Managing Strategy and Structure Planning - Essay Example

Name: Tutor: Title: Managing strategy and structure planning Course: Institution: Date: Managing strategy and structure planning Introduction Contemporary business world is a progressively more multifaceted, interlinked environment where organizations carry out global business. The international business environment is characterized by changing market forces coupled with changing political, social, cultural technological, environmental, financial, legal and economic paradigms which are integrated with rapid and volatile changes leading to business turmoil which affects all levels of organizations (Knights and WiIlmott, 2006). Heinrich & Betts, (2003) indicates that conventional deliberate strategies founded on cycles of stability and expectedness are no longer pertinent and suitable for modern business environments since the instability of contemporary business environment acts as a vehicle for the continued emergence of new challenges and business opportunities. For instance, product lifestyles which used to be calculated in terms of years are presently being calculated in months if not weeks. These instabilities therefore, requires not only ample planning but strategic planning at that since it is no longer about aligning the environment to business operations and processes but it is about aligning the internal environment to the external environment in order to gain enhanced competitive advantage (Hamel & Prahalad, 2005). Recent changes to the business environment suggest that there are corresponding shift in business processes and business models to facilitate these changes. To counter modern day business volatility and unpredictability which culminates to problems such as financial and economic downturns as witnessed recently in 2008/09, business leaders are reliant on strategic management and strategic planning in order to not only maximize profits and minimize costs but also ensure effective acquisition, allocation and usage of resources, efficient identification of market opportunities, effective identification and management of threats and risks and more importantly ameliorating existing weakness of the business to ensure sustainable competitive advantage (Dye, et al., 2009). Dye notes that they are structuring their business operations and processes in such a way to ensure flexibility and adaptability which is crucial to surviving in a changing environment. This forms the basis of this report which is a literature review that seeks to explicitly discuss the statement: We tend to think of the task of managing as one defined by carefully considered, long-term thinking. If the global financial crisis taught us anything, it is that more often than not organizations operate with very short horizons, reacting to an ever-changing environment. Definitions of terms Strategy According to Atkinson, (2004), strategy is a crucial tool for a firm in asserting its essential continuity while forcefully facilitating the firm’s adaptability and flexibility in a changing business environment. Watson, (2001) notes that the fundamental nature of strategy is intent management of change toward the attainment of competitive edge in every venture an organization is engaged in. primarily, strategy provides the management with opportunities to align the goals, mission, vision and objectives with available valuable resources to ensure anticipated business outcomes are achieved effectively and efficiently. Mintzberg and Waters (1985) defines strategy as the patterns in a stream of action where the emergent approach as suggested by Mintzberg occurs without direction of purposeful or developed plans and emergent plans are integrated into organizational actions and contribute to achieved strategy. Strategic management Strategic management is described as a continuous process which assesses and controls the business in which the organization is engaged and more significantly, evaluates the competitors and set objectives and strategies to counter current and potential competitors (Lamb, 1984). According to Lamb, (1984), the process ensure continuous development, implementation, monitoring, and evaluation of strategies to ensure they function as anticipated and determine implementation of new strategies to meet changed situations, new competition, new technology and countering new economic, social, legal and political environment. Strategic planning Strategic planning is a management instrument utilized to help the firm’s stakeholders to focus their efforts in working towards mutual goals and more significantly, to evaluate and adjust the direction of the firm in response to changes occurring in the environment (Knights and WiIlmott, 2006). Primarily, strategic planning entails making essential decisions which guide and influences what a firm is, what it does, when it does, how it does and why it does, the greater emphasis being placed on the future (Atkinson, 2004). Timing for the process of strategic planning relies on the needs and nature of firms and their immediate external ecology (Heinrich & Betts, 2003). For instance, for an organization dealing with products and services within an industry which is rapidly changing such as information technology industry, comprehensive planning should be conducted every so frequently to align to the ever-present changes placing greater focus on organizational ideals, missions and visions, challenges, strategies, environmental changes, roles and responsibilities, budgets and time lines among other significant variables. Literature review Dye, et al., (2009) argues that in order to survive present volatile and unstable business environments, where financial and economic crises have the potential to reverberate from one state or economy to varied and numerous economies globally as witnessed in the 2008/2009 global financial crisis, organizations both local and multinational, large and small, private and public an both profit and non-profit making organizations needs to strategically align the internal environment with the external environment where the actions and decisions of an enterprise are consistent with the needs and expectations of all stakeholders, which are in turn consistent with the market and the context. Knights &WiIlmott, (2006) suggests that it is no longer just about attracting new clients but more so, attracting and retaining loyal customers which necessitates business management to forward think by establishing the strengths the firm has and capitalizing in them, determining what the weaknesses of the firm are and ameliorating them, identifying market gaps and market opportunities and capturing them and crucially, assessing for risks and effectively and efficiently preparing for them to ensure they are prevented and when they actually occur, they are sufficiently averted or managed (Hamel & Prahalad, 2005). This means that strategic management and strategic planning is based on minimizing business risks and maximizing on business opportunities. Benefits of strategic planning for contemporary organizations According to Heinrich & Betts, (2003), modern business can benefit from strategic planning since it offers varied services to organizations such as clearly defining the objective of the firm and establishing realistic goals that are aligned with the mission in an established time frame, helping in communicating the set strategic goals to all the relevant stakeholders, which help generate a sense of ownership of strategic plans and actions, allowing effective and efficient utilization of resources of the organization by allocating the resources on critical priorities and offering a base from which progress can be computed and determine a system for informed adjustments where and when required. In addition, strategic planning offers the organization a clearer focus which results in production of enhanced efficiency and effectiveness that generates high productivity, it enhances collaboration and interconnectedness among stakeholders (Eisenhardt & Brown 1998). Important to note is that strategic planning is only beneficial when it reinforces strategic thinking or future thinking/ long range thinking and results to strategic management, which is the foundation for an effective firm as argued by Bourgeois & Brodwin, (1984). Future thinking means evaluating whether the organization is doing the right thing. Atkinson, (2004) indicates that strategic planning entails developing future mission and goals of an organization in context of changing external variables such as regulations, technology, and competition and consumer behavior in a bid to enhance the competitiveness of the organization. Why strategic planning fails Not all strategic plans succeed in contemporary business environment. This is as a result of stakeholders failing to overcome organizational cognitive, resource, political and motivational hurdles, inability for organizations to understand the consumer decision making process/ consumer behavior, strategic planners underestimating time requirements due to lack of critical path analysis, failing to plan and failing to understand the customer’s actual needs, expectations, hopes, wants, tastes and preferences (Knights &WiIlmott, 2006). There are instances when organizations are unable to effectively and efficiently predict environmental reaction such as actions of competitors and government actions such as business interventions and they overestimate resource competence which may result in their strategic plans failing (Atkinson, 2004). The inability to coordinate particularly where the organizational structures are rigid and the control and reporting relations are insufficient and failure to acquire commitment from the employees and management in terms of management support and access to adequate resources to complete tasks are some of the reasons strategic plans developed and implemented by organizations may ultimately not generate the anticipated results and eventually fails (Hamel & Prahalad, 2005). Strategic planning can be unsuccessful where the management is unable to manage change owing to insufficient knowledge of internal resistance to change and lack of insights on the link between processes and the organization and where there is deteriorated communication especially where information sharing across and along organizational structures is limited and where some of the relevant stakeholders are excluded (Bourgeois & Brodwin, 1984). Implementing strategic management to counter unpredictability of the business market environment According to (Watson, 2001), to effectively survive the highly competitive, unpredictable and volatile global business environment where success is not assured and the resources are limited, strategic planning and strategic management allows organizations the opportunity to not only focus on achieving short term goals but also, seeking to accomplish long term goals which ensures organizational competitive sustainability. Definition of strategic management by Mintzberg & Waters, (1985) as a systematic process for developing and implementing long-range goals and action plans for the firm, that is, a process of development pursued by implementation is founded on the prospects that at a fixed place in time, there is one best option to follow and this best option sets a vision toward which a succinct and implementable route can be laid. According to Hamel & Breen, (2007), strategic management holds an alignment to Taylor’s first principle of scientific management where understanding what the management want employees to do and then observing and ensuring that they do it in the best and the most cost effective way, is the route to effective management. Scientific management suggest that there is only one best way of accomplishing work and the management are accountable to developing the firm’s one best way and rules that ensures the one best way functions always (Taylor, 2008). This is effectively demonstrated by current trends and actions practiced by major global and industrial players. For instance, to ensure consistency in services and in the type of products it makes and sells globally, MacDonald’s has developed and implemented the system referred to as MacDonaldization, which applies the tenets and principles of scientific management (Ritzer, 2010). To ensure the one best way is practiced to ensure McDonald services are standard always and everywhere globally, the fast food restaurant has determined its one best way of making its menu, cleaning up, locking down and promoting workers which has ensured standardization of products and services globally, propelling McDonalds into the position of a global leader in its industry and being able to survive tough economic and financial times. Strategic management just as taylorism recommends segmenting roles into manageable units where the management specify what needs doing, how and when which McDonalds has implemented effectively where chefs have precise cooking time frames for food and there are temperature rates set for all machines as discussed by (Ritzer, 2010). Ritzer indicates that operators at McDonalds have to cut French flies nine-thirty seconds thick while those operating the grill ought to lay the hamburgers down moving from left to right, making six rows of six pies each. Strategic management suggests recruiting the right best person for the right job where one is specialized in what they do which is practiced at McDonalds where a hamburger is made in a way considered division of labor where a task is divided into small parts (Ritzer, 2010). Acquiring the best resource is the first step to success in strategic management where an organization must access quality, valuable, rare, unique and costly to substitute resources such as human resources at the right time, for the right job position and job description and at the right cost as noted by Hamel & Prahalad, (2005). In regards to the recent financial crisis, majority of corporations and organizations that went under are those that were unable to caution themselves from such risks and those that rely on meeting short term goals and placing little attention to achieving long term goals (Dye, et al., 2009). This is as a result of failure to correctly understand the external environment and the inability of the management to efficiently refocus and restructure the business in order to adapt to the changes and effectively manage the status quo (Atkinson, 2004). During hard economic and financial environments as presented by global economic downturns offer hardships for business which threaten their very survival. Nevertheless, such environments provide great opportunities for businesses that are well prepared to weather the economic and financial storms (Bourgeois & Brodwin, 1984). These opportunities can only be captured when an organization has set itself up to do through preparation of effectively and efficiently developed strategic plans which entails understanding the internal and external environment, establishing clear goals and direction, developing strategies which will help the business move in the established direction and finally implementing the developed strategies as echoed by Dye, et al., (2009). Businesses that were able to weather the economic storms in recent GFC were able retain value adding elements and eradicate those that were adding costs such as retaining the best human resources and laying off unproductive ones, diversifying roles, carrying out opportunity cost analysis and more significantly, forming strategic alliances in order to enhance competitive advantage (Dye, et al., 2009). In addition, the businesses were able to focus beyond the crisis and were able to apply innovativeness and creativity to not only survive the hard time but ensure sustainability in the long term. For instance, McDonalds are example of organizations that developed innovative actions and plans to respond to the GFC which was able to accrue profits despite the hard times by offering its clients low cost menu and facilitating the same store sales systems (Dye, et al., 2009). Other than that, management at McDonalds has placed greater emphasis on longer-term strategies entailing costly store renovations, operational revamps, production and sale of high end coffee products and focus on offering healthful menu options as highlighted by Dye, et al., (2009). McDonalds showcase the importance of adapting to present changes while keeping the focus on longer term strategies. Despite the immense benefits of strategic management to business, it posses some limitations which includes the inability to accurately predict the future since the future does not always unfold as expected which means strategies developed and implemented based on anticipated future are invalidated as argued by Robinson, (2005). According to Robinson, strategic management is more geared towards generating long term gains and therefore using strategic management to address an immediate problem means, it won’t work. It is important to address immediate problems before allocating resources such as people, time, finances, cost and opportunities to the process of strategic management (Atkinson, 2004). Conclusion Strategic management offers organizations tools to effectively use in order to identify opportunities and capitalize on them by developing and implementing suitable strategies. Strategic management is defined as a continuous process which assesses and controls the business in which the organization is engaged and more significantly, evaluates the competitors and set objectives and strategies to counter current and potential competitors. During hard economic and financial times, strategic planning and strategic management allows organizations to not only adapt to the changing environment, but also, ensure the business does not lose focus of its long term goals and mission. As discussed in the report, organizations that overcame the GFC were those that effectively and efficiently restructured its processes, systems and operations to meet the needs and expectations of the customer at that time while ensuring long-term strategies are not forgotten. A good illustration of such a company is McDonalds. Bibliography Atkinson, P. (2004). Strategy: failing to plan is planning to fail. Management services, vol. 48, no. 1, pp. 14-18 Bourgeois, L. J. and Brodwin, D. R. 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