By strategy, we mean an informed plan of action that includes the processes of preparation and execution that have been designed in order to accomplish a specific goal. A vision is something that constitutes what we need to achieve but it is the strategy that tells us how to achieve it. Thus, strategy can also be viewed as a tool or the means of obtaining intended objectives which we systematical and consciously pursue and we can implement it by using operational or strategic action plans.
The word strategy comes from “stratçgos”, which is a Greek word and has been derived from “Stratos” which means army, and “logos” which means leading or guiding. (Nayyar, 2006, 45) So, the strategy also has certain connotations as it has been coined from a word meaning army. But today strategy is more commonly used as art for projecting, directing, and analyzing business and functional campaigns.
However, strategy is simply not just planning since it has to deal with competitive circumstances in an uncontrolled environment while simple planning takes place in controlled environments. When we are faced with a challenge a strategy is what our active, conscious mind comes up with to enable us to clearly view our potential future once the strategy is undertaken and thus, react intentionally and rationally without having to guess or presume.
Since strategy can be considered as an outline, position, perception, and plan it acts as a bridge between goals and policies on one side and actual actions and tactics on the other. Thus, to sum up, strategy refers to the intricate mesh of expectations, ideas, goals, insights, perceptions, expertise, and experiences that provides us with guidance to take particular actions in order to detect specific ends.
The strategy has a number of components which are:
- Differentiation – This component appeals to a broad section of the market by granting differentiating features that make one distinguish oneself from the others on the basis of value or price or by establishing oneself as a dominant market player. This is done for making the customers eager to pay up certain premium costs. This component is successful only if the differentiation features of the strategy are difficult and expensive to duplicate.
- Overall Cost or Price Leadership – This component appeals to a broad section of the market and can be achieved by providing services and products at minimal prices. To implement this strategy effectively we continuously need to make exceptional efforts in reducing costs without leaving out the major features and services of the products.
- Response – This component helps to track the marketing results so that we can determine which is successfully working for the company and which is not. Through this component we can also determine whether operations and services are being provided to the customers on time or not, the quality of the product is good or bad and the promises made to the customers are being kept or not.
- Ongoing Augmentation and Review – Through this component, we continuously assess the strong points and flaws of our business and sometimes even the marketing strategies so as to continually improve them. (Gainer & Padanyi, 2007, 187)
The Use of Service as a Competitive Weapon
The rationale underlying setting up and running a business is to create new customers and hold on to them. If such a business process is carried out successfully in a cost-effective manner, the business will generate proper turnovers and at the same time will continue to survive and flourish. However, if such a condition failed to be met the business suffers heavy losses, and continued losses may result in the downfall of the venture.
This standpoint of viewing business makes it primarily a client-driven process. In the post-industrialization era, the markets have started to exhibit a fiercely competitive trend in which just meeting the quality standards and quantity requirements of a product are not enough for the business to survive. In order to stay ahead of other competitors in a segment a good deal of innovation is needed. Upholding a sustainable competitive lead is the central focus of any business strategy.
It permits the preservation and development of the organization’s competitive situation in the market. Innovation is the chief force underlying competitive advantage, development, and effectiveness. Firms that successfully realize the full payback from their machinery and innovations are competent enough to integrate their technological proficiency with corresponding expertise in various other sections of their business, such as providing efficient services to clients as well as its employees. (Nayyar, 2006, 44)
With more and more options becoming available to the customer differentiation becomes a key concept and acts as a driver of sustainability. Differentiation denotes the capacity to separate the product or service offered by the business from that of other players. It is the solution to the problem of creating and upholding a competitive advantage. This is the edge that a business has over its competitors in the same market segment. This comes from the capability of offering exclusive and unique benefits that no other competitor can provide to the customer. Servitization of products is a window of opportunity on which organizations look to capitalize on. By offering services as a product or post-sales services firms aim at adding value to products and gain a competitive edge.
“Managing the evidence” refers to the process of notifying customers that the service has been executed effectively. It is done in a delicate fashion like providing explanations of high-quality and poor service which is used as a basis of judgment. The rationale is that a client might not acknowledge the worth of the service if they lack a benchmark for evaluations. (Sun & Zhou, 2008, 90)
Customers often prefer a “personal touch”. Firms pay considerable attention to the human aspect and personalization of services. Employees are often allowed to tailor a service encounter to the individual needs of customers. This satisfies the customer to a greater degree and increases customer loyalty which in turn provides the business with a competitive edge.
Performance Objectives Turned into Operational Priorities
A flourishing business organization and its management must be competent enough to cater to customer needs in addition to financial targets in a fiercely competitive global market. To build up customer confidence and accomplish business goals, the administrative team must not only craft an economically fruitful business strategy but coerce the outcome by translating the strategy into an unambiguously defined operational priority and ensure that they are adequately adhered to and met through enhanced communication and an efficient performance evaluation system. However, turning the performance objectives into a business strategy is into actual reality is an intricate undertaking. (Buttle & Burton, 2002, 227)
Firms often adopt an approach in which performance objectives are prioritized based on operational needs and requirements. The first step is to explicitly define a business policy that clearly outlines the performance objectives of each sphere of the business. It is then the responsibility of the management of the firm to oversee the operations and ensure that the defined objectives are complied with. Converting these objectives into operational priorities involves careful result-based evaluation of the business performance. Communication is an aspect that is inherently linked to this process. The role of each employee and every stakeholder must be explicitly communicated to them. Outlining and designating accountability for each sub-objective is also important in this context.
The management is responsible for communicating the operating plan strategy to the lower echelons of the firm and describing the intentions behind the targets. This must be clearly understood by all employees as well as other parties involved. Deliverables must be clearly outlined in such a communication and performance measurement machinery must be understood by all. A key administrative role is to define the way the goal is to be achieved. However, they should always assist in this process for the employees to easily realize the operational priorities. (Sun & Zhou, 2008, 90)
Performance evaluation systems may be a successful tool in pushing business performance objectives to be realized. However, before implementing such systems the firms lay down the objectives and convert them into operational priorities. To translate the former into prioritized items the objectives must be aligned with specifically described personal as well as team accountabilities. Major projects or programs linked with time-based deliverables must be identified. General business processes and mechanisms must be recognized. Key performance indicators in line with overall business strategy must be delineated. All these factors must then be linked with tactically defined personal and team accountabilities.
Converting performance objectives into operational priority can be a major step on the road to success. Ensuring proper communication and delineating accountabilities are two major issues associated with this process. (Ferlie, 2007, 87).
Strategy formulation and development
Strategy formulation can be defined as a process through which we can determine the suitable course of action we need to follow in order to achieve the objectives of an organization and thus, accomplish the intended organizational goal. Strategy formulation can be considered as the second phase of the process of strategic management, the first being diagnosis, and the third being implementation.
The output of strategic formulation is an unambiguous set of testimonials and recommendations along with proper justifications which revise, as required, the objectives, mission, and vision of an organization together with policies to achieve them. Through strategic formulation, we try to adjust the present strategies and targets in such a way that it is beneficial to our organizations and results in its success. (Bigelow & Arndt, M 2004, 41)
Strategy formulation has 3 levels or aspects each having an individual focus and produces 3 sets of testimonials which internally need to be consistent and matched together so that a strategical hierarchy can be integrated through them. They are:
- Corporate Level Strategy – This phase of strategy formulation focuses on the broad decisions that are made regarding the overall direction and scope of an organization. The changes which need to be made within the growth objectives of an organization and the strategies for accomplishing them need to be considered here. We should also include the business line we operate in and how all the business aspects fit together in order to create a mutually supportive environment. Again, corporate-level strategy has three components, which are:
- Directional or growth strategy
- Portfolio strategy
- Parenting strategy
- Business-Level Strategy or Competitive Strategy – Determines how an organization competes with other Strategic Business Units (SBU) or LOB.
- Functional Strategy – These are localized strategies that determine how the individual functional blocks and areas operate efficiently and productively. (Habib, 2003, 603)
Strategy development begins when we clearly understand what we want to do, say with our business, and where we finally want to go, in other words, what our vision is. Strategy development is therefore a distinctive process that is carried out due to certain distinct and purposeful sets of actions and processes. The process of strategy development normally consists of 3 phases along with a number of dependent techniques and methods. They are:
- Recognition – This is the first phase and is basically the analytical or logical phase of the whole process of strategy development.
- Choice – The second phase determines which strategy we should follow.
- Alignment – The third phase helps to match organizational structure, processes, and culture with the intended strategy.
Strategy development is actually an emergent property that takes shape over time. Since strategy is a complex phenomenon, strategy development occurs by slowly identifying the basic properties of the complex situation. Most of the time, the process of strategy development is actually determined by various decision-making requirements. Effective strategy development is usually carried out by a proper evaluation of SWOT Analysis. (Ramírez, 2005, 50)
Issues involved in Sustaining a Strategy
Defining a strategy is one of the most fundamental and significant components of any business venture. Proper implementation of a sustainable strategy is often the difference between a flourishing and a downfallen business. However, implementing a strategy adequately can be easier said than done. There are various issues involved when it actually comes to sustaining a strategy on the ground.
Employees frequently face the enduring test of meeting the performance expectations of the firm. Dealing with these expectations typically takes the shape of strategic choices and actions. For a strategy to be sustained, the employees must be capable of adjusting various circumstances as required. If a business wants to succeed, it has to rely on the skill set of its employees across the organization.
It is also important for them to recognize the strategic purpose and then both execute the existing strategy and become accustomed to it in a synchronized manner. It is not only important to craft out an extraordinary strategy at an instant but also imperative to get employees who are competent enough working on it and motivate them to implement the strategy and tailor it as per required conditions demand. This necessitates the management to concentrate on the route used to build up the strategy – ‘the human dimension’, as well as the core of the strategy – ‘the analytical dimension’. (Nayyar, 2002, 571)
Sustaining a strategy depends heavily on the firm’s understanding of its customers. This is one of the most important determining factors in a sustainable strategy. It is important to get into the psyche of the client in order to provide improved quality of service which in turn translates into increased business profitability. Understanding what are the needs of the customer and the reason for purchasing the product or services is necessary. Contemplating the actual need of the product or service is an issue which marketing experts need to focus on. Failure of proper marketing research can result in faulty strategies which have an immense down sliding effect on the business.
Predicting and envisaging the business environment is another key issue in developing a sustainable strategy. The firm must foresee the impacts of its strategic implementations in terms of brand fights and price wars. It should also analyze probable government responses. Other issues involved in sustaining a strategy are ensuring proper internal and external communications, adequate analysis of resource competence, good coordination, and level of management and employee commitment to goals, and objectives, and ability to adapt to change. (Crittenden, 2000, 208)
Sustaining a strategy is an intricate process and requires a great deal of flexibility. Enforcing a strategy stringently can be detrimental to the overall business as it may curb the knack of innovation and creativity. Thus achieving a balance is important for the business to flourish.
Bibliography
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