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SEMESTER 2
BBA202 Business Strategy
Question 1- a. Discuss the factors, which impact the organization’s need for having a business strategy.
b. List out the differences between a policy and a strategy.
Answer1- The word, ‘Strategy’ is derived from the ancient Greek word ‘Strategos’, which is a combination of two words – ‘stratos’ meaning ‘army’ (especially across a terrain) and ‘agos’ meaning ‘to lead’. The idea of strategy has its origin in military combat, where it was important to envision and lead large scale operations. The core element of strategy in military operations is rational planning. There is a striking similarity between the use of strategy in military combat and business operations. In both the scenarios, the organizations try to profit from their competitive edge, by optimizing on their strengths.
The field of strategy and strategic management had its origins in the 1960s, when academics showed an interest to study the concept of strategy independently. Strategic management grew as a subject of study in the 1970s and 1980s, as important research was conducted in this field by studying companies, their managers and strategies.
Today, Strategy is defined and interpreted in several ways. The most commonly accepted definition is that strategy is a general set of directions for the corporate to achieve a desirable state in the future. It is the driving force of the vision, mission and objectives of the company. It provides the route map for taking the business forward.
Strategic planning helps the top management of an organization to assess the impact of current decisions on the future trends in business. At the time of devising the strategy, the top management should consider the external interests of the organization, the expectations of the shareholders, past history and anticipated performance, along with the mission, objectives and policies of the organization
| Policies | Strategy |
| A policy is thought oriented. | Strategies are action oriented. |
| Policies guide the management of the firm to achieve the pre-determined goals. | Strategies are specific actions suggested to achieve the objectives. |
| Policy is an overall guide which governs and controls the managerial action. | Strategy is developed to mobilize the available resources in the best interest of the business organization. |
| Policy deals with the course of action to fulfil the set objectives. | Strategy is exclusively concerned with meeting uncertainties, competitive situations, and risks, etc., that are likely to happen at a future date. |
Question 2-. What are the benefits available to an enterprise which tries to practice strategic management?
Answer 2- In a competitive world, it is very difficult to sustain oneself and also grow at a desired pace. Strategic management allows an organization to be more proactive than reactive in shaping its own future. It allows an organization to initiate and influence activities and thus to exert control over its own destiny. Small business owners, chief executive officers, presidents and managers of many profit and non-profit organizations, have recognized and realized the benefits of strategic management.
In the past, adopting the principles of strategic management has helped business organizations to formulate better strategies through the use of the more systematic, logical and rational approach to strategic choice.
Strategic Management is a way in which strategists set the objectives and proceed about attaining them. It deals with making and implementing decisions about future direction of an organization. It helps us to identify the direction in which an organization is moving.
Strategic management is a continuous process that evaluates and controls the business and the industries in which an organization is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors; and then re-evaluates strategies on a regular basis to determine how it has been implemented and whether it was successful or does it need replacement.
Strategic management helps to integrate various functional areas of the organization completely, as well as, to ensure that these functional areas harmonize and get together well. Another role of strategic management is to keep a continuous eye on the goals and objectives of the organization.
Strategic management is a level of managerial activity below setting goals and above tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about “strategic consistency” between the organization and its environment or “strategic consistency.” According to Arieu (2007), “there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context.” Strategic management includes the management team and possibly the Board of Directors and other stakeholders.
“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment. “Strategic Management can also be defined as “the identification of the purpose of the organization and the plans and actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term performance of a business enterprise. It involves formulating and implementing strategies that will help in aligning the organization and its environment to achieve organizational goals.”
In 2010, IBM released a study summarizing three conclusions of 1500 CEOs around the world: 1) complexity is escalating, 2) enterprises are not equipped to cope with this complexity, and 3) creativity is now the single most important leadership competency. IBM said that it is needed in all aspects of leadership, including strategic thinking and planning.
Question 3-. Define strategic vision. Explain the role to be played by a strategist in a business organization?
Answer 3- We use the word Vision very often without understanding the real meaning. Perhaps leaders also do not understand what vision is, or why it is important.. One definition of vision comes from Burt Nanus, a well-known expert on the subject.
Burt Nanus defines a vision as a realistic, credible, attractive and futuristic for an organization.
Let’s analyze this definition:
a. Realistic: A vision must be based in reality to be meaningful for an organization. For example, if you’re developing a vision for a computer software company that has carved out a small niche in the market developing instructional software and has a 1.5 percent share of the computer software market, a vision to overtake Microsoft and dominate the software market is not realistic!
b. Credible: A vision must be believable to the rank and file of the employees. To whom must a vision be credible? If the staff-members of an organization do not find the vision credible, it will not be meaningful or serve a useful purpose. One of the basic purposes of a vision is to inspire those in the organization to achieve a level of excellence and to provide purpose and direction for the work of those employees. A vision which is not credible will fail to accomplish either of these ends.
c. Attractive: In order to inspire and motivate those in the organization, vision must be attractive.
d. Futuristic: A vision is not in the present, it is in the future. A vision is not where you are now, but where you want to be in the future. (If you reach or attain a vision and it’s no longer in the future, but in the present, is it still a vision?).According to Nanus “the right vision for an organization, one that is a realistic, credible, attractive future for that organization, can accomplish a number of things for the organization”.
One of the primary reasons for having a vision for an organization is the motivational effect it is supposed to produce by energizing the workforce. When people can see that the organization is committed to a vision-and that entails more than just having a vision statement-it generates enthusiasm about the course the organization intends to follow, and increases the commitment of people to work toward achieving that vision. It creates meaning in workers’ lives. A vision allows people to feel like they are part of a greater whole and hence provides meaning for their work. The right vision will mean something to everyone in the organization if they can see how and what they do, contributes to that vision. Consider the difference between the hotel service worker who can only say, “I make beds and clean bathrooms,” to the one who can also say, “I’m part of a team committed to becoming the worldwide leader in providing quality service to our hotel guests.” The work is the same, but the context and meaning of the work is different.
It establishes a standard of excellence. A vision serves a very important function in establishing a standard of excellence. In fact, a good vision is all about excellence. It bridges the present and the future. The right vision takes the organization out of the present and focuses it on the future. A good vision is a mental model of a future state. It involves thinking about the future and modeling possible future states. A vision doesn’t exist in the present and it may or may not be reached in the future. A good vision is realistic and also idealistic.
A good vision is appropriate for the organization and for the times. A vision should reflect the organization’s values and culture, and its place in its environment. The term strategists refer to those who are involved in the process of formulation of a strategy. There may be a single strategist for a business organization or there may be a team of strategists. The strategist, as the very name suggests, is associated with the formulation, implementation and evaluation of strategies.
Normally, the select few from the Top Management act as strategists in large business organizations.
a. The Board of Directors, being at the helm of affairs, plays an important role in corporate strategy making. It is their duty to guide the Top Management with regard to framing and implementation of a strategy. It is very essential that the role and powers of the Board of directors should be clearly defined to ensure smooth functioning of the Board. This goes a long way in the implementation of effective strategies.
b. CEO: Strategic Management is a general management function. The Chief Executive Officer by whatever designation he is identified plays an important role as he is directly involved in setting the goals and objectives of the organization, formulation and implementation of strategies.
c. Corporate Planners: The role played by the corporate planning staff is that of enablers by way of the support extended by them to the CEO to accomplish corporate objectives.
d. Consultants: Some of the organizations, in case they do not have a planning department, may enlist the support of the outside consultant in this task. Mostly, the companies which are small in size and cannot bear the cost of maintaining full-fledged planning departments look for strategic management consultants who are specialists in handling such issues for solving their problems. These small businesses enjoy the benefit of getting unbiased advice from such consultants at a reasonable cost and benefit from their specialized knowledge.
The strategist should be able to use both convergent and divergent analysis to envision the direction in which the industry and competition are moving and put in place long-term plans and unit capabilities to position the organization for future success. He is expected to know how to evaluate external threats and capabilities, internal strengths and weaknesses, and logically establish a path forward that is consistent with both vision and reality. He should be able to adjust actions and decision-making to focus on critical initiatives and issues.
The role of the strategist in the strategy process has been implied in terms of ‘crafting’ strategy. Essentially, the strategist is a silent partner or invisible being in the strategy literature. In terms of searching for the strategist, Whittington states that there are three fundamental issues regarding strategists, or strategy practitioners, “who they are, how they get there and the skills they need”
Thinking processes, however, are often muted by externalities and consumed by operational minutiae. The nature of the role of the strategist is also somewhat ambiguous. Garratt describes the role of the strategist as: ‘managing the conjunction of the political world or ‘polity’, with the more day-to-day routines of tactics and trying to keep them sufficiently in balance without allowing ossification’. The fragmented and underdeveloped basis of the literature suggests the imperative of exploratory work in this area. Johnson captures this clearly ‘if the worlds of practice and academic research demand a more micro perspective than the task is one of empirical investigation’ To raise to this challenge the strategy field needs to understand and explore who the strategist is in different organizational settings.
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