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Topic 7

Topic 7

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Published by: spica_shie88 on May 26, 2010
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06/03/2010

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INTRODUCTION
 
Strategy means common planning or a plan that is established to achieve long-term objectives (Abu Mansor et. al., 1999). It is the driving force to organisationÊsmembers on the steps that need to be followed in order to achieve the targetedobjectives. Thus, the strategy has to be consistent with the objectives of theorganisation.Before an organisation drafts a strategy, the main issue that needs to be known isthe competitive advantage of the said organisation. Competitive advantage refersto any aspect that can be done by the said organisation which is better than itscompetitor. For example, providing fast and efficient service.The competitive advantage is established through the use of resources that areavailable in an organisation. The organisationÊs resources not only consist of financial resources, human resources and fixed assets but also consist of information owned, knowledge and capabilities in certain sectors as well as thework processes that are being practised.
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OrganisationalStrategy
LEARNING OUTCOMES
By the end of this topic, you should be able to:1. Describe the concept of organisational strategy;2. Explain the four conditions that need to be fulfilled by theorganisationÊs resources in order to establish a competitiveadvantage;3. Discuss the three processes in establishing strategy; and4. Evaluate the three levels of strategy.
 
 
TOPIC 7 ORGANISATIONAL STRATEGY
 
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These resources must fulfil at least four conditions in order for an organisation toestablish its competitive advantage, these are (1) valuable, (2) limited, (3) difficultto be copied and (4) no replacements.The use of valuable resources will increase the efficiency and effectiveness of theorganisationÊs operations. An example of an organisationÊs valuable resources isthe possession of sophisticated and latest technology. Nonetheless, the elementsin a business environment such as changes in consumer taste, action of competitors, technology advancement and others, can affect the resources thatwere previously valuable to be of less value now.In order to maintain competitive advantage, these valuable resources have to belimited. This means that they are not owned by the competitor. Even if there areother people who have the said resources or such capabilities, the numbers arevery limited.Apart from that, the resources owned must be difficult to be copied. This meansthat the valuable and limited resources cannot be copied or are too expensive to be copied by competitors.Finally, these resources must also be irreplaceable. This means that there are noother resources that could provide the same results or interest such as the oneproduced by the said valuable resource.In summary, in order to establish a strategy, the organisation must firstly identifyits strengths (that is the competitive advantage) it owns. This identification isimportant to ensure that the competitive strategies established are based on thesestrengths.
PROCESS OF STRATEGY ESTABLISHMENT
Organisations establish strategies to maintain its competitive advantages. Thestrategies are established based on the three steps illustrated in Figure 7.1.
7.1
SELF-CHECK 7.1
Some organisations prefer to use old strategies to compete with othercompanies and it is not impossible for them to fail in such competitions.How important are the changes of strategies to an organisation?
 
 
TOPIC 7 ORGANISATIONAL STRATEGY
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Figure 7.1:
Process of strategy establishment
(a)
Evaluating Requirements to Change Strategies
Before deciding on a new strategy, the first step is to evaluate or identifywhether the said strategy needs to be changed. This process usually takes along time to process especially if the manager is facing competition inertia.Inertia competition refers to the refusal of the manager to change theexisting strategies as the strategies have proven to be successful all thiswhile. Even though the strategy had been proven to work previously, itdoes not necessarily mean that it is suitable for use in the future. Probablyin the future that strategy would become obsolete or be copied bycompetitors.One of the ways that can be used to facilitate the evaluation process on therequirement to change is by conducting an assessment on the strategy thatis currently being implemented. Is it really as it was planned before? If thereare any deviations, even a little, it will mean that the strategy has to berestarted with the same original strategy. Definitely it would not be suitableas changes in time had made a part of the original plan no longer suitablefor the current situation. Therefore, the best step is to establish a newstrategy. This means the existence of the requirement to establish a newstrategy.(b)
Analysing Situations
 After identifying that the establishment of strategies must be made, thesubsequent step is to carry out environment analysis or SWOT analysis.SWOT analysis is the abbreviation for Strengths, Weaknesses, Opportunitiesand Threats. The purpose of this analysis is to identify the strengths andweaknesses of the organisation as well as the opportunities and threats inthe environment that could influence the organisation.Strengths and weaknesses are the internal elements found in organisations.Strengths refer to elements that are positive while weaknesses refer to theelements that are negative. Examples of organisation strengths are the

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