Levels of Strategy in organizations

• Corporate strategy
1.Overall purpose and scope of the organization
2.Overall business domain
3.Corporate resource allocation
4.Value addition to the different parts of the organization ( ―2+2=5‖, outsourcing vs core business)
5.Principal focus – effectiveness.

• Business Strategy
1.Competition with other businesses in the market. How will we compete successfully
2.Achievement of competitive advantage
3.Principal focus is effectiveness
4.Focus on the Strategic Business Units – SBU

• SBU is that part of the organization for which there is a distinct market for goods and services.

• Distinct market requires different strategies

• Functional (Operational) Strategy
1.How the various functional areas contribute to achieving business and corporate strategy
2.Organizational processes
3.Principal focus is efficiency

• Without strategy, the organization is like a ship without a rudder, going around in circles‖.

Thinking strategically
• How do you know that an organization has a strategy?

• Three key strategic questions:
1.Where are we now?
2.Where do we want to go? – what business positions management want to stake out, Financial outcomes to achieve, Strategic outcomes to achieve.
• How will we get there

Formality of Strategy
• A formal strategy is defined by the extent of deliberateness in planning
1.Identifiable process
2.Time spend on planning
3.Documented and
4.Communicated to others.
• Low deliberateness in planning indicates informality.

What factors may influence formality of strategy?

• Organizational factors including growth in size, complexity in products or markets
• External factors including technology, competition, economics,
• Performance – perception of a decline in performance or feeling that a mistake has been made in the past.

What are the benefits of formality of strategy?

• Promotes unity of purpose, direction and commitment
• Forces managers to deliberately think about strategy
• Requires analysis in addition to intuition
• Results in documented strategy
• Communication of strategy is easier.

What are the dangers of formality of strategy?

• Inflexibility
• Creativity and originality may be inhibited
• Time consuming
• Inappropriate executives may be involved.

Strategic management is about success of organizations:

1.Profit organizations
2.Nonprofit organizations
3.Private and Public sector organizations
4.Large and Small organizations
5.Domestic, multinational, global organizations

Success – Ability to meet expectations of customers who have a choice and Strategic management enhances the chances of organizational success. The ingredient of this success is Organizational vision, clear objectives, understanding the external environment, appreciation of strengths and weaknesses and effective implementation.

It focus is about:
1.The future of organizations
2.The present posture of organizations
3.Developing superior strategy
4.Competent implementation of strategy

The key questions to ask are:-

1.Where are we now? (situation analysis)
2.Where do we want to be? (vision, objectives)
3.How do we get there? (strategy)
4.What is stopping us? (constraints analysis)

Value of strategic management

1.Providing direction
2.Vision, mission, objectives
3.Framework for company actions
4.Adaptation to external change
5.Focus on strategic issues
6.Competitive advantage
7.Effective organization
8.Effective resource allocation
9.Focus on key issues

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