Dynamic and complex business world make the intensive and severe competition among the organisations. Effective formulation of strategy will lead to achieve the success of organization and enhance the future survivals.
Strategy1 is course of actions developed to achieve certain specific objectives. Mintzberg states strategy as a plan, a ploy, a pattern, a position, and as a perspective (Barney, 1990). Strategies are used from ancient time and also it has been used for various purposes such as war purposes and business purposes etc. strategic development process consists of lot of activities [Refer Figure 1.0]
Figure 1.0: Business Strategy Development Process
http://www.intellia.co.nz/images/Business%20Technology%20Strategy.jpg
Source: Johnson, G, Scholes, 2008
This assignment tries to identify the formulation, implementation, review and development of strategies for business organizations with reference to its stakeholders. Stake holders are those who have interest in the business. So when crafting strategies stakeholder interests also should be considered.
2.0 Business Strategy Development Process
2.1 Formation of Strategy
Formal strategy making process have certain steps. The first step is identifying the vision and mission o the organization; because they show the path to run a business. Most of the business organizations are operating with the aim of maximizing shareholder wealth.
And also they may have other sub objectives regarding its customers, environment, suppliers and society. These will be reflected through their mission statements. So it is important to consider the Vision and mission statements before making strategies and it have high level of impact on stakeholder’s context.
2.2 Environmental Analysis
It is very much important for an organization to evaluate its internal and external environment. This will provide them a clear idea about the business environment in which the organization is operating. By analyzing the internal environment by using SWOT analysis2 [Refer Figure 2.0], the organization would identify its strengths, weaknesses, opportunities and threats. (Menon, A. et al. 1999). Example: If organization is having some problems with its skilled labor, and then they shall make initial steps to solve that problem before implementing strategies. Further organization could identify its strengths and move on it. These would finally lead to increase in value for its share holders. Further value chain analysis also come under internal analysis. Where it involves identifying the activities of the organization and tries to make decisions to improve it to create greater values. In this particular analysis many stakeholders are involved. From suppliers of materials to end customers. Further human resources (employees) and other stake holders relating to other day today activities will be involved. So internal analysis is important in developing effective strategies.
Figure 2.0: Swot Analysis http://www.northwoods.org.uk/files/northwoods/images/SWOT2.png
Source: www.patsula.com
In the case of external environmental analysis it will analyze the external factors which may affect the strategic decisions. In which it will analyze porters five forces, PEST analysis3 [Refer Figure 2.2], and Competitor analysis. This will help in formulating better strategies by identifying external factors affecting organization. So it will be very important for strategy makers to make effective strategies to achieve the intended objectives with having proper understanding regarding stakeholders.
Figure 2.2: PEST Analysis
http://markbertrand.com/images/large/PEST-box.jpg
Source: www.markbertrand.com
Strategic Option Generation
The next step in formulating a strategy is strategic option generation. In this possible options will be considered to have as the proper strategy to gain competitive edge. Where possible options for each level corporate, business, functional and operational level strategies will be considered. In this organization would develop strategies such as low cost or differentiation, mass market or niche market etc. (Chaffee, E 1985). These strategies will be determined based on the organizations objectives and its stakeholder powers and influences.
Strategy Evaluation
The next step is the strategy evaluation and choice. In this stage appropriate strategies will be selected for implementation. Before this step it is important for strategy makers to have proper understanding regarding its stakeholders. So it is very important for strategy makers to do a stakeholder analysis before choosing a strategy. Here mendelows stakeholder mapping would be used for this purpose. In which strategy makers need to identify the power and interests of its stake holders. Where the strategies should consider more about the key players of the matrix. And also it should consider the other categories such as keep satisfied and keep informed categories as well.
In the evaluation stage generated strategies will be evaluated based on certain criteria. It can be evaluated based on its suitability to the organization. This is important because it establishes the rational for the selection of particular strategy. Here life cycle analysis, positioning, portfolio analysis, and value chain analysis will be performed to select the best strategy to suit the organization.
The next very important evaluation would be its acceptability. This is the acceptability by its stakeholders. Organization can’t succeed in its strategy formulation without considering its stakeholders. For example if it is a new project it share holders will expect higher return, employees will expect higher benefits to them, government will focus on the social and environmental factors, and customers would expect more value for money. So the strategy makers should focus on prioritizing these stakeholders and try to satisfy them by selecting proper strategies.
Next phase in evaluating a strategy is evaluating its feasibility. Here it will analyze whether it will be achievable or implemented without obstacles. Here financial, economical, political and technological feasibilities will be considered. Then workability test will be performed to see whether proposed strategies can be really be accomplished as planned and where it is likely that the intended results will be realized.
And also in strategy evaluation and choice analysis such as SOWT matrix, BCG matrix, GE matrix and Balance Score Card 3[S. Kaplan and David P. Norton, 1996] [Refer Figure 2.3 ] would be very useful. For example in the case of balance score card, it uses certain criteria to measure its employee performance. Customer perspective, learning and growth perspective, innovation perspective and financial perspective are the main criteria. These factors will directly influence by the performance of employees who play key part in making a strategy successful one.
Figure 2. 3: Balance Score Card
http://www.learn.com/files/images/products/Balanced_Scorecard2.gif
Source :www.learn.com
2.5 Strategy Implementation
Up to now this assignment focused on formulating a business strategy, through certain steps, with particular emphasis to its stakeholders. After choosing particular strategy the next step will be strategy implementation. Here I would like to emphasis on the implementation phase of the strategy. The implementation part consists of major three elements. Who implement the strategy, what must be done and how are they going to do it. To succeed in selected strategy everyone within the organization should effectively participate in the strategy implementing process. It is not only the responsibility of strategic manager or project manager to make this chosen strategy to a successful one.
Further in the implementation phase structure, leadership and culture should also be considered. These should be modified a required to achieve the intended strategy. Structure should facilitate the implementation of strategy. So the managers have to decide the suitable structure and have to decide on degree of delegation and span of management etc. further when implementing a new strategy it is very much important to be aware of cultures. Then only the managers would make the strategy as a successful one. The next important part in strategy implementation is the leadership. It is the ability to influence the behavior of others. Successful leaders will focus on its superior’s expectations, individual expectations, peers expectations, subordinates expectations and organizational culture and policies. So it is very important to select a proper leader to manage the strategy implementation process. And also the leadership style should depend on the characteristics of its followers and task structure.
Review and Development
Even though strategy is a continues process final phase of strategy development process is reviewing and development. The objective of this phase is to pinpoint the weaknesses and errors to rectify them and prevent recurrence. To do this it should have an idea of what to measure first. Then it should establish certain criteria and standards to measure the performance. Then it should measure it regularly; if performance matches the standards then do not take any actions.
If organization do not take necessary actions to correct the problems and make sure the achievement of the achievement of intended targets. If it does not meet the intended targets sometimes it will also required developing the strategies again from the beginning.
Further business environment is so dynamic and volatile. So these rational strategies will be successful on one occasion and would fail in another occasion. So according to mintzberg it is not preferable to always stick into one particular intended strategy. Many things would emerge during the strategy process. So the organizations and strategy makers should focus on those things as well to make effective strategies. These are called emergent strategies according to mints berg. Finally the realized strategy will be the strategy with the mix of intended and emergent strategies.
Conclusion
The strategy development process is a vital for any organization and it is continues process to enhance the achievement of stakeholders objectives.in addition to that it should be focused on every aspect of the business particularly with regard to its stake holders in order to make effective and successful strategies.
