Literature Review on What Is Strategy
Introduction: Strategy and management is one of the prominent and most discussed topic in the organization and business studies - Literature Review on What Is Strategy introduction. Organizations today are challenged by many factors both internal and external and need to effectively address such, which makes only possible by the organization effective leader and their strategic view to overcome and take their company into profitable, competitive, innovative and change.
Further, the shift of organization from being local onto global and so the factors of cross-cultural, internationalization cross-disciplinary knowledge of geo-economy, politics, business, market, volatile competition, wide range of customer, and other globalization factors brings further complexity and encounters, hence urgency of more robust leadership, strategy and creative approaches is at forefront than anytime in the history; to struggle and compete this dynamic challenges.
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In the Michael Porter (1996) literature ‘what is strategy’; one of the concept of the organization strategy can be understood as being “different” from the competitors and so with the different end outcome and added value to the organization as a long-term advantages. It means that, an industry or organization could be operated in a different way than it`s competitor, which will allow to achieve long-term value creation. In other words; strategy can be understood as, what are the organization unique positions in order to achieve organizational effectiveness, and competitive advantages at the end of the day.
The author argues that; strategy can significantly be divided in a wider way of doing things. As a competitive way of thinking, industry has its own-target area and ways of doing the business, for example; defined vision and goals, particular business activities, objectives, niche customer, differentiated product or service, market segments, key technological drivers, different approach on marketing, and so forth. Also each company has its own rivals, key market presences and targeted economic outcome.
However, every company is seeking for the unique ideas and plans to stay in the market for the longer period, to achieve strong economy and become one of the competitive in its industry frame. This will help to achieve greater value to the industry. The basic notion of the strategy here is; it is a set of systematically planned actions that takes time out for a particular purpose on, how companies are going to be unique, achieve competitive advantages and sustain over longer span of time. This is the core essence of organization strategy.
Strategy in relation to operational effectiveness; it is important to be stay ahead from the competitor and aggressively gain the efficiencies. However; competitor may act quickly with such manner to stay long term in the market. An organization may have chosen different area to stay in frontier from the rivals and putting more effort and superior performance to achieve goals. Such as deliver value to customers, comparable value at lower cost, creating activities to produce, sell and deliver of product and service, training employees, calling to customer, assembling final products etc.
; hence, the value created by these activities will help organization to lead than the rivals, and so company can performance better than its counter competitors. And on top, more innovation and technological improvement will push backs the organization rivals. This can also be related to Porter’s theory on generic strategy to gain competitive advantage in terms of either product differentiation or cost based strategy. Achieving organization goals either in cost based focused, product differentiation or the cost leadership can gives a suitable competitive advantage, value and strong strategic view of the company.
Similarly, according to Henry Mintzberg( as strategy defined in five areas, these are plan, ploy, pattern, position and perspective. An organization or company analyzing process of idea receiving here and there. Putting their action in over time, as frequently market actual costly product is using “high-end” strategy. This reflection of decision in the particular products, and the impact on the market place. An example of an apple company strategy-An apple organization “Steve job” vision of the strategic is that, making product differentiation, innovation and strategic position, and how to change the industry.
According to the competitive Advantage written by Michael Porter in 1985 ‘Creating and sustaining superior performance is Generic strategies’. Generic strategies represent the varieties in strategic positions of a company. The concept of generic strategy is divided in three parts Product differentiation, cost Leadership and Focus. According to Porters company can have a focused or broad approach on product differentiation or cost leadership, in the given article Ikea and south west airlines are an example
in this Ikea is based on the needs of customer group and south west airlines is based on offering a particular service variety in cost leadership, where as Neutrogena is based on product differentiation because, it is focused on sales its product distribution in drugstores and avoid price promotion. Where as Hambrick (1983a, p. 702) argue that “It is simply not accurate to say that all generic strategies are equally possible within an industry . . . any broadly ‘generic’ strategy is really a composite of numerous variations, not all of which are equally suited to a given situation”.
As author Michael E Porter (1996) in this article argues that; operational effectiveness in not a strategy but it is doing the same thing that the competitors does but in different ways similarly strategic positioning is applied in a company in order to perform a unique skills and establish a strong reputation of a company. it is also focused on profit by eliminating wasted effort, employee and technology furthermore offer consumers a unique set of benefits by making good strategy in core activities differently.
An example of Japanese manufacturing company, which shows that company, has enjoyed substantial cost and quality advantage. After using operational effectiveness but the unique strategic positioning, Japanese electronic company was not able to compete in the market because, its competitor has applied similar method and technology, which shows strategic decision of Japanese company, has to focus out of Japan. According to the article Porters verified strategy in many different parts, have been using in every organizations like competitive strategy, about choosing different ways in delivering their product in unique style.
It is essential to find out, competitors strength and weakness. As an example of southwest airlines. They have chosen different and unique strategy of providing low cost, short haul, and point –to –point service between midsize cities, and secondary airports in large cities. They targeted customer like student, families, and business traveller, traveller who used to travel in car or buses. Southern airlines as a value based airlines, unique low cost strategic setting in methods and technology, attracting valuable customer and outstanding performance.
Porter’s states that trade off create the needs for choice, protect against repositions and straddles in a company, such as brand image, technology, company effectiveness need different strategic positioning of trade off in terms of operational effectiveness and exclude a potential barrier of a company. Example continental airlines try to emit the strategic of southwest airlines, which is failed. Continental lite to maintain the image and service, where as Neutrogena maintain unique position of manufacturing process, and avoid using deodorants or skinning softener.
Towards achieve strategic positioning of its image research based medical proved soap by manufacturing its product in drugstores. According to Porter’s this article about generic strategy, an example of Ikea, southwest airlines and Neutrogena. Porter’s defined about strategy as, finding a unique position by combining a unique set of activities, as every company has been adapting unique strategies of presenting, the situation products in competitive way. Porter’s also found that strategy is about, what to do? And what not to do?
, by giving an example of continental airlines failed in the market, By adapting an idea of strategy of southwest airlines in this case. Porter’s says imitation is not always successful. An author point of view of strategy, about finding complementary activities that creates internal and external fit. These idea and process may an organizational success, it provides clear future path of the business and performances, through to set of rules and procedures in dealing with daily management and operational activities.
The Collective effort of the management and employees to achieve the goal of an organization. Here, author finds that, while designing strategy company should match mission, vision, goals and objectives, which give benefit to the company and also be aware of effecting factors like competition, globalization, customer’s demands and change in technology and other external environment. As we have seen in above explanation of “Hambrick” state that, generic strategy is not effecting the similar position in an industry.
It’s has been divided many part of an industry strategy, and widely targeting but not giving result same position in an industry situation. While we agree with Michael E porter generic strategy, which has divided in various process of strategy targeting in an industry. An industry could be more effectiveness and performance base, towards implementing and measuring their own strategy mapping. Aimed at making more profitability and pushing back to rivals. Towards of achieving the goals and objectives, with the segmented stage of strategy making process.
According to Henry Mintzberg five stage of the strategy process, which has been design for an organization strategy. While we are agree with the 4 stages of the strategy of Henry mintzberg, but as we focused on the pattern of the strategy. We are not agree with that, because action of the over time in the particular product, an organization have to pay more cost to employees making products quality in the market, while considering pushing back rivals. It will be more affecting an organization financial situation.
According to Michael E porter generic strategy. As we agree with Products differentiation strategy is the unique idea of strategy; Separately from that cost of the products will be higher, because an organization has to pay more to produce innovation, technology, and quality product. The market will be unique and quality base. As market point of view consumer targeted in quality products, and the rivals have to be tougher to make innovation product differentiation. While taking competitive advantages cost will be more than previous.
An example of apple products, an organization focusing on the products differentiation, where cost will be high to produce in quality and innovative products, but customer targeted in quality and service. An apple user gets benefit and they will be more focused on their software and service. Which means customer are now involved in an organization, If customer want to quit apple products, they might have very difficult to use new software. Because they used to it. References: Murray, I.
A (1988) A Contingency View of Porter’s “Generic Strategies” University of Alberta, Academy of management Review Vol. 13, No. 3 PP 390-392. Mintzberg, H (1994) The fall and rise of strategic planning. Harvard Business Review, 107-114 Steve Jobs’ Strategic Vision, June 6, 2012, Andrea hill, Harvard Business School. Available on (http://footnote1. com/steve-jobs%E2%80%99s-strategic-vision/) Accessed on 26/01/13 Andrews K. R, 1998, the concept of corporate strategy, Revised European Edition. Porter, M. (1996) ‘What is Strategy? ’, Harvard Business Review, v74 (6) Nov-Dec, pp. 61-78.