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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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