The word “strategy” is derived from the Greek word “strategia”, which means “generalship”. The term strategy entered the business world from military Services where it was originally used. The strategy works as a blueprint of an organisation that defines its vision, mission, and also helps in determining the future course of action. A strategy helps an organisation to minimize the strengths of competitors by maximizing its own strengths. A strategy is formulated to achieve the current goals of an enterprise by optimum allocation and utilization of internal resources and by collaborating with different organisational pursuits.
Strategy tries to achieve synergy and balance between objectives, resources, and concepts to maximize the possibility of success and fruitful results. In wider terms, strategy refers to determining the fundamental long-term organisational goals and at the same time developing plans, acquiring, allocating and deploying resources in order to achieve those goals. The purpose of formulating strategy is to bring consistency and alignment in the activities of an organisation, which can be accomplished by various endeavors, methods, and resources.
According to George A. Steiner, “Strategy means deciding the basic mission of a company, the objectives which it seeks to achieve and the policies governing the use of resources at the disposal of the firm to achieve its objectives”.
- 1 Roles of Strategies in the Organisation
Levels of Strategy
It is worth stressing that strategy exists at different levels in the organization. Once managers have determined “what is our business, what will it be and what should it be?” Then they have a basis for setting challenging and achievable performance objectives for formulating strategies to achieve them. The desired outcome is the creation of a hierarchy of objectives spanning the organization from top to bottom and the formation of a corresponding hierarchy of strategies to achieve the objectives at each level in the organization. Organizational Strategies are divided into three distinct levels: 1) Corporate level strategy 2) Business level strategy 3) Functional level strategy
Corporate level strategies or corporate strategies are the plans of top management developed I’m supervising the overall functioning of the enterprise and achieving the expected level of perfbrmance. These strategies outline the organisational activities and Objectives in various areas of an organisation like divisions, product lines, technologies, consumers and their needs, etc.
Corporate strategies guide an organisation to become what it wants to be in order to maximise the performance levels. For example, since the dim of Nokia launch its own operating system failed, in the year 2011 Microsoft and Nokia formed an alliance in which Nokia agreed to produce smartphones with the Windows operating system. With this alliance, Microsoft was able to access the market of one of the largest cell-phone manufacturer. Nokia was able to retain its market share with the help of this merger.
Business level strategies are also called as business strategies or Strategic Business Unit (S13U) level strategies. A Strategic Business Unit (SIItJ) is based on the idea of recognizing the separate market segments catered by the company. Business strategies are formulated differently by each segment due to the differences in their environmental conditions. The business-level strategies are formulated to satisfy the needs of the customers of different segments and also to provide value to them.
Hence fulfilling the demands of customers belonging to different segments helps the organisation in increasing and sustaining its competitive advantage.
For example, Domino’s Pizza owes its success to Turnaround strategy that had positive effects due to the organization-wide efforts of achieving a simple and clear goal that was, “have a clear win against a competitor in a taste test”
The functional level denotes the operating division levels and departments in an organization such as marketing, finance, human resources, R&D, etc. Various strategic decisions at functional levels are associated with business practices and value chain. The functional level strategies are focused on expanding and synchronizing the resources for implementing the business level strategies in an efficient manner.
The functional level of an organisation provides input to the higher-level strategies such as business level and corporate level strategies and converts them into action plans for various departments. These plans are needed to be carried out for the strategy to be successful. Higher-level strategies depend on the functional level for information regarding resources and capabilities on the basis of which strategies at the business and corporate levels are formulated. For example, a marketing strategy can be broken into various functional level strategies such as pricing strategies, distribution strategies, promotion strategies, sales strategies, etc.
Roles of Strategies in the Organisation
The role played by strategies can be understood with the help of points explained below:
1) Serve its Operational Planning Framework:
In an organization, strategies often serve as framework operational planning. The strategic decision-makers predetermine and direct the operational the help of such a framework. By carefully understanding and developing various strategies, managers or decision-makers can formulate a reliable framework for their operational plans, Optimum utilizationorganizational resources can be achieved with the help of such a reliable framework. Using the wale* framework, the resources can be allocated in the areas where they can prove most fruitful.
These areas Predefined in the strategies in terms of customers, as well as geographical market, covered, The effective allocation of resources will be directly dependent on the appropriateness of the area defined, For example, if an organisation is devising strategies for launching a new product in market, it should allocate its resources in the field of market research and development activities,
2) Clarity in Direction of Activities:
Another role of strategies is to clearly specify the activities to be covered in the course of achieving various objectives set by the organisation. This reflects the direction of the activities focused during strategic planning. Hence, with the help of strategies, organisational objectives can he made niece clear and specific. For example, a business or non-business organisation can define its objectives as profit, – making or social objective. However, such a definition is too broad and lacks clarity as the Operational objectives of the organization remain unclear.
Such objectives can better be defined with the help of strategies that further specify each operational objective employing a more practical approach. In the case of the example quoted here, strategies-can help in determining the total amount of profit targeted by the organization, what resources are to tie objected as well as what resources are required in achieving these targets. Once these objectives are clear, they can provide direction to the individuals who own the responsibility to implement these activities. Moreover, the whole process helps in enhancing the performance of the individuals by clarifying what the organization expects from them and where it intends to rise in the future.
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3) Enhancing Organisational Effectiveness:
Strategies also play a major role in enhancing the organisational effectiveness employing numerous ways. Effectiveness can be determined by evaluating the success level of an organisation in achieving its targeted objectives within the allotted time period and resources. Hence, for ensuring such effectiveness, the organisation needs to deploy its resources in a way to make the best taco: of their efficiency and optimize their contribution in achieving the overall objectives set by the organisation. All the resources present with the organisation have their own application in a given situation. Therefore, it is recommended to put these resources into action following their specific application. This will help .in. achieving organisational effectiveness.
4) Personnel Satisfaction:
In the course of strategic management, another role played by strategies Is • providing satisfaction to the personnel. Employees tend to be more satisfied in organisation which follows a formal strategic management process, as the strategies here help in describing the role of each individual. This further reduces conflict and confusion arising in identifying roles associated with each employee, Systematic decisions linked with strategic management provide direction to the personnel.
For example, it clarifies them how to Contribute its achieving organisational objectives, from where to access. required information, who will make the decisions, etc. This helps in gaining effectiveness both at indiVidual as well as organisational level.