Organisations that wish to gain a competitive advantage in terms of changing their operational environment must apply effective strategies to remain relevant and/or break even. The objective of any company is to deliver value to its owners. This value is normally expressed in terms of returns on investments. Business management executives require skills in decision-making processes to arrive at strategic decisions that enhance the performance of their organisations.
According to Grant (2013), arriving at the most effective decisions implies that the concerned parties will ignore other possible decisions, which they find inappropriate when conducting an evaluation of different business strategies. Evaluation of the repercussion of decisions that are left out in the development of the main strategy helps to eliminate cases of failure. This observation implies that success or failure for all organisations is a function of their ability to select appropriate strategies.
The term strategy is coined from the Greek word, strategia, which means command or ‘generalship’. It constitutes plans that are aimed at attaining specific goals and objectives while experiencing conditions of uncertainty (Menon 1999). From the paradigms of generalship, the term includes various subsets such as logistics, siegecraft, and tactics. In the 20th century, the term strategy denoted a detailed mechanism of attempting to pursue various political ends. Such mechanisms included the use of force, threats, coercion, and even engagement in military conflicts.
From a military context, strategies are important since resources to achieve the intended goals and objectives are limited in supply (Grant 2013). In a business setting, strategy entails a plan and/or methods that are selected to create a desired necessary change (Vladimir 2009). It also involves achieving certain solutions to specific problems. Freedman (2013, p. 11) defines it as ‘the art and science of planning and marshalling resources for their most effective and efficient use’.
In this extent, a strategy comprises methods for determining actions and/or mobilisation of the available resources to implement some resolutions. Thus, a strategy sets the foundation for achieving a well-calculated goal through the deployment of various means or resources. Strategies form a crucial tool for decision-making processes. On the other hand, decision-making is a fundamental concept in strategic processes that are adopted by organisations. Strategic processes are important since they help business people in terms of sharing the goal and destiny of their respective nations’ economic status.
Over the last five decades, scholarly research has recognised the importance of strategies in achieving organisational success. Strategies comprise decisions, which are ‘important in terms of the taken actions, the committed resources, or the set precedents’ (Eisenhardt & Zbaracki 1992, p.17).
This claim suggests that the best strategies encompass decisions or actions, which directly influence the organisation’s health and survival both in the short and long-term. The capacity of strategies to influence the survival of an organisation is reflected by JP Morgan, which is the financial institution, which marks the origin of the global financial crunch (Tett 2010). Credit derivative strategies that were meant to enhance the performance of financial institutions resulted in a negative impact on the health and survival of many financial institutions. They almost collapsed.
In conclusion, although strategies that were adopted by JP Morgan led to the emergence of the global financial crisis, the main objective of strategy developers entails enhancing positive organisational performance. Freedman (2013) supports this assertion by adding that strategies focus on shaping the future of organisations in the effort to achieve the desired positive ends using the available means. Hence, a strategy acts as a system for determining, formulating, and developing doctrines, which ensure short-term and long-term success when followed in a faithful manner.
References
Eisenhardt, K & Zbaracki, M 1992, ‘Strategic decision making’, Strategic Management Journal, vol. 13 no. 3, pp. 17-37.
Freedman, L 2013, Strategy: A History, Oxford University Press, Oxford.
Grant, R 2013, Contemporary Strategy Analysis Text Only, Wiley, New York, NY.
Menon, A 1999, ‘Antecedents and Consequences of Marketing Strategy Making,’ Journal of Marketing, vol. 63 no. 2, pp. 18-40.
Tett, G 2010, Fool’s Gold: The Inside Story of J.P. Morgan and How Wall St. Greed Corrupted Its Bold Dream and Created a Financial Catastrophe, Free Press, New York, NY.
Vladimir, K 2009, The Global Emerging Market; Strategic Management and Economics, Routledge, London.