Organizations and Strategy

There are a variety of definitions for the term Strategy; however, the definition by Johnson and Scholes (2011) is very well balanced. They state that  ‘strategy is the long term direction of an organization’. This would require a process that the organization employs for the strategy, and the tools available to make it happen. We must also look at the current situation of the organization and question why it is no longer suitable in an organizations long-term direction.

There are 3 levels in strategy.

1.     Corporate Level

Decisions are usually made at the top. An overall scope of the organization.

2.     Business Level

How individual business units compete in their particular markets.

3.     Operational Level

How does the organisation actually deliver- in terms of resources, people and processes.

There are different sort of perspectives on strategy, as shown in the table below.

We will look into Mintzberg, Ansoff and SWOT theories in regards to strategies.

Mintzberg bends towards the learning approach as shown in the diagram below.

1^st the strategy would be intentional, however, rarely are all the goals achieved. So out of 10 goals, 4 may not be realized. With the learning approach, Mintzberg accounts for strategies organizations had no initial thought about, ensuring that this approach can adapt easily to make necessary changes. For instance, when developing a strategy, there should be flexibility to accept emergent strategies. Strategic development in the past used to be very formal and stringent, whereas nowadays, it is less formal planning. Instead of assuming and predicting the future, scenario planning is carried out instead. In addition, a 10 year plan has now been reduced to a 5 or maybe even lesser year plan. This is solely due to the fact that the external environment is constantly changing. Gone are the days where an organization is able to predict what might happen and work around it. 

Next we look at SWOT Analysis. SWOT stands for Strength, Weaknesses, Opportunities and Threats respectively. In my previous posts, I had talked about PESTLE and Porter’s 5 Forces, and these are all looking at external contexts. The SWOT allows us to look at both the internal and external contexts. The SWOT analysis can help managers find the fit between internal capabilities and external changes or opportunities.

Below is SWOT analysis of Starbucks.

Lastly we will look at Ansoff’s Matrix.

According to the organizations direction for its products and markets, Ansoff’s Matrix allows the organization to decide on the right form of strategy to achieve its desired goal.

Existing market and existing product – Generic Growth

Involves selling more established products into existing markets, often by increased promotion or price reductions or better routes to market, for example online. By doing so, the organization is playing safe and although that might be an appealing route to pursue, it might cause the organization to fall back in the race.

Existing market and new product – Product Development

Involves developing new products or services and placing them into existing markets. Being different has and always is a convenient and useful stepping stone in staying ahead in the game. For example, Starbucks coming up with newer flavours and tea products to add into their predominantly coffee menu is product development.

New market and existing product – Market Development 

Entails taking existing products or services and selling them in new markets. A method of this would be starting your business internationally, such as HnM opening up a new branch in South East Asia. 

New product and new market - Diversification

Involves developing new products and putting them into new markets at the same time. Diversification is considered the most risky strategy. This is because the business is expanding into areas outside its core activities and experience as well as targeting a new audience. It also has to bear the costs of new product development.

Material Links: 

1. http://www.syncresis.co.uk/emstrat.html
2. http://www.smartinsights.com/marketing-planning/create-a-marketing-plan/ansoff-model/
3. http://businesscasestudies.co.uk/enterprise-rent-a-car/marketing-and-product-strategies-for-growth/ansoffs-matrix.html#axzz2vuafOwwk