Free Business Dissertations - Strategy And The Environment In An Increasingly More Competitive Business
STRATEGY AND THE ENVIRONMENT
In an increasingly more competitive business market, strategy needs to be clear and effective. Unfortunately, many organisations have a fuzzy strategy, or worse, a fuzzy idea of what a strategy is. Many managers spend time trying to answer questions of strategy correctly, rather than thinking about which are the right questions to ask (Styles and Goddard 2004). This century will require innovative strategy, either in addition to or in place of innovative product. Organisations will flounder and mature into oblivion if they are not able to create and implement innovative strategy (Styles and Goddard 2004).
In his article What is strategy and how do you know if you have one? Costas Markides addresses the strategy issue. He contends that:
Most corporate strategies are too vague to be useful.
The basic components of a good strategy that worked in the past are the same components needed in a good strategy today.
Strategy requires three parameters: a clear definition of the company’s target customers (who they are, who they will be, and who they are not), a clear definition of its products or services, (what the company will produce or offer and what it will not), and an plan for how this will be achieved (how it will go about creating, producing and delivering its products or services to its target customers).
A good strategy is a fluid thing, able to change if needed. There needs to be systems in the organisation for collecting ideas and getting them to the decision-makers.
While it is helpful for everyone to have input, the senior management must decide strategy and communicate it to the rest of the organisation.
The business must actually follow the strategy it espouses.
Strategy requires that the company combine the choices it makes into a system that allows the company to meet the needs of its customers and environment (Markides 2004).
Markides goes on to discuss the organisational environment. He divides the environment into four elements: culture, structure, incentives, and people. Markides does not define each of these elements in his article, but each can be examined in greater detail. Culture includes the style and values of the organisation, its expectations, traditions, temperament and norms. Structure includes processes related to communication, workflow, and responsibility (Alkhafaji 2004). Incentives focus on the goals and returns an organisation receives, primarily financial. People includes the employees of an organisation, including their ideas and potential for contribution.
Reducing the environment to these four elements does not really define the environment. For one thing, they only address internal aspects of an organisation. External elements also influence the organisation’s environment. The PESTEL framework is an acronym for these external influences: political, economic, social, technological, environmental, and legal (Johnson and Scholes 2002).
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