Business Strategy and Technology

8/8/2019 Business Strategy and Technology

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BUSINESS STRATEGY AND TECHNOLOGYSTRATEGY


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WHAT IS MEANT BY STRATEGY

Strategyinvolvesenvisioningand planningfor

the future. It is the means by which long term objectiveswill be achieved. In business terms,it represents a broad

formula of how anorganizationintends tosucceed. It also

details the plan that needs to be followed tocompete and

win. A strategy entailsdefininggoals,decidingthe way toreach thesegoals,settingaction plans toexecutespecific

tasks, and followingup an accomplishment toensure that

objectives have been met.

Some people thinkofstrategy asdevelopinga

longrange plan assumingthat they willcontinue todo

what they are already doing. Thereis a fallacy in this

assumption,since theeconomicenvironment and

technology scene arecontinually changing.


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A more appropriate way of thinkingabout strategy is to

think what should bedone,regardlessof what has been

done and without saddlingthe plan with existingpractices. Formulatingstrategy is a continuouschallenge,

requiringtheevaluationofodd practices and thesearch

fornew ones. Thus, a strategy must first affirm the

Coreof the business What the businessknows andthendevelop what the businesscando.

It isessential that nations as well as firms

develop competitivestrategy andinstitutionalizestrategic

planningefforts. This will help them compete moreefficiently andstrengthen their market positions.

Strategic Management is a processconsistingof three

important andinterrelatedcomponents :


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1.Strategic Planningincludesstrategicvisionsetting

andstrategy formulation. Thiscomponent ofstrategic

management concentrateson strategizing.2. Strategic Implementation includesdetailing

actions that need to be followed anddesignatingthe

functional unitsresponsible forimplementingoperational

actions andstrategic projects. Thecomponentsofstrategic management deals with tactics andsystematic

planning.

3.Strategic Evaluation involves performance

measures, feedback mechanisms,continuous

improvement, and theorganizationallearningprocess.

Thiscomponent ofstrategic management permits

refinement of thestrategy andcorrections to the plans.


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Strategizingentailsenvisioning, brainstorming

forideas, thinkingabout the future, and analyzingexisting

conditions and trendsinsociety, theindustry, and themarket place. Strategizingshouldresult in a vision, a

mission, and a set ofobjectives that willset thedirection

of theorganization. The planningprocesscharts the path

to theobjectives and thesystems that will follow up onperformance. Many organizations managers tend to

spend moreenergy on the planningcomponent of

strategic planningthanonstrategizing. When this

happens, they tend tolosesight of what they should bedoingasopposed to what they have beendoing.


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Hamel (1996)distinguishesstrategizingfrom

planningby thedegreeofinnovationincludedin thestrategy. He pointsout that planningis aboutprogramming,not discovering, and that the world hasbeen more hospitable toindustry revolutionariesproducingstrategicinnovation than toindustryincumbents. Thelatter arelikely tosurrender the future to

revolutionary challenges. Hedescribes thecharacteristicsof twocompanies,one with therevolutionary strategicplanningattitude andone that he terms incumbent,orof therulingclass. Theindustry revolutionary has a

planningprocess that isinquisitive,expansive,positioning,elitist, andeasy. A company that performsstrategic planningas a routineexercise withoutperiodically questioningitsdirectionsor pursuinginnovative approachescan becomestagnant and mayloseitscompetitiveedge.


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FORMULATION OFA STRATEGY

The formulationof a strategy requires acore andoperatingunits toexecute thestrategy (Figurebelow).

Mission, Vision The Core & operating

Objectives & Units for the

Goals Execution of Strategy

To use an analogy, thecoreof a strategy can bethought of as the brain. The brainreceivesinformationfrom thesurroundingenvironment, processesit,setsgoals, andcoordinates a networkof functional unitsin thehumansystem.

A B

F C

DE

Operating Units


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These units are the muscles, the heart, thelungs

andotherorgans. Each of them performsitsown function.

In a company,central to the formulationof a strategy ismanagement actingas the brainof the business

enterprises,receivinginformation from thesurrounding

environment, processingit, andsettinggoals and

appropriate policies to beexecuted by functional unitsoftheorganization. Thecorestrategy is basedon the Vision,

the mission, and theobjectives andgoals that need to be

realized. Theoperatingunitsof anorganization just like an

organsof the humansystem,execute thestrategyaccordingtoestablished policies. They maybedivided by

functionor by a group of functions, asset up by the

organizationalstructure. Thelatershould bedesigned to

facilitateoptimal attainment ofgoals andobjectives.


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Anorganization without a strategy islike a body with

a dead brain. It may exist as a structure but it willgo

nowhere.. Anorganization with poorstrategy islike a sickpatient. Strategic management is a crucial undertakingthat

involves formulating,implementing, andevaluatingcross

functionaldecisions that enable anorganization to achieve

itsobjectives.Central to the formulationof a strategy is the

existenceof a vision and a mission for the business. Peter

Drucker, a pioneerof modern management thinking,says,

A businessisdefined by its mission,not by itsname,statues,or articlesofincorporation. Askingthequestion

What isour business?issynonymous with askingthe

question What isour mission?. A missionstatement

specifies thereasons for what the businessisestablished.


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A missionstatement specifies thereasons for which

the businessisestablished. Eg: Florida Power and Light

Companys missionis tosupply safe,reliable,reasonablepricedelectricservices toitscustomers. The mission

statement provides a foundation forestablishinggoals,

plans, priorities, and work assignments. A mission

statement usually describes anorganizations purpose,customers, productsorservices, market, philosophy and

basic technology.

A visionis a paramount component in thecoreof a

strategy. A vision provides a pictureof a different reality forthe future. Without a vision a business wanders aimlessly. A

visionstatement of a business answers thequestion,

What do we want to become? A visiongives a business

direction, a long term view of what it wants to accomplish,


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whoit wants toserve, and what it wouldlike to be. It also

inspiresemployeesof theorganization to becommitted to

work toward achievingfutureobjectives. Here areexamplesofshort but powerfulvisionsofleadingcompanies :

Microsoft : Information at your fingertips.

Federal Express : When it absolutely, positively,

must get there overnight, use Fedex.

Oracle : Enabling the Information age.

In thesecases, thevision has beenconvertedinto aslogan that motivatesemployees andconveys to

customers what theorganizationis all about. A visionis

expressedin thevisionstatement adopted by the

company.


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To accomplish a mission andrealize a vision, a

company must defineobjectives andset goals. Doingso

will focus thecompanyseffort onexecutinga set of tasksthat help accomplish longandshort term objectives. The

question at this point is How do we achieve thesegoals?.

Porter (1980) used a wheel toillustrate the

competitive businessstrategy of a firm ( Fig. below). Theobjectivesof the firm are the hub of the wheel, where the

firm canstateits business goals. Thesecaninclude

achievinga certainlevelof profitability,growth, market

share,orotherdesiredshort orlongterm objectives. The


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