Does it fit with the vision and mission?
- Consonance - The strategy must represent adaptive response to the external environment and to the critical changes occurring within it as defined by the SWOT Analysis information..
- Advantage - The strategy must provide for the creation and/or maintenance of a competitive advantage in the selected areas of activity.
- Flexibility - Can it be adapted and changed as needed?
- Cost-Benefit - Is the strategy likely to lead to sufficient benefits to justify the costs in time and other resources?
- Timing - Can and should the organization implement this strategy at this time, given external factors and competing demands?
The whole point about strategy is that the critical factors determining its quality are often not directly observable or simply measured; and by the time strategic opportunities/threats do directly affect operating results, it may well be too late for an effective response.
Strategy Statement
A strategy statement is an explanation of a company's business organization strategy expressed in terms of a company's goals, plans, and vision. It expresses what the business plans to accomplish, the scope of the plan, the scope of the plan, and what differentiates it from its competitors. Strategy statement is comprised of the following elements: strategic objectives, scope, and competitive advantage.
Example Strategy Statement
To develop an effective strategy statement, start by creating product strategy based on the industry landscape. Focus on the product or service the company sells, why customers might want your product and how em[ployees can contribute to the company's success. Your strategy statement might include financial plans, customer service goals, or details about product sales and development.
Strategic Objectives Examples - Some examples of what the objectives portion of the strategy statement might express:
Scope Examples - Examples of how to express the scope of the company in a strategy statement:
Competitive Advantage Examples - Examples to inspire you when writing the competitive advantage element of a strategy statement:
A strategy statement is an explanation of a company's business organization strategy expressed in terms of a company's goals, plans, and vision. It expresses what the business plans to accomplish, the scope of the plan, the scope of the plan, and what differentiates it from its competitors. Strategy statement is comprised of the following elements: strategic objectives, scope, and competitive advantage.
- Strategic Objectives - This allows you to define the goals of the company, expressed in terms of the company's central objectives.. For example, if a company is entering an existing market, the strategic objectives might outline your plan to capture market share from competitors; if the company is entering a new market, your objectives may describe how you plan to reach customers and educate them about your product ot service. These statements clarify the goal, which involves the market the business plans to target.
- Scope - The scope component can be organized into three (3) areas/dimensions: target customer, geography/location, and product. This component defines the boundaries between each of these three dimensions, and outlines what's most important for the future of the company. In defining these boundaries, the company can strategise about where to allocate resources and focus energy.
- Competitive Advantage - This element of the strategy statement outlines how the company plans to distinguish itself from its competitors. Some factors of competitive advantage to consider may include:
- Value Proposition - The value proposition is what makes your product valuable to the people in your target market. Identifying the value of a product or service to your audience is one way of distinguishing the company from its competitors.
- Value discipline - A company's value discipline is what actions the company takes to achieve its value proposition. This includes what values and beliefs make the company different from its competitors. For example, the company may value providing high-quality products at affordable price. This value discipline defines the core mission of the company, which helps it develop a strategy that supports the mission.
- Business Model Canvas - A one page graphic template that companies may use to provide a consistent representation of their business plans.
Example Strategy Statement
To develop an effective strategy statement, start by creating product strategy based on the industry landscape. Focus on the product or service the company sells, why customers might want your product and how em[ployees can contribute to the company's success. Your strategy statement might include financial plans, customer service goals, or details about product sales and development.
Strategic Objectives Examples - Some examples of what the objectives portion of the strategy statement might express:
- Grow and diversify revenue base
- Improve resource management
- Develop fundraising options
- Enhance board involvement
- Increase revenue by 10% annually
- Decrease expenses by 5% annually
- Develop and utilize customer database.
Scope Examples - Examples of how to express the scope of the company in a strategy statement:
- Increase customer satisfaction
- Develop user-friendly products
- Expand customer relationships
- Increase marketing budget by 5%
- Increase product accessibility in stores and online
- Update employee training process
- Facilitate collaborative and productive workplace
- Develop promotional plans to increase sales
- Focus on consumer feedback and targeted advertisement.
Competitive Advantage Examples - Examples to inspire you when writing the competitive advantage element of a strategy statement:
- Access to resources unavailable to competitors
- Ability to manufacture products at lower cost than competitors
- Strong brand recognition
- Unique geographic location
- Access to new and developing technology
- Unique product design
- Highly trained employees with relevant skills and experience
- Opportunities for 1)% increase in revenue annually, within the next five years
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