Managers face three main questions in regard to their business prospects: What is the company’s present situation? Where does the company need to go from here? How should it get there? The answers to these basic questions can be achieved by a “strategy”. Porter, (1996) defined strategy as “the creation of a unique and valuable position, involving a different set of activities”. It is also defined as “a set of related actions that managers take to increase their company’s performance” (Hill & Jones, 2007). Another deep definition would be “A company’s strategy is managements game plan for growing the business, staking out a market position, attracting and pleasing customers, competing successfully, conducting operations and achieving targeted objectives" (Thompson, Strickland & Gamble). Putting all together in one piece, a strategy can be defined as the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations. Operational Effectiveness vs. Strategic Positioning
For Michael Porter, operational effectiveness refers to that domain of organizational activity that is about having functions that work well. Operational effectiveness (OE) means performing similar activities better than rivals perform them. OE is not only about efficiency, it simply means the ability of a company to better utilize its inputs than rivals. An example would be reducing wastage and use of advanced technology to develop better products faster. In other words, OE is about continuously improving functional performance. The managers lead and control the functional activities, measure and improve the processes to achieve operational effectiveness (porters journal).
On the other hand strategic positioning means performing different activities from rivals or performing similar activities in different ways.
Minztbergs 5 P’s
Management expert, Henry Mintzberg, argued that it's really hard to get strategy right. To help us think about it in more depth, he developed his 5 Ps of Strategy – five different definitions of (or approaches to) developing strategy.
Strategy as a Plan – These are consciously intended course of action, a set of guidelines to deal with a situation. They have two important characteristics; they are made in advance and are developed consciously and purposefully.
Strategy as Ploy
According to Minztberg a specific maneuver intended to outwit an opponent or competitor could be a part of the strategy. For example a Grocery chain might threaten to exapand the store so that competitor doesn’t move into the same area. In this case, tools such as impact analysis and scenario analysis can help to explore the possible outcomes of such maneuver
Strategy as Pattern
Strategic plans and ploys are deliberate exercises. Strategy emerges from past organizational behavior, and rather than being an intentional choice, a consistent and successful way of doing business can develop into a strategy. For instance, managers who make decisions that further enhance an already highly responsive customer support process. Despite not deliberately choosing to build a strategic advantage, his pattern of actions nevertheless creates one.
Strategy as Position – this is how we decide to position the business in the marketplace. This way, strategy helps the business to explore the fit between the business and the environment and it helps the business to develop a sustainable competitive advantage For instance the company might focus on developing a niche product to dodge competition or to choose to position amongst different competitors while looking other ways to differentiate the service offered
Strategy as a Perspective
The strategy of an organization relies heavily on it culture. Patterns of thinking will shape an organization’s perspective...
Please join StudyMode to read the full document