Defining Organizational Strategy
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The document outlines the importance of strategy as the foundation of the star model for organizational design, emphasizing that a company's strategy defines its goals, the markets it serves, and competitive advantages. It details a step-by-step exercise for developing a strategy, including analyzing internal capabilities, understanding the external environment, identifying stakeholders, and considering competitor dynamics. Finally, it emphasizes the need for careful evaluation and selection of strategic options, followed by successful implementation for achieving organizational objectives.
Defining Organizational Strategy
- 1. 1 STAR Model- Strategy Strategyisthe company’sformulaforwinningandisthe firststepof the STAR Model What isStrategy? The company’sstrategyspecifiesthe goalsandobjectivestobe achievedaswell asthe valuesand missionstobe pursued;itsets outthe basicdirectionof the company.The strategyspecifically delineatesthe productsorservicestobe provided,the marketstobe served,andthe value tobe offeredtothe customer.Italsospecifiessourcesof competitive advantage. Importance of Strategy It isimportantinthe organizationdesignprocessbecauseitestablishesthe criteriaforchoosingamong alternative organizational forms. Each organizational formenablessome activitiestobe performedwell,oftenatthe expenseof other activities.Choosingorganizational alternativesinevitablyinvolvesmakingtrade-offs.Strategydictates whichactivitiesare mostnecessary,therebyprovidingthe basisformakingthe besttrade-offsinthe organizationdesign. Ramificationsof Strategy Differentstrategiesleadtodifferentorganizations.Althoughthisseemsobvious,ithasramifications that are oftenoverlooked.There isnoone-size-fits-all organizationdesignthatall companies–regardless of theirparticularstrategyneeds–shouldsubscribeto.There will alwaysbe acurrentdesignthathas become “all the rage.”But no matterwhat the fashionabledesignis–whetheritisthe matrix designor the virtual corporation–trendinessisnotsufficientreasonto adopt an organization design. All designshave meritbutnotforall companiesinall circumstances.The design orcombinationof designsthatshouldbe chosenisthe one that bestmeetsthe criteriaderivedfromthe strategy.
- 2. 2 The figure above dictateshowthe startingpoint“Strategy”appliestothe restof the STAR Model. Step by Step Exercise for defining the “Strategy” of your Business Unit/ Client Groupi: Stage 1: AnalyzingYour Contextand Environment In thisfirststage,youensure thatyoufullyunderstandyourself andyourenvironment.Dothe following: AnalyzeYourOrganization Firstly,examine yourresources,liabilities,capabilities,strengths,andweaknesses.A SWOTAnalysisisa great tool foruncoveringwhatyoudo well andwhere youhave weaknesses,providingthatyouuse it rigorously.It'smucheasiertoachieve yourobjectiveswhenyourstrategyusesyourstrengthswithout exposingyourweaknesses. Also,lookatyour Core Competencies.These highlightyouruniquestrengths,andhelpyouthinkabout howyou can setyourself apartfromyour competitors.
- 3. 3 AnalyzeYourEnvironment Nowyouneedto examine yourcurrentoperatingenvironmenttopredictwhere thingsare moving.Are there excitingopportunitiesthatyoushouldpursue?Whatfuture scenariosare likelyinyourindustry, and howwill these impactthe workthatyoudo? PEST AnalysisandPorter'sFive Forcesare greatstartingpointsforanalyzingyourenvironment.They showwhere youhave a strongpositionwithinthe largerenvironment, andwhere youmayhave issues. As youprepare to create yourstrategy,make sure that you're workingina waythat's alignedwith changesinyour operatingenvironment,ratherthanworkingagainstthem.These externalfactorsare oftenbeyondyourcontrol,soif youpursue a strategythat requiresachange in one of these elements, youmay have a long,exhausting,unprofitablebattle aheadof you. AnalyzeYourCustomersand Stakeholders Your strategydefineshowyou'llwin,andwinningistypicallyframedbyhow well yousatisfyyour customers.For-profitcompaniesmustkeeptheircustomersandshareholdershappy.Governments, nonprofits,andprojectteamsall have otherstakeholderstosatisfyaswell.Strategycreationmust considerthese needs. Identifyyourclientsandstakeholders.Whatdoyourclientswant?Andwhoare the keystakeholdersin your success?A StakeholderAnalysisAddtoMy Personal LearningPlanwill helpyouuncoverthese needsandpreferences. Also,lookatyour marketindetail.Answerkeyquestionssuchas"How our marketissegmented?", "What subpopulationscanwe reachcost-effectively?"and"Whatisour optimal MarketingMix Addto My Personal LearningPlan?" AnalyzeYourCompetitors In a traditional for-profitcompany,youmustunderstandhow yourproductscompare withcompetitors' products,and whatyour competitors'competenciesare.How easy,ordifficult,isittoenteryour market?What alternativesdocustomershave?
- 4. 4 Non-profits,departmental teamsandprojectshave competitorstoo.Otherprojectsandteamswithin the departmentcompete formoneyandotherresources.Therefore,youmustprove thatyoucan add value,meetobjectives,andcontribute toorganizational success. Stage 2: IdentifyingStrategicOptions In Stage 1, you developedanunderstanding of how yourorganizationorteamfitswithinthe contextof the internal andexternal environments.Now it'stime tothinkaboutthe differentthingsthatyoucould do to create a clear advantage,andmeetyourobjectives.Here are some fundamental activitiesthatcan helpyoumake thisdecision. BrainstormOptions Guide yourbrainstormingwithreference tothe organization'smissionstatement,but,dependingon your role inthe organization,considerhow faryoushouldbe constrainedbythis. ExamineOpportunitiesand Threats Your SWOT Analysisidentifiedsome of the mainopportunitiesandthreatsyouface.Usingthisas a startingpoint,brainstormadditional waystomaximizeyouropportunities,minimize yourthreats,or perhapseventurnyourthreatsintoopportunities. SolveProblems A problem-solvingapproachcanalsohelpatthisstage.If yourproblemisthat you're notachievingyour goals,ask yourself howyoucanensure thatyoudo. (If everyone inyourindustryfindsithardto deal witha particularproblem,thenyoumaygaina competitive edgebydealingwithit.) For example,if youwanttoincrease yourcustomersatisfactionratingsinanindustryplaguedbypoor customerrelations,yourstartingpositionis"low satisfaction."Brainstormwhythisisthe case,and create strategicoptionsthatwouldincrease satisfaction. Stage 3: Evaluating and SelectingStrategicOptions The final stage isto evaluate strategicoptionsindetail,andselectthe onesthatyouwantto pursue.
- 5. 5 EvaluateOptions By thisstage,you've probablyidentifiedarange of goodprojectsthatyou couldrun.You must now evaluate these tochoose the beststrategicoptions.Considereveryoptionyou've identified,butdon't make a final judgmentuntil you'vecompletedyourassessment. Start by evaluatingeachoptioninthe lightof the contextual factorsyouidentifiedinStage 1.What do these tell youabouteachoption? Many optionswill be analyzedonafinancial basis.Here,techniqueslike Cost-BenefitAnalysis,Break- EvenAnalysisAddtoMy Personal LearningPlan,use of NetPresentValues(NPVs) andInternal Ratesof Return(IRRs) Addto My Personal LearningPlan,andDecisionTreesAddtoMy Personal LearningPlan are helpful. ChoosetheBest Way Forward Withyour evaluationcomplete,younow mustchoose the beststrategicoptionorstrategicoptions, makingsure that youdon't choose somany optionsthatyouspreadyour resourcestoothinly. Checkyour ideasforconsistencywithyourorganization'sVision,Missionand Values,andupdate these if necessary.It'seasyto forgetaboutthese critical elementsduringstrategicplanning,soensure that whatyou wantto "win"issomethingthatcontributestowardsthe organization'soverallpurpose. Stage 4: ImplementingStrategy It's no gooddevelopingastrategyif youdon't implementitsuccessfully,andthisiswhere manypeople go astray. i https://www.mindtools.com/pages/article/developing-strategy.htm