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Question:
Identify 3 (three) core areas of
Corporate Strategy
Solution:
Corporate Strategy is concerned with
complexity arising out of ambiguous and non-routine situation with
organization-wide rather than operation-specific implications. The
strategic manager must develop a capacity to take an overview (hostility approach)
of the situation facing the organization. Not only must the strategic
manager be capable of taking decisions about major issues facing the
organization, he/she must also ensure that the strategy is implemented.
Corporate Strategy has three main elements within it as shown below:
1. Strategic Analysis
2. Strategic Development (called Strategic Choice in Johnson
& Scholes text)
3. Strategic Implementation
It is important to note that all three
areas may well be happening at the same time for different parts of the
organization, I.e. a simultaneous approach.
1. Strategic
Analysis: this is concerned with understanding the strategic position of
the organization in terms of the following:
a. The external environment - what
changes are happening in the environment and how will they affect the
organization?
b. The organization's internal
resources and competences - what are the resources and competences and can they
provide competitive advantage?
c. The expectations and influence of
the organization's stakeholders - what are the aspirations of stakeholders and
how might they affect the future development of the organization.
Therefore, the organization's mission and objectives have to be examined
and analyzed.
2. Strategic
Development: the strategic options have to be developed and then selected.
To be successful, the strategy is likely to be built on the particular skills
of the organization and the special relationships that it has or can develop
with those outside-suppliers, customers, distributors and government. For
many organizations, this mean developing advantages over competitors that are
sustainable over time. There are usually many options available -
each one will have to be evaluated and one or more will have to be
selected. Examples of issues thar may need to be considered at this stage
include:
a. A need to realize stakeholder
expectations (these may be reflected in the strategic mission)
b. identification of areas of
competitive advantage
c. Consideration of the financial
strategy of the organization
Strategic options can be examined in
the context of the strategic analysis to assess their relative merits. A SWOT
(Strengths, Weaknesses, Opportunities & Threats) analysis can be used at
this point to help evaluate options.
3. Strategic
Implementation: The selected options now have to be implemented. A
strategy that cannot be implemented is not worth the paper it is written on.
This stage is concerned with the translation of strategy into organizational
action through organizational structure and design, resource planning and the
management of strategic change. Successful implementation depends
upon the extent to which these various components are effectively integrated.
Question:
What in your opinion is the major
importance of Corporate Strategy? Explain them with examples
Solution:
Why is Corporate Strategy Important?
Companies that devote time and
resources exclusively on day-to-day operations can suffer over the long term by
not working towards strategies that will drive new products, accelerates sales,
increase market share and ultimately add to revenues and profits. Far from a
theoretical exercise, effective corporate strategy represents a
necessary step in any company's growth and is the product of careful planning
by the board of directors, CEO and senior managers.
Changing Condition:
the marketplace can change as often and subtly as the direction of breeze.
Companies with well-defined strategies can be more readily adjust to
competition and economic forces, together with focus on new products and
services that will serve expanding markets and customers preferences. Depending
on the specific industry, company executives must also remain aware of changing
laws and regulations that can directly impact the bottom line.
Execution:
without a clear corporate strategy, implementation and execution become far
more difficult. Putting a strategy plan into action involves addressing
client needs, production schedules, human-resource issues, market penetration
and efficient allocation of resources. Successful strategies also align
everyone within the corporation, from the board of directors to the mail-room
clerk, to its vision and goals and how they can work together to make all
components come together.
Efficiency:
inefficiencies can crop up at all levels within a corporation, and a strategic
plan helps to identify and define these weaknesses so they can be quickly
addressed.
Leadership: Company Leaders who look to other employees
to provide overall strategic direction are looking straight into a vacuum. Effective leaders must take responsibility
for all details and ensure that they are carried out.
QUESTION:
WHAT
IS CORPORATE STRATEGY?
SOLUTION:
CORPORATE STRATEGY is
the direction an organization takes with the objective of achieving business
success in the long term. Recent approaches have focused on the need for
companies to adapt to and anticipate changes in the business environment, i.e.
a flexible strategy. The development of a corporate strategy involves
establishing the purpose and scope of the organization's activities and the
nature of the business it is in, taking the environment in which it operates,
its position in the marketplace, and the competition it faces into
consideration; most times analyzed through a SWOT analysis.
Strategy will
affect the overall direction of the organization and establish its future
working environment. Corporate strategy defines the markets and the
businesses in which an organization chooses to operate. Competitive or business
strategy defines the basis on which it will compete.
QUESTION:
IDENTIFY AND EXPLAIN 5 (FIVE) KEY ELEMENTS OF
CORPORATE STRATEGY?
SOLUTION:
Strategic decisions
are the decisions that are concerned with whole environment in which the firm operates
the entire resources and the people who form the company and the interface
between the two.
5
STRUCTURAL ELEMENTS OF CORPORATE STRATEGY
Strategies fall over
and over again for the same reason:
Business ignore the 5 key structural elements of strategy. Miss one and your strategy is doomed to fail.
There’s a reason that the causes of failure repeat. It’s because strategy has a unique structure,
and if you overlook one of the five key elements of that structure, you will
fail. Add elements that don’t support
that structure and you will fail. And
the failure will look familiar every time.
ELEMENT 1: POWER DISTRIBUTION
Power
distribution dictates who's involved, how much information each individual can
access, and the decision-making process.
It's
crucial to know who you're working from their track record on complex strategy
projects to basic strengths and weaknesses. Talk to other people in the
organization who have worked with them to gain more information. Vet people to
avoid surprises and to understand the best ways to support and motivate team
members.
How
much of your strategy is confidential? What can -- or should -- be shared with
other groups? Set the boundaries and share them so that everyone agrees and has
the same expectations.
Make
sure that the inner working of the group matches the culture and values of the
parent organization. If your company is as free-flowing as Google, don't bind
people with conservative rules that eliminate communal sharing of ideas or the
development innovative solutions.
ELEMENT 2: DECISION MAKING
The
way that decisions are made in organizations determines how ideas are generated
and which ideas are considered. The way decisions are made influences how these
ideas are carried out later.
Does
decision making in your organization flow top-down or bottom-up? Who are the
holders of the power to decide which ideas advance and which are eliminated? If
ideas are valued in your culture, there's a strong likelihood that it might not
matter who generates the ideas.
ELEMENT 3: IDEA GENERATION
How
ideas are generated affects the quantity and quality of these ideas, which
directly affects the number of viable strategy options.
A
company that has an annual strategy meeting with a brainstorming component that
encompasses input from many directions within the company uses one type of idea
generation. The Google model involves having employees use 20% of their time
for innovation. They test and grow projects. Some projects are nurtured and
provide the company with revenue. Others are killed off. It's even possible
that original projects may mutate into something different.
ELEMENT 4: PROCESS
Process
is the way that ideas are handled and consumed within organizations. Process
defines the way that agreements and commitments are made and managed, and how
well people understand what is happening and what to do.
The
process-driven organization avoids wasting employee time and energy. People in
this type of company reach agreement that an action is valuable, develop a
process around it, and set it in motion.
Process
may be communicated to a team in writing, by word of mouth or in other ways.
Agreement is critical to the understanding of process within an organization.
ELEMENT 5: PEOPLE
In
an organization of any size, people bring their domain knowledge, talents, and
perspectives to strategy creation. Often people are viewed as the first point
of strategy failure, but they are actually the last point of failure in a long
series of cascading interactions.
Put
another way, very bright, creative, motivated people can fail if they are
embedded in a strategy creation structure process where power, decision making,
idea generation, or process are broken.
Each
of the five elements is critical to the strength, balance, and practicality of
the proposed strategy. Tighten up around these five and watch your team's next
strategy succeed beyond your plans.
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