The notion of strategy in organizations Essay Example | Topics and Well Written Essays - 3750 words

The notion of strategy in organizations - Essay Example Strategy as a Plan or Ploy The term plan is common to different fields when it comes to strategy formulation. For instance, in the military, strategy is to draft a plan while in Game theory a complete plan is necessary to determine the choices the players will make. The dictionary too describes strategy as a plan and in management it is an integrated plan to achieve the organizational objectives. Mintzberg contends that a strategy can be a ploy too. To discourage a competitor when an organization expands its plant capacity, it can be termed as a ploy. Since it is meant as a threat, it cannot be called a plan; it is a ploy with a specific intention. Strategy as a pattern According to this definition strategy is consistency in behaviour and has a set pattern, whether or no intended. Patterns can appear without pre-conception but people can observe a set behaviour in an organization and call it a strategy. This may be just an assumption. A plan can be an intended strategy where as a pattern can be called a realized strategy, since it was not intended. Thus, when the intended strategy is realized, it is a deliberate strategy as the intentions existed. Emergent strategies are those that went unrealized where the patterns developed in the absence of intentions or perhaps despite them. Strategy as a position The fourth definition is that strategy is a position. It is a means of locating an organization within the industry environment. This definition suggests that strategy is a mediating force between the organization and the environment. ... Strategic analysis requires the use of several tools but there is limited use of these tools. Tools and techniques are essential because they help the SMEs to change their course of action depending on the data collected through these tools. Tools and techniques do not help or make a strategy but they are useful in collecting and presenting data which help in strategic analysis . The most used tool is the financial analysis followed by PEST or STEP analysis, Porter’s five forces analysis and analysis of critical success factors (CSF). External analysis, considered a part of SWOT analysis ranked sixth in popularity, in a study conducted by Aldehayyat and Anchor . The study found that respondents were aware of other tools such as value chain analysis, competition analysis and portfolio analysis, but none used them. Other tools for strategy analysis such as organizational culture, core capability and experience curve analysis were not even known by the respondents. 2.2.1 Porter’s Five Forces Model The five competitive forces that shape strategy (Figure III) include the threat of new entrants, bargaining power of buyers, bargaining power of suppliers, rivalry among existing competitors and the threat of substitute products . He further clarifies that these five forces differ by industry. If the forces are intense, the return on investment is low; if the forces are benign, the profit margins are high. The strongest competitive force determines profits and is important for strategy formulation.