Strategyis the direction and scope of an organization over the long term, which achieves advantage in a

changing environment through its conguration of resources and competences with the aim of fullling
stakeholder expectations.
Strategic decisions are about

Long-Term Direction of an organization

Scope of an organization
Gaining Advantage over competitors
Addressing Change in Business Environment
Building on Resources and Competences (Capability)
Values and Expectation of Stakeholders

Characteristic Of Strategic Decision

a. Strategic decisions are likely to be complex in nature. This complexity

is a dening feature of strategy and strategic decisions and is especially so in
organizations with wide geographical scope, such as multinational rms, or
wide ranges of products or services.
b. Strategic decisions may also have to be made in situations of
uncertainty about the future.
c. Strategic decisions are likely to affect operational decisions: for
example, an increased emphasis on consumer electronics would trigger off a
whole series of new operational activities, such as nding new suppliers and
building strong new brands. This link between overall strategy and
operational aspects of the organization is important for two other reasons.
First, if the operational aspects of the organization are not in line with the
strategy, then, no matter how well considered the strategy is, it will not
succeed. Second, it is at the operational level that real strategic advantage
can be achieved. Indeed, competence in particular operational activities
might determine which strategic developments might make most sense.
d. Strategic decisions are also likely to demand an integrated
approach to managing the organization. Managers have to cross functional
and operational boundaries to deal with strategic problems and come to
agreements with other managers who, inevitably, have different interests and
perhaps different priorities. Managers may also have to sustain relationships
and networks outside the organization, for example with suppliers,
distributors and customers.
e. Strategic decisions usually involve change in organizations which
may prove difficult because of the heritage of resources and because of
culture. These cultural issues are heightened following mergers as two very
different cultures need to be brought closer together or at least learn how to
tolerate each other. Indeed, this often proves difficult to achieve
STRATEGYINTOACTION
Levelsofstrategy

There are three levels of strategy

The rst level is Corporate-level Strategy, is concerned with the overall scope of
an organization and how value will be added to the different parts (business units)
of the organization. This could include issues of geographical coverage, diversity of
products/ services or business units, and how resources are to be allocated between
the different parts of the organization. In general, corporate-level strategy is also
likely to be concerned with the expectations of owners the shareholders and the
stock market. It may well take form in an explicit or implicit statement of mission
that reects such expectations. Being clear about corporate-level strategy is
important: it is a basis of other strategic decisions.

The second level can be thought of in terms of business-level strategy, which is

about how to compete successfully in particular markets or how to provide best
value services in the public services. This concerns which products or services
should be developed in which markets and how advantage over competitors can be
achieved in order to achieve the objectives of the organization perhaps long- term
protability or market share growth. So, whereas corporate-level strategy involves
decisions about the organization as a whole, strategic decisions here need to be
related to a strategic business unit (SBU). A strategic business unit is a part of an
organization for which there is a distinct external market for goods or services that
is different from another SBU.

The third level of strategy is at the operating end of an organization. Here there
are operational strategies, which are concerned with how the component parts of
an organization deliver effectively the corporate- and business-level strategies in
terms of resources, processes and people. Indeed, in most businesses, successful
business strategies depend to a large extent on decisions that are taken, or
activities that occur, at the operational level. The integration of operational
decisions and strategy is therefore of great importance.

VocabularyofStrategy

A mission is a general expression of the overall purpose of the organization, which,

ideally, is in line with the values and expectations of major stakeholders and
concerned with the scope and boundaries of the organization. It is sometimes
referred to in terms of the apparently simple but challenging question: What
business are we in?

A vision or strategic intent is the desired future state of the organization. It is an

aspiration around which a strategist, perhaps a chief executive, might see to focus
the attention and energies of members of the organization.
If the word goal is used, it usually means a general aim in line with the mission. It
may well be qualitative in nature. On the other hand, an objective is more likely to
be quantied, or at least to be a more precise aim in line with the goal. In this book
the word objective is used whether or not there is quantication.

Strategic capability is concerned with the resources and competences that an

organization can use to provide value to customers or clients. Unique resource and
core competences are the bases upon which an organization achieves strategic
advantage and is distinguished from competitors.

The concept of strategy has already been dened. It is the long-term direction of
the organization. It is likely to be expressed in broad statements both about the
direction that the organization should be taking and the types of action required to
achieve objectives. For example, in may be stated in terms of market entry, new
products or services, or ways of operating.

A business model describes the structure of product, service and information ows
and the roles of the participating parties. For example, a traditional model for
manufactured products is a linear ow of product from component manufacturers to
product manufacturers to distributor to retailers to consumers. But information may
ow directly between the product manufacturer and the nal consumer (advertising
and market research).

Strategic control involves monitoring the extent to which the strategy is achieving
the objectives and suggesting corrective action (or a reconsideration of the
objectives).
StrategicManagement

What, then, is strategic management? It is not enough to say that it is the

management of the process of strategic decision making. This fails to take into
account a number of points important both in the management of an organization
and in the area of study with which this book is concerned. Strategic management is
different in nature from other aspects of management. An operational manager is
most often required to deal with problems of operational control, such as the
efficient production of goods, the management of a salesforce, the monitoring of
nancial performance or the design of some new system that will improve the level
of customer service. These are all very important tasks, but they are essentially
concerned with effectively managing resources already deployed, often in a limited
part of the organization within the context of an existing strategy. Operational
control is what managers are involved in for most of their time. It is vital to the
success of strategy, but it is not the same as strategic management.

The scope of strategic management is greater than that of any one area of
operational management. Strategic management is concerned with complexity
arising out of ambiguous and non-routine situations with organisation-wide rather
than operation-specic implications. This is a major challenge for managers who are
used to managing on a day-to-day basis the resources they control. It can be a
particular problem because of the background of managers who may typically have
been trained, perhaps over many years, to undertake operational tasks and to take
operational responsibility. Accountants nd that they still tend to see problems in
nancial terms, IT managers in IT terms, marketing managers in marketing terms,
and so on. Of course, each of these aspects is important, but none is adequate
alone. The manager who aspires to manage or inuence strategy needs to develop
a capability to take an overview, to conceive of the whole rather than just the parts
of the situation facing an organization. Because strategic management is
characterized by its complexity, it is also necessary to make decisions and
judgments based on the conceptualization of difficult issues.
STRATEGIC MANAGEMENT can thus be dened as

Strategic management includes understanding the strategic position of an

organization, strategic choices for the future and turning strategy into action.
Exhibit below shows these elements and denes the broad coverage of them.
First it is important to understand why the exhibit has been drawn in this particular
way. It could have shown the three elements in a linear form understanding the
strategic position preceding strategic choices, which in turn precede strategy into
action. Indeed, many texts on the subject do just this. However, in practice, the
elements of strategic management do not take this linear form they are
interlinked and inform each other. For example, in some circumstances an
understanding of the strategic position may best be built up from the experience of
trying a strategy out in practice. Test marketing would be a good example.

STRATEGIC POSITION:

Understanding the strategic position is concerned with identifying the impact on

strategy of the external environment, an organizations strategic capability
(resources and competences) and the expectations and inuence of stakeholders.
The sorts of questions this raises are central to future strategies ENVIRONMENT-
The organization exists in the context of a complex political, economic, social,
technological, environmental and legal world. This environment changes and is
more complex for some organizations than for others. How this affects the
organisation could include an understanding of historical and environmental effects,
as well as expected or potential changes in environmental variables. Many of those
variables will give rise to opportunities and others will exert threats on the
organization or both. A problem that has to be faced is that the range of variables
is likely to be so great that it may not be possible or realistic to identify and
understand each one. Therefore it is necessary to distil out of this complexity a view
of the key environmental impacts on the organization.

STRATEGIC CAPABILITY of the organization made up of resources and

competences .One way of thinking about the strategic capability of an organisation
is to consider its strengths and weaknesses (for example, where it is at a
competitive advantage or disadvantage). The aim is to form a view of the internal
inuences and constraints on strategic choices for the future. It is usuallya
combination of resources and high levels of competence in particular activities (in
this book referred to as core competences) that provide advantages which
competitors nd difficult to imitate.

Major inuences of EXPECTATIONS ON AN ORGANIZATIONS PURPOSES. The

issue of corporate governance is important. Here the question is: who should the
organization primarily serve and how should managers be held responsible for this?
But the expectations of a variety of different stakeholders also affect purposes.
Which stakeholder views prevail will depend on which group has the greatest power,
and understanding this can be of great importance. Cultural inuences from within
the organization and from the world around it also inuence the strategy an
organization follows, not least because the environmental and resource inuences
on the organization are likely to be interpreted in terms of the assumptions inherent
in that culture.. All of this raises ethical issues about what managers and
organizations do and why.

STRATEGIC CHOICES:

Strategic choices involve understanding the underlying bases for future strategy
at both the business unit and corporate levels and the options for developing
strategy in terms of both the directions in which strategy might move and the
methods of development.

There are strategic choices in terms of how the organization seeks to compete at
the business level. This requires an identication of bases of competitive
advantage arising from an understanding of both markets and customers and the
strategic capability of the organization. As mentioned above, Dell expected to gain
advantage through its knowledge of digital technologies.

At the highest level in an organization there are issues of corporate-level strategy,

which are concerned with the scope of an organizations strategies. This includes
decisions about the portfolio of products and/or businesses and the spread of
markets. So for many organizations international strategies are a key part of
corporate-level strategy. The development of Dell had been guided by key
decisions on these issues of scope and considers the impact to extend the scope of
activities. Corporate-level strategy is also concerned with the relationship between
the separate parts of the business and how the corporate parent adds value to
these various parts. For example, the corporate parent could add value by looking
for synergies between business units, by channeling resources such as nance or
through particular competences such as marketing or brand building. There is a
danger, of course, that the parent does not add value and is merely cost upon the
business units and is therefore destroying value. There are different ways in which
these issues might be resolved. For example, Dell had chosen to dictate product
range and selling method from the corporate centre

Strategy may develop in the future in different directions. For example, Dell was
progressively moving from a narrow product base (computers) and a narrow
customer base (corporate clients) by extending both its product range and target
markets. The development method used by Dell was one of internal development
(growing its current business). Other organizations might develop by
mergers/acquisitions and/or strategic alliances with other organizations. These
options for development directions and methods are important and need careful
consideration.

STRATEGY INTO ACTION:

Translating strategy into action is concerned with ensuring that strategies are
working in practice.

Structuring an organization to support successful performance. This includes

organizational structures, processes and relationships (and the interaction between
these elements). Therefore, the success of strategy depended on an ability to
coordinate the activities of these separate units. Enabling success through the way
in which the separate resource areas (people,information, nance and technology)
of an organization support strategies.

The reverse is also important to success, namely the extent to which new strategies
are built on the particular resource and competence strengths of an organization. Of
course some businesses, like Dell, had transformed the way that business was
conducted on their sector through developing a new business model based on their
IT capabilities.

Managing strategy very often involves change. This will include the need to
understand how the context of an organization should inuence the approach to
change: the different types of roles for people in managing change. It also looks at
the styles that can be adopted for managing change and the levers by which
change can be effected.

BASICMODELOFSTRATEGICMANAGEMENT:

FIGURE11

Figure11illustrateshowthesefourelementsinteract;Figure12expandseachoftheseElements.
Itisaplanningmodelthatpresentswhatacorporationshoulddointermsofthestrategic
managementprocess,notwhatanyparticularfirmmayactuallydo.Therationalplanningmodel
predictsthatasenvironmentaluncertaintyincreases,corporationsthatworkmorediligentlyto
analyzeandpredictmoreaccuratelythechangingsituationinwhichtheyoperatewilloutperform
thosethatdonot.
 FIGURE12

ENVIRONMENTALSCANNING:

Environmental scanning is the monitoring, evaluating, and disseminating of

information from the external and internal environments to key people within the
corporation. Its purpose is to identify strategic factorsthose external and internal
elements that will determine the future of the corporation. The simplest way to
conduct environmental scanning is through SWOT analysis. SWOT is an acronym
used to describe the particular Strengths, Weaknesses, Opportunities, and Threats
that are strategic factors for a specic company. The external environment consists
of variables (Opportunities and Threats) that are outside the organization and not
typically within the short-run control of top management. These variables form the
context within which the corporation exists. Figure below depicts key environmental
variables. They may be general forces and trends within the natural or societal
environments or specic factors that operate within an organizations specic task
environmentoften called its industry. The internal environment of a corporation
consists of variables (Strengths and Weaknesses) that are within the organization
itself and are not usually within the short-run control of top management. These
variables form the context in which work is done. They include the corporations
structure, culture, and resources. Key strengths form a set of core competencies
that the corporation can use to gain competitive advantage.

STRATEGYFORMULATIUON:

Strategy formulation is the development of long-range plans for the effective

management of environmental opportunities and threats, in light of corporate
strengths and weaknesses (SWOT). It includes dening the corporate mission,
specifying achievable objectives, developing strategies, and setting policy
guidelines.

Mission

An organizations mission is the purpose or reason for the organizations existence.

It tells what the company is providing to societyeither a service such as
housecleaning or a product such as automobiles. A well-conceived mission
statement denes the fundamental, unique purpose that sets a company apart from
other rms of its type and identies the scope or domain of the companys
operations in terms of products (including services) offered and markets served.
Research reveals that rms with mission statements containing explicit descriptions
of customers served and technologies used have signicantly higher growth than
rms without such statements. A mission statement may also include the rms
values and philosophy about how it does business and treats its employees. It puts
into words not only what the company is now but what it wants to become
managements strategic vision of the rms future. The mission statement promotes
a sense of shared expectations in employees and communicates a public image to
important stakeholder groups in the companys task environment. Some people like
to consider vision and mission as two different concepts: Mission describes what the
organization is now; vision describes what the organization would like to become.
We prefer to combine these ideas into a single mission statement some companies
prefer to list their values and philosophy of doing business in a separate publication
called a values statement. One example of a mission statement is that of Google:

To organize the worlds information and make it universally accessible and useful.63

Another classic example is that etched in bronze at Newport News Shipbuilding,

unchanged

since its founding in 1886:

We shall build good ships hereat a prot if we canat a loss if we mustbut

always good ships.

A mission may be dened narrowly or broadly in scope. An example of a broad

mission statement is that used by many corporations: Serve the best interests of
shareowners, customers, and employees. A broadly dened mission statement
such as this keeps the company from restricting itself to one eld or product line,
but it fails to clearly identify either what it makes or which products/markets it plans
to emphasize. Because this broad statement is so general, a narrow mission
statement, such as the preceding examples by Google and Newport News
Shipbuilding, is generally more useful. A narrow mission very clearly states the
organizations primary business, but it may limit the scope of the rms activities in
terms of the product or service offered, the technology used, and the market
served. Research indicates that a narrow mission statement may be best in a
turbulent industry because it keeps the rm focused on what it does best; whereas,
a broad mission statement may be best in a stable environment that lacks growth
opportunities.

Objectives

Objectives are the end results of planned activity. They should be stated as action
verbs and tell what is to be accomplished by when and quantied if possible. The
achievement of corporate objectives should result in the fulllment of a
corporations mission. In effect, this is what society gives back to the corporation
when the corporation does a good job of fullling its mission. For example, by
providing society with gums, candy, iced tea, and carbonated drinks, Cadbury
Schweppes, has become the worlds largest confectioner by sales. One of its prime
objectives is to increase sales 4%6% each year. Even though its prot margins
were lower than those of Nestl, Kraft, and Wrigley, its rivals in confectionary, or
those of Coca-Cola or Pepsi, its rivals in soft drinks, Cadbury Schweppes
management established the objective of increasing prot margins from around
10% in 2007 to the midteens by 2011.

The term goal is often used interchangeably with the term objective. In contrast to
an objective, we consider a goal as an open-ended statement of what one wants to
accomplish, with no quantication of what is to be achieved and no time criteria for
completion. For example, a simple statement of increased protability is thus a
goal, not an objective, because it does not state how much prot the rm wants to
make the next year. A good objective should be action-oriented and begin with the
word to. An example of an objective is to increase the rms protability in 2010 by
10% over 2009.

Some of the areas in which a corporation might establish its goals and objectives
are:

I. Protability (net prots)

II. Efficiency (low costs, etc.)
III. Growth (increase in total assets, sales, etc.)
IV. Shareholder wealth (dividends plus stock price appreciation)
V. Utilization of resources (ROE or ROI)
VI. Reputation (being considered a top rm)
VII. Contributions to employees (employment security, wages, diversity)
VIII. Contributions to society (taxes paid, participation in charities, providing
a needed product or service)
IX. Market leadership (market share)
X. Technological leadership (innovations, creativity)
XI. Survival (avoiding bankruptcy)
XII. Personal needs of top management (using the rm for personal
purposes, such as providing jobs for relatives

Policies

A policy is a broad guideline for decision making that links the formulation of a
strategy with its implementation. Companies use policies to make sure that
employees throughout the rmmake decisions and take actions that support the
corporations mission, objectives, and strategies. For example, when Cisco decided
on a strategy of growth through acquisitions, it established a policy to consider only
companies with no more than 75 employees, 75% of whom were engineers.

Consider the following company policies:

 3M: 3M says researchers should spend 15% of their time working on
something other than their primary project. (This supports 3Ms strong
product development strategy.)
Intel: Intel cannibalizes its own product line (undercuts the sales of its current
products) with better products before a competitor does so. (This supports
Intels objective of market leadership.)
General Electric: GE must be number one or two wherever it competes. (This
supports GEs objective to be number one in market capitalization.)
Southwest Airlines: Southwest offers no meals or reserved seating on
airplanes. (This supports Southwests competitive strategy of having the
lowest costs in the industry.)
Exxon: Exxon pursues only projects that will be protable even when the
price of oil drops to a low level. (This supports Exxons protability objective.)

STRATEGY IMPLEMENTATION

Strategy implementation is a process by which strategies and policies are put into
action through the development of programs, budgets, and procedures. This
process might involve changes within the overall culture, structure, and/or
management system of the entire organization. Except when such drastic corporate
wide changes are needed, however, the implementation of strategy is typically
conducted by middle and lower-level managers, with review by top management.
Sometimes referred to as operational planning, strategy implementation of ten
involves day-to-day decisions in resource allocation.

Programs

A program is a statement of the activities or steps needed to accomplish a single-

use plan. It makes a strategy action oriented. It may involve restructuring the
corporation, changing the companys internal culture, or beginning a new research
effort. For example, Boeings strategy to regain industry leadership with its
proposed 787 Dreamliner meant that the company had to increase its
manufacturing efficiency in order to keep the price low. To signicantly cut costs,
management decided to implement a series of programs:

a) Outsource approximately 70% of manufacturing.

b) Reduce nal assembly time to three days (compared to 20 for its 737
plane) by having
c) Suppliers build completed plane sections.
d) Use new, lightweight composite materials in place of aluminum to
reduce inspection time.
e) Resolve poor relations with labor unions caused by downsizing and
outsourcing.

Another example is a set of programs used by automaker BMW to achieve its

objective of increasing production efficiency by 5% each year:
 a) Shorten new model development time from 60 to 30 months,
b) Reduce preproduction time from a year to no more than ve months
c) build at least two vehicles in each plant so that production can shift
among models depending upon demand.

Budgets

A budget is a statement of a corporations programs in terms of dollars. Used in

planning and control, a budget lists the detailed cost of each program. Many
corporations demand a certain percentage return on investment, often called a
hurdle rate, before management will approve a new program. This ensures that
the new program will signicantly add to the corporations prot performance and
thus build shareholder value. The budget thus not only serves as a detailed plan of
the new strategy in action, it also species through pro forma nancial statements
the expected impact on the rms nancial future.

For example, General Motors budgeted $4.3 billion to update and expand its
Cadillac line of automobiles. With this money, the company was able to increase the
number of models from ve to nine and to offer more powerful engines, sportier
handling, and edgier styling. The company reversed its declining market share by
appealing to a younger market. (The average Cadillac buyer in 2000 was 67 years
old.) Another example is the $8 billion budget that General Electric established to
invest in new jet engine technology for regional jet airplanes. Management decided
that an anticipated growth in regional jets should be the companys target market.
The program paid off when GE won a $3 billion contract to provide jet engines for
Chinas new eet of 500 regional jets in time for the 2008 Beijing Olympics

Procedures

Procedures, sometimes termed Standard Operating Procedures (SOP), are a system

of sequential steps or techniques that describe in detail how a particular task or job
is to be done. They typically detail the various activities that must be carried out in
order to complete the corporations program. For example, when the home
improvement retailer Home Depot noted that sales were lagging because its stores
were full of clogged aisles, long checkout times, and too few salespeople,
management changed its procedures for restocking shelves and pricing the
products. Instead of requiring its employees to do these activities at the same time
they were working with customers, management moved these activities to when
the stores were closed at night. Employees were then able to focus on increasing
customer sales during the day. Both UPS and FedEx put such an emphasis on
consistent, quality service that both companies have strict rules for employee
behavior, ranging from how a driver dresses to how keys are held when approaching
a customers door.

EVALUATION AND CONTROL

Evaluation and control is a process in which corporate activities and performance
results are monitored so that actual performance can be compared with desired
performance. Managers at all levels use the resulting information to take corrective
action and resolve problems. Although evaluation and control is

the nal major element of strategic management, it can also pinpoint weaknesses
in previously implemented strategic plans and thus stimulate the entire process to
begin again.

Performance is the end result of activities. It includes the actual outcomes of the
strategic management process. The practice of strategic management is justied in
terms of its ability to improve an organizations performance, typically measured in
terms of prots and return on investment. For evaluation and control to be effective,
managers must obtain clear, prompt, and unbiased information from the people
below them in the corporations hierarchy. Using this information, managers
compare what is actually happening with what was originally planned in the
formulation stage. For example, when market share (followed by prots) declined at
Dell in 2007, Michael Dell, founder, returned to the CEO position and reevaluated his
companys strategy and operations. Planning for continued growth, the companys
expansion of its computer product line into new types of hardware, such as storage,
printers, and televisions, had not worked as planned. In some areas, like televisions
and printers, Dells customization ability did not add much value. In other areas, like
services, lower-cost competitors were already established. Michael Dell concluded,
I think youre going to see a more streamlined organization, with a much clearer
strategy.

The evaluation and control of performance completes the strategic management

model. Based on performance results, management may need to make adjustments
in its strategy formulation, in implementation, or in both.

CHALLENGESOFSTRATEGICMANAGEMENT

It requires managers to develop strategies that are appropriate to the specic

circumstances of an organization but these circumstances will change over time. It
also requires some clarity on which issues are more important than others and an
ability to reconcile the conicting pressures from the business environment, an
organizations strategic capability and the expectations of stakeholders. In addition
to this three sets of overarching challenges that managers face in relation to their
organizations strategies for the future. They are

1. Preventing Strategic Drift where strategies progressively fail to

address the strategic position of the organization and performance
deteriorates. History suggests that most organizations run into difficulties
because of a failure to acknowledge and address strategic drift.
2. The need to understand and address contemporary issues that are
challenging most organisations at any particular time. This section looks at
 four such themes: internationalization; e-commerce; changing
purposes and knowledge/learning.
3. The benet of viewing strategy in more than one way. These are the
three strategy lenses: design, experience and ideas

1.Strategic drift

Exhibit below illustrates that historical studies of the pattern of strategy

development and change of organizations have shown that, typically, organizations
go through long periods of relative continuity during which established strategy
remains largely unchanged or changes incrementally. This can go on for
considerable periods of time in some organizations. But these processes tend to
create strategic drift where strategies progressively fail to address the strategic
position of the organization and performance deteriorates. This is typically followed
by a period of ux in which strategies change but in no very clear direction. There
may then be transformational change, in which there is a fundamental change in
strategic direction, though this is infrequent. This pattern has become known as
punctuated equilibrium. There are strong forces at work that are likely to push
organizations towards this pattern so understanding why this pattern occurs is
important. This unit has highlighted the potential complexity and uncertainty of the
strategic issues that managers face. In such circumstances managers try to
minimize the extent to which they are faced with uncertainty by looking for
solutions on the basis of current ways of seeing and doing things that are part of
the existing organizational culture. For example, faced with a drop in sales enquiries
advertising is increased. Or when competitors drop prices they are immediately
matched and so on because this has tended to work in the past. There are,
however, dangers. Environmental change may not be gradual enough for
incremental change to keep pace. If such incremental strategic change lags behind
environmental change, the organization will get out of line with its environment and,
in time, need more fundamental, or transformational, change as seen in Exhibit .

Indeed, transformational change tends to occur at times when performance has

declined signicantly. For some organizations such changes may be inadequate or
too late and the organization fails as shown in the diagram. There is another
danger: that organizations become merely reactive to their environment and fail to
question or challenge what is happening around them or to innovate to create new
opportunities; in short, they become complacent. The rst challenge is, then, how
managers can stand sufficiently apart from their own experience and their
organizations culture to be able to understand the strategic issues they face
The second challenge relates to the management of strategic change. New
strategies might require actions that are outside the scope of the existing culture.
Members of the organization would therefore be required to change substantially
their core assumptions and ways of doing things. Desirable as this may be, the
evidence is that it does not occur easily.

2.CONTEMPORARY ISSUES:

2.1.Internationalization

Internationalization is a factor affecting many organizations in a wide variety of

ways. First of all, internationalization can extend both the size of the market and the
range of competitors. It can also raise issues of relationships with potential partners
overseas and the organization of activities across national boundaries. These are
issues faced every-day by a large multinational like Dell, which sources,
manufactures and sells across the world and whose competitors come from Japan,
Taiwan and Europe. But even small rms are now increasingly born global, as for
instance small software companies making applications for games systems or
telephone operating systems that are sold by large corporations around the world .
Public sector organizations too increasingly confront the opportunities and
challenges of internationalization. Patients in the UK National Health Service may
now have their operations undertaken overseas, if appropriate services are not
available at home. It is possible to outsource back-ofce public sector functions to
cheaper locations around the world. Police forces must cooperate across borders in
the struggle against international crime and terrorism. There is another
fundamental sense in which internationalization can affect strategy. Different
countries around the world vary widely in their institutional and cultural orientations
to strategic management. Many cultures give less emphasis to simple prot-
maximisation than is found particularly in North American accounts of strategy.
Long-term survival and the collective interests of the organization as a whole are
often given greater weight in some European and Asian cultures. The institutions
that enable prot-maximisation, or penalize deviation from prot-maximisation, also
differ around the world. Capital markets are highly competitive in North America
and the United Kingdom, for instance. These competitive capital markets make it
more dangerous for American and British managers to deviate from simple prot-
maximising strategies as dissatised shareholders can easily permit a hostile
takeover by another rm promising better results . What contributes to performance
also differs according to the institutional environments of various countries, it can
make more sense to pursue widely diversied conglomerate strategies and adopt
loose holding company structures in countries where capital and labour markets are
not highly efcient than in countries where such markets work well.

2.2.E-commerce

The speed at which data can be analysed and communications enacted has been
transformed through the development of cheap and powerful information and
communication technologies (ICT). Although most managers would accept that this
is likely to impact on their own organization they are left with considerable
uncertainty about the direction and speed of those changes. In order to reduce this
uncertainty managers rst need to assess the impact on their current and future
strategic position.

This includes understanding how the business environment is changed by these

developments: for example, the extent to which the expectations of customers are
changing in relation to product features and how they do business with suppliers.
The relative power of buyers and suppliers is fundamentally altered in e-commerce
transactions because the buyers have much easier access to information about
competitive offerings. Also important is an understanding whether the organization
has the strategic capability to compete through e-commerce or whether it should
concentrate its efforts on improving performance within its traditional business
model as a way of remaining attractive to customers. The expectations of other
stakeholders are likely to be changed by e-commerce. For example, the strategies
of the organization may be much more visible to employees, bankers and the
community at large through their use of the internet. The choices available to
organizations are also shifted through e-commerce developments. For example, the
ability to service small market segments and wider geography may be facilitated by
e-commerce particularly for many service organizations. Partnerships can also be
supported and sustained over greater distances. As business units become more
competent and self-sufcient through their ICT systems this raises questions of the
extent of support they need from their corporate centre. This is causing many
organizations to slim down the corporate centre or even abandon it altogether.

Finally, the ways in which strategy is translated into action need to change to
support e-commerce models. Flatter structures; an increased ability to integrate
resources from different parts of the organization and beyond and the need for
almost constant strategic change are challenges for many organizations.

2.3.Changing Purposes

There used to be a clear distinction between the purposes of the private sector and
organizations in the (so-called) not-for-prot sector and/or the public sector. The
former were prot-driven organizations working to the best interests of their
shareholders. The others were mission-driven organizations working to increase
the quality of life for a specic group of the community or society at large. Of course
it was never really quite so polarized but increasingly these distinctions are
becoming blurred. The private sector has seen major changes in regulations and
corporate governance reforms many as a result of corporate scandals, such as
Enron and SATYAM. They have also faced pressures to develop a much stronger
framework of business ethics and corporate social responsibility. At the same time
there have been opposing forces arguing for a much clearer emphasis by boards of
directors on increasing shareholder value as their primary responsibility .In not-for-
prot organizations and in the public sector there has been a danger of being
dominated by the purposes of the funders and being concerned more with
resource efciency than with service effectiveness . Awareness of such dangers has
led to major efforts to make the purposes and modus operandi of these types of
organization more business like. This has resulted in a much more prominent role
for both nancial targets and strategies and a major emphasis on improving the
quality of service to the beneciaries (for example, patients in hospitals). In turn this
is changing the way in which strategy is managed. There is a greater need for:
market knowledge ;new competences, such as nancial management ; an ability
to work in partnerships and for less centralization , to name just a few of these
changes.

2.4.KNOWLEDGE AND LEARNING:

There are an increasing number of organizations that claim to depend substantially

on innovation for their strategic success, and still others that argue the importance
of becoming more innovatory. But this can only occur if an organization is able to
both generate and integrate knowledge from both inside and around the
organization to develop and deliver new product or service features. In a fast-
moving world constant improvement and change become essential to survival and
success. So the ability to manage learning is also vital. Businesses in

the eld of high-technology products or those dependent on research and

development, for example in the pharmaceutical industry, have long experienced
the extent to which innovation is important. Innovation is seen as the ability to
change the rules of the game. The rapid developments in information technology
have thrown up opportunities for many more organizations to do business in new
ways as discussed above. The success of all these innovatory organizations is
likely to be built on a willingness to challenge the status quo in an industry or a
market and an awareness of how the organizations resources and competences can
be stretched to create new opportunities. The need to see and act strategically
against very short time horizons is another key feature of the innovatory context. It
is likely to affect the type and quality of the people , the sources of knowledge in
the organisation and the extent to which the prevailing culture encourages the
transfer of knowledge and the questioning of what is taken for granted . Innovation
will also be inuenced by how people are managed and how they interact For
example, organizational structures that encourage interaction and integration,
rather than formal divisions of responsibility, may encourage innovation.

3. STRATEGIC LENSES:

The strategy lenses are three different ways of looking at the issues of strategy
development for an organization

3.1. Strategy as Design: the view that strategy development can be a logical
process in which the forces and constraints on the organization are weighed
carefully through analytic and evaluative techniques to establish clear strategic
direction. This creates conditions in which carefully planned implementation of
strategy should occur. This is perhaps the most commonly held view about how
strategy is developed and what managing strategy is about. It is usually associated
with the notion that it is top managements responsibility to do all this and that
therefore they should lead the development of strategy in organizations.
3.2. Strategy as Experience: here the view is that future strategies of
organizations are based on the adaptation of past strategies inuenced by the
experience of managers and others in the organization. This is strongly driven by
the taken-for-granted assumptions and ways of doing things embedded in the
culture of organizations. Insofar as different views and expectations exist, they will
be resolved not just through rational analytic processes, but also through processes
of bargaining and negotiation. Here, then, the view is that there is a tendency for
the strategy of the organization to build on and be a continuation of what has gone
before.

3.3.Strategy as Ideas: neither of the above lenses is especially helpful in

explaining innovation. So how do new ideas come about? This lens emphasizes the
importance of variety and diversity in and around organizations, which can
potentially generate genuinely new ideas. Here strategy is seen not so much as
planned from the top but as emergent from within and around the organization as
people cope with an uncertain and changing environment in their day-to-day
activities. Top managers are the creators of the context and conditions in which this
can happen and need to be able to recognize patterns in the emergence of such
ideas that form the future strategy of their organizations. New ideas will emerge,
but they are likely to have to battle for survival against the forces for conformity to
past strategies (as the experience lens explains).Drawing on evolutionary and
complexity theories, the ideas lens provides insights into how innovation might take
place.