As a wise person once told me, ‘‘definitions of strategy are like vitamins, you get one-a-day and most of them are hard to swallow.’’ Over the years, how many different definitions of the word strategy have you been exposed to? The definition of strategy is the subject of many articles and the cause of many debates. The word strategy is a vague statement that means different things to different people at different times. Much of the cause for debate can be explained as follows:
Many definitions of strategy not only attempt to define what a strategy is, but they also contain information regarding how a strategy is created, and what a strategy is expected to achieve.
A strategy is simply a plan. It is an executable plan of action that describes how an individual or organization will achieve a stated mission. A strategy is often perceived as being intangible, as there is nothing to touch and feel there are no physical attributes associated with a strategy. A strategy is simply a plan a plan that describes what an organization proposes to do to achieve a stated mission.
Organizations often formulate company strategies, product and service strategies and strategies that drive operational, support and management processes.
Strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and computer information systems to achieve organisational successes.
Product research is the identification and comparison of functional features and specifications of competitive products.
Concept of Product Research
Product research is the marketing research that provides information on the desired characteristics of a product or service. Product research helps companies to understand what the customers really want, so that the product can be tailored to match the needs of the customer. This research can help to refine new product ideas.
Product research is a very important activity in new product development it can be carried out at several stages of new product development. In the initial stages, product research can be carried out to identify and screen new ideas. This testing will help reduce costs by avoiding product development costs in the discarded ideas.
In the later stages of product development, product research can help companies to identify which features are important and hence retain them and which features can be discarded. A newly developed product is also tested with customers, to identify any changes to be made to packaging etc. Once the product is launched, consumer satisfaction with the product is tested. Most common techniques used in product research include focus group discussions, interviews and surveys.
Strategic management has been defined in many ways by different authors and authorities. There is no absolute consensus on the definition of strategic management. The following are some of the definitions:
Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation. (Wikipedia, The Free Encyclopedia On-line).
Strategic management is a stream of decisions and actions which leads to the development of an effective strategy or strategies to help achieve corporate objectives (Gleck and Juanxh, 1984).
Strategic management is concerned with the over-all long range direction of organizations and consequently provides a framework for operational management (Greenley, 1989).
Strategic management is a systematic approach to a major and increasing important responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises (Ansoff, 1990).
Mintzberg Model of Strategy
There are three different modes of strategic planning. These are depicted in a diagram, listed and explained as follows:
- Entrepreneurial Mode: In entrepreneurial mode, strategic planning is done by one person. He takes the full responsibility of planning for the production department. That is, he does production planning on behalf of the production department. He has entrepreneurial skills. That is, he is good in planning, organizing, motivating, etc. He is also a strong and bold leader.
- Adaptive Mode: In adaptive mode, the production managers go on changing his plans according to the changes in the environment. He first makes a big plan, then he breaks it into smaller plans. This is done to adjust with the dynamic environment. Then he tries to combine all these plans to make a strategic production plan. In this method, the production manager is not at peace. He works in a disorganized environment. Therefore, his planning is also disorganised.
- Planning Mode: In planning mode, the production manager makes the plan after analyzing the objectives and resources of the organization. He carefully considers all the factors before making the plan. In this method, his approach is very rational. He gives prime importance to management science. Therefore, his plan is very logical.
Strategic planning was embraced by corporate leaders in the mid-1960s to devise and implement strategies that would enhance the competitiveness of each business unit, generate decisions about deployment of resources toward fixed goals and priorities and build a sustainable long-term future with a constantly changing or dynamic environment.
Strategic planning cannot be prepared by an outside expert but rather a prescription that is formulated by the combined expertise within the organisation (Daniyan, 2002). Daniyan states that the purpose of planning is to make decisions about the future before the future either forces the decisions on us or renders any decision irrelevant.
Strategic planning focuses on the process while the long-term planning with its application of formulae, gives little attention to the organisation’s politics and the changing circumstances.
Strategic planning pays attention to the external environment, qualitative information and initiative decisions regarding resource commitment and integrated participatory involvement. Long-term planning tends towards internal analysis and qualitative models of resources deployment, and it conducted as a separate institutional function.
Development of Strategic Planning
Strategic planning deals with four separate tasks, which are as follows:
- Determination of the long-term direction of the company.
- Determination of the resources requirement of the company.
- Establishing of overall goals and strategies.
- Assessment of the competitive position of the firm in the industry.
In a modern organization, strategic planning is seen as the focal point for all planning and reporting. It is closely linked to market studies, capital spending, contingency planning and annual profit plan or budget.
Processes Involved in Strategic Planning
There are processes and methodologies involved in conducting strategic planning. The processes involve a step-by-step systematic approach, which starts out from the very beginning with focus on implementation. The standard methodology works for every organisation whether big or small. However, industry variations and adaptations need to be made. Such various include the following:
Competitive Analysis: Organisations that enjoy monopoly of their business, e.g. Power Holding Corporation of Nigeria (PHCN), will certainly omit a step since it has no competitor.
Planning Horizon: Some organisations may need to plan for a long time to come especially in trading activities (e.g. PHCN) while others may not need more than a year’s planning.
Functional Analysis: The consumer products companies are very much marketing-oriented. Such companies must be serious to consider the market for their products in the strategic planning.
Regulatory Analysis: In this aspect, some industries or businesses are more affected than the others. For instance, tobacco companies and alcohol producing companies are more affected than the soft drinks producing companies.
Technological Trends: Certainly, technological advancement vary vividly between the advanced and the developing countries. This will affect the activities of the organisation. The technology must be of concern particularly to the local industries.
Economic Sensitivity: The local companies may be less sensitive than the importers.
Strategic Planning and Responsibility
The ultimate responsibility of the planning process rests firmly with the corporate management. In practice, organisations differ greatly both in how they go about this and in the degree of freedom given to the managers or individual business units. For instance, some organisations allow business units considerable scope in developing their own objectives and strategies, ensuring only that the promised levels of performance are obtained. This is referred to bottom-up planning. By contrast, others are opposed to this, in that they establish the objectives and they insist on being involved in the development and implementation of the strategy. This is known as the top-down planning. Yet, others establish the goals and then leave the business units to develop the strategic for their achievement. This is called goals down-plans up planning.
STRATEGIC PLANNING PROCESS
Formal strategic planning calls for an explicit written process for determining the firm’s long-range objectives, the generation of alternative strategies for achieving these objectives, the evaluation of these strategies, and a systematic procedure for monitoring results. Each of these steps of the planning process should be accompanied by an explicit procedure for gaining commitment. This process is summarized in Figure below. The arrows suggest the best order in which to proceed. The need for commitment is relevant for all phases. The specification of objectives should be done before the generation of strategies which, in turn, should be completed before the evaluation. The monitoring step is last. The dotted line indicates that, to some extent, the process is iterative. For example, the evaluation may call for going back to the generation of new strategies, or monitoring may require a new evaluation of strategies.
The planning process
Formal planning should start with the identification of the ultimate objectives of the organization. Frequently, companies confuse their objectives (what they want and by when) with their strategies (how they will achieve the objectives). For example, suppose that a company desires to make money for its stockholders. To do this, it decides to build a tunnel through a mountain in order to charge tolls to automobiles. They plan to complete the tunnel in five years. On the way through the mountain, they strike gold. To mine the gold, activities on the tunnel must be suspended.
Generate Alternative Strategies
A strategy is a statement about the way in which the objectives should be achieved. Strategies should be subordinate to objectives. That is, they are relevant only to the extent that they help to meet the objectives.
This advice is obvious but often ignored. The generation of alternative strategies helps to avoid this problem. It recognizes explicitly that the objectives may be achieved in many different ways.
Evaluate Alternative Strategies
Once sufficient strategies have been proposed, the evaluation of alternatives can begin.
This requires a procedure by which each alternative plan is judged for its ability to meet the objectives of the organization. Such a process is not simple, because conflicting objectives usually exist among stakeholders. Furthermore, the presence of uncertainty complicates the choice of a strategy. For example, one should consider not only how well the strategy does for the most likely situation, but also how well it does against other possible situations, especially those that are dramatically different.
The value of feedback has been well established in laboratory studies, especially when combined with the setting of objectives (Tolchinsky and King, 1980; Ilgen, Fisher, and Taylor, 1979). Field studies have also demonstrated the value of explicit feedback (for example, Becker, 1978). It seems important, then, to provide feedback to the organization on how well they are meeting their objectives. In other words, specific procedures should be developed to “monitor results.”
The monitoring system should allow for corrective action. To do this, the following items should be measured in a systematic way:
- Changes in the environment (sometimes called “environmental scanning”)
- Changes in the organization’s capabilities (and in their competitors’ capability)
- Actions that were actually taken by the organization (did they implement the desired strategy?)
- Actions by major competitors