Garlinghouse pointed out a mass of overlapping services. He believes the company requires to focus the vision, restore accountability and sell non-core businesses and cut 15 percent to 20 percent of yahoo`s worker and remaining will be a company where general managers are delegated authority to actually run the business units.
‘Mission’ means the long-term objectives of the organisation as related to the strategic leader’s vision of the nature and scope of the businesses that he feels would be appropriate and desirable (Thompson, 1993, p. 45). It explains the wide purpose of what the organisation is and how it will step forward. Organisations that successfully and constantly encourage a common mission know their definite objectives and are clear about their challenges ahead.
‘Strategy is the direction and scope of an organisation over the long term: which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.’ (Johnson and Scholes, 2005:9).
Strategy is to be expected for the long-term direction of an organisation. Yahoo would need a long time for a strategic change and he have to define where he is and where he wants to be that requires a long term decision.
Strategic decisions are also associated with where an organization should focus. For example an organisation can focus on one area, or can it have too many areas? The issue of focusing on activities is basic to strategy because it concerns the way in which those accountable for controlling the organisation visualize the organisation’s limits. This possibly will comprise central decisions about product variety or geographical coverage. Yahoo`s is not concentrated on area of activity it has too many areas where he is not concentrating effectively.
Strategic decisions are also defines the how to get advantage for the Organisation to survive in competitions. For example, Yahoo was left behind because of competition and growth of Google. Yahoo has to add some value in his services to get advantage from his competitors.
The strategic fit along the business environment this may perhaps require major resource changes for an organisation in the future. Suppose, decisions to expand geographically might have important implications in requisites of the need to construct and support a new customer base. It helps to get the correct positioning for the organisation, for example in terms of the degree to which products or services meet clearly identified market needs. This may acquire the structure of a small business trying to discover a specific niche in a market, or a big multinational corporation searching to procure up businesses that have already establish successful market. In case of yahoo, Yahoo wants to conquer various markets instead of one particular market.
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On the other hand, making opportunities through establishing an organisation’s resources and competences is also a strategic decision. This is known as the resource-based view of strategy, which is associated with utilization of the strategic capability of organisation, through the resources & competences, to provide competitive advantage and making new opportunities. For example, a large MNC may emphasise on its strategies on the business with strong brand. A small business, on the other hand, focuses on market to suit its capabilities. Yahoo in this domain considers brand more likely as internet.
Along with environmental forces and strategic capability, the values and expectations of those who have influence in the organisation (the stakeholders of the organisation.) in yahoo the senior Managers have pursued growth in many ways. The stakeholders have their impact on strategy from internet user to top management respectively.
(B) To what extent do they differ from strategic issues facing your own organisation?
There is no one ideal strategic planning model for each organization. Each organization ends up budding its own nature and model of strategic planning, often by selecting a model and modifying it as they go along in developing their own planning process.
I have business of footwear and it is not a big multination Company but still it has a clear and concise vision mission of being market leader with in next five years. Now I will compare my business with Yahoo on the basis of following Strategic Issues.
Scope of organization`s activities My area of activity is high quality footwear for on segment i.e. men footwear I just focused on it rather producing all kind of footwear. Yahoo on the other hand going for too many activities and that is why he cannot concentrate on each activity.
Advantage over competition Yahoo is losing its advantage because of stiff competition given by Google yahoo have to give a quick response to it while on the other hand I have also been given tough competition by Bata along with other footwear companies but I am constantly scanning environment to exploit opportunity for having advantage and trying to convert threat into opportunity along with that I am constantly adding value to my product.
Strategic fit with environment Since I am concentrating on a single product and I am satisfying local market needs with I have only one segment and that is why I have good sound knowledge about my target market demands. But yahoo wants to expand the business in too many areas while yahoo cannot concentrate comprehensively on too many markets
Organization’s resource and competence according to Brad Garlinghouse ‘Yahoo claims brand synonymous with internet’ yahoo has a well recognised brand as well as yahoo has state of art media awesome assets largest audience but still yahoo have to come forward with a solid strategy to bridge the gap where they are and where they want to be. On the other hand I have specialized workforce from cutting leather to stitching and then a complete product that is why my product is highly value added.
Values and expectation the power group may affect the organizations boundaries of activities the organization have to consider these power group i.e. individual or group of individuals direct to expand, hold or divest business yahoo’s senior managers in this case wants to expand his business but they don’t hold responsible themselves to take responsibilities. While I am taking responsibilities for all the decision and also delegating authorities to lower level to contribute for best output.
C) Critically examine how strategic issues differ between profit making and a non-profit oriented organisation?
Over the past several years or so, there has been the major improvement and alteration of many issues in the non-profit organisations. Activities that take place anywhere in the world have major influence to the national sectors either directly or indirectly. Change, though shocking for some quarters, is essential. In most non-profit organisations, the change even if it is small then it is normally seen unfavourably by the civil servants who for long time are comfortable’ in their positions. Though, a review of traditional modes of management justifies the idea of transformation organisation. This certainly demands a whole range of tasks. As noted by Worcester (1991, p. 55), among these tasks are: Introducing completely new products or services, managing a foremost reorganisation, effecting acquisitions and mergers, Entering a new market, radically improving internal efficiency and profitability.
as strategic management is still believed a new introduction in the non-profit organisations, its implementation is an issue. For example, in the area of strategic financial management, decentralised budgetary approaches, the concept let the managers manage’ has created a stress or conflict of interest between non-profit managers and politicians (Pollitt, 1995, pp. 203-34). Rationalisation’ also carry out a further criticism. Ten years of working experience does not mean one will become skilled at something new as one may keep on doing the same schedule every day. As argued by Peters, basic values such as accountability and responsibility are overlooked (Peters,1995, p. 314; see also an interesting discussion on the concept of rational action by Waldo in Shafritz and Hyde, 1987, pp. 232-4). Others think that the establishment of internal markets within the public sector comprises a rejection of the administrative state (Lane, 1995, p. 198). Many intangible values such as the trade-off between efficiency or productivity versus due process and legality (Lane,1995, p. 175) cannot be quantified (or is unwise to be quantified).
‘ Strategic Management
Strategic management may subsist as another typical management tool that has emerged over time. However, one major difference of strategic management compared to previous tools is that it is unlikely to be eradicated from the management dictionary. As the techniques can be modified, non-profit organization managers may find them possessing a relevancy for the management enterprise. Non-profit organization managers need to be fully aware of the implications of applying strategy methods, particularly in a plural society, where the inclination towards communication burdened and tension relationships prevail. This is especially true when common division come into view not only on specific issues regarding the economic, social, and cultural benefits and costs of participating in the polity but in many sides of the society. Different frameworks of development projects and programmes in different settings demand distinct styles of strategic management. Nevertheless, what has changed is the prominence. In the new approach, strategy is seen more as something to be negotiated, not engineered. The accent is, therefore, on finding common agreement in game plans (Goldsmith, 1997, p. 31). Strategic management is a better option for transforming government-owned venture and programmes into additional successfully managed projects and for even-handed market-oriented systems. Though, it is neither a universal solution for all governments’ weaknesses nor a satisfactory tool to make certain its efficiency and nongovernmental organisation.
‘ Strategy requires redefinition of overall Mission, Goals and Operational
Non-profit organization managers may feel cynical of their confidences in working inside a intimidating environment. This is because they have to equilibrium the competing interests of different parties. It is most likely that strategy can be most effectively exercised starting at the top executive level of the organisation. The vision should be well communicated across each and every level of the organisation. Assurance to total quality products and services needs a very special kind of organisational culture. It is a general believe by many strategic writers that managers have to enjoy entirely diverse skill to move the organisation from a controlled mechanism entity to one where it becomes a matter of personal confront, self-regulation and pride. Research shows that Japanese managers think differently as compared to their Western counterparts. Japanese are typically vigorous, analytical and quantitative (see Raimond, p. 209-10). therefore, the need to develop a new form of mission, goals, and operational objectives has opened up the possibility and opportunity for strategic submission for many Japanese companies.
‘ Strategic Management is in the Process, Not in Outcome
Non-profit organization leaders’ visions for their organisations must turn out to be both practically useful and morally compelling. In this instance, the establishment of a new work ethic is deemed essential. A study in the UK, New Zealand, Sweden and Finland proved that despite evidence of continued tightening and refinement of performance indicators, the swing to a more output-oriented culture was slow (Pollitt and Summa, 1997, p. 11). This specifies that the role of the government at the macro level is not adequate. As noted earlier, strategic management is largely effective when it is part of a broader programme of socio-economic reforms and organisational development where the strategists worked as the key players. Effective strategic management as noted by Porter, thus, requires the formation of a strategic management group to provide leadership for the process whom made up by chief executives, top-line managers and key executive members (Porter, 1996, p. 316).
‘ Careful Efforts to start and Capitalise Non-profit Value
Moore argues that the non-profit organization managers’ most important ethical responsibility is to undertake the search for non-profit value conscientiously (Moore, 1995). Here, the manager has to seize equilibrium between political reply and his effective tests or resources of efficiency. As a consequence, transform of their views should be completed as a product of this connection.
As mentioned by Porter, strategy requires constant discipline and clear communication. In this regard, vision directs the subordinates and is communicated straight to the non-profit largely. The dependability between functional units and the for the most part strategy will make certain that the non-profit values are optimised. The new idea would make a new form of non-profit value.
‘ Strategy forms the scope of Non-profit Managers
The facts and methods of good managerial actions can be of no substitute for good character and experience. However with luck, they might help to enhance the limits of one’s character and experience (Moore, 1995, p. 309). simply, strategy cannot be observed as an finish in itself. Public managers should take a more hands-on stance in improving themselves and their managerial abilities.
Above all, even in spite of the fact that strategic management could be useful inside a positive functional area or within a group (which may consist of a small quantity of persons), it is most probable to face the risk of failure without a considerate, forceful and committed approach from the non-profit organization manager. Governments, on the other side, are expected to keep hold of their responsibility to uphold the development project from too much political meddling, watch the overall procedure of the project or programme and formulate sure that the project is significance to its intended beneficiaries. Therefore, the role of a central government through suitable ministries, eventually, comes before, during and after the projects or programmes are held and completed. The coming out of strategy into the dictionary of non-profit organisations returns both the increasing complexity and adaptability of the organisation in reacting to the demand of an unstable environment. Strategic management, without uncertainty, can become a vibrant yet challenging instrument to balance the efforts towards new non-profit management, mainly in the region of managing non-profit segment development projects and programmes. in spite of many obstructions or restraining issues that parallel along with the way, strategy without uncertainty could enhance the professionalization of management in the government sponsored bodies.
In the concluding analysis it is the leadership approaches and behaviour that resolve the achievement of the re-engineering procedure through the use of strategic management tools. Strategic management ideas whether taken from abroad or self-made can only be good if the significant leadership issue is present to begin and guide changes towards enhanced results.
‘We are reactive instead of charting an unwavering course’tactics’ says the author.
(d) Critically analyse the accuracy of the statement that formal planning systems are irrelevant for firms.
The Formal Planning Process
Formal strategic planning calls for an explicit process for determining the firm’s long-range objectives, procedures for generating and evaluating alternative strategies, and a system for monitoring the results of the plan when implemented. During each of these steps, it is important that a systematic procedure be used to gain commitment of those who will be affected by the plan. These steps are summarized are discussed below
The making of objectives (goals) has long been observed as a major feature of formal planning. The objectives should be written concise and clear. They should start with the decisive objectives for the organization, and then should be translated into precise assessable objectives. In adding, the objectives should be challenging. Extensive evidence exists on the value of setting objectives.
Formal planning calls for the generation of alternative strategies. These strategies should be written in enough detail to permit for an open assessment (the next step). A fact from studies in organizational behaviour suggests that the generation of the strategies should be completed prior to any evaluation begins.
Two course of action are typically recommended for the growth of strategies. First, an effort should be ended to offer comprehensive strategies; that is, the plan should regard as all important factors. The second guideline is that the plan holds slack resources; that is, extra time, money, and facilities should be held in reserve. This recognizes uncertainty and adds elasticity to the plan.
Substitute strategies can improve the compliance of the organization in two ways. First, by explicitly examining substitutes, it is likely that the organization will discover substitutes that are superior to the current method. Second, the organization may encounter environmental changes; if substitute (contingency) plans have been prepared for these changes, the organization can respond in a systematic way.
Evaluate Alternative/substitute Strategies
Formal planning calls for a systematic process for weighing up the various alternatives. First the substitutes must be screened to make certain that they do not breach any restriction. The feasible strategies should then be compared against each of the listed objectives. A range of actions can be used here, such as checklists, the Delphi technique (with internal experts), or the ‘devil’s advocate’ (where one person is given the task to confront a proposed strategy). Conventional meetings, as usually used in informal planning, are hardly ever adequate.
Search for Commitment
It is not enough to build up plans. Plans are often mistreated. Other period they are used to rationalize a course of action previously decided. Formal planning calls for an open procedure for gaining assurance to the plan. This involves, for example, a want for meetings; Al-Bazzaz and Grinyer (1980) establish that the supposed contribution of planning was higher when the firms had extra meetings. Most probably, the need for meetings carries through all phases of planning.
Conditions Favouring the Use of Formal Strategic Planning
In which condition could formal strategic planning be seemed to be mainly helpful? Slight study has been finished in this part. Based on a study of the organizational behaviour literature, it is proposed four kinds of the circumstances to be significant: inefficient markets, large changes, high uncertainty, and high complexity of the duty. The hypotheses are that each of these issues boosts the need for formal planning.
Under what circumstances is formal planning most helpful for strategic decision making?
If an objective is apparent, little want stay alive for a formal objective setting process. A well-organized market makes the objectives more clear. Little proof has been seen to propose that an organization can make enhanced decisions than a relatively competent market. An organization in a well-organized market can respond to convene the demands of its employee, financial and consumer stakeholders.
As inefficiencies are initiated, formal planning may turn into more helpful. An inefficient market provides little in rank on the proper pricing strategy. It also lifts up serious questions on how to assign rewards among a range of stakeholders. Formal planning can inspect the pricing issue in a systematic way. It can address the portion of rewards in a clear and open way. Thus, planning might be more suitable for regulated industries and non-profit organizations. Some people quarrel just the opposite. Formal planning is most practical for profit-oriented firms because those with deprived planning might not survive. The dissimilarity in these two views arises from the truth that the first puts more stress on an study of the total system. Controlled industries and non-profit organizations can live
Indefinitely when they use assets inefficiently. Profit-oriented firms get smaller amount opportunities to exploitation resources because a more competent organization could take over.
Changes can happen from the outside (the environment) or from the inside (a change in the organization’s assets). Generally organizations are planned to deal with small outside changes and they normally oppose inside changes. But for big changes, the standard organizational answer becomes less appropriate. As a result, It is imagine that formal planning is more significant where changes are large. Some evidence exists that formal planning is more applicable where change is huge. Lindsay and Rue (1980) offered survey results in which firms in further composite and earlier changing environments said they were more to be expected to use formal planning, but their study did not inspect whether such a process led to improved act. Facts that formal planning is most suitable when change is huge was provided by Thune and House (1970); they suggested that planning was more helpful -in markets characterized by a high rate of technological improvement and new product introductions.
If it is clear what will happen and when, the want for planning seems tiny. As uncertainties raises, the organization can advantage by planning to encounter with these uncertainties. (Hypothetically, with total uncertainty, planning would be of small value.) The hypothesis is that over the realistic array for uncertainty, higher uncertainty would need more planning. It is seen bit earlier proof on this subject, and it is not hard to find arguments against this hypothesis.
More complex jobs create a superior need for a plan to make sure that the various bits and pieces in shape together. Therefore, it is hypothesize that firms engaged with complex production, financial and marketing procedures would have a larger need for planning. It is found no empirical proof on this matter. It would come out to be one of the least contentious of the four hypotheses.
Interaction among Hypotheses
Given the uncertainty about the various hypotheses, it seems reasonable initially to treat each of the hypotheses independently. Planning is hypothesized to be relevant in cases where all four of the preceding conditions hold. When one or more of these conditions does not apply, planning. would be expected to be. Less valuable (or perhaps even be etrimental) to the performance of the organization:
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An example of an organization where all four of the conditions apply would be a company building atomic reactors in the U.S.A. It has a complex task, large changes are involved, uncertainty is high, and the market is inefficient. At the other extreme would be a typical middle-price restaurant operating in a stable neighbourhood in New York City and contemplating no major changes. Formal strategic planning- should be useful for the former but not the latter.
Some strategic decisions will create the above conditions. For example, mergers or new .product introductions can involve large changes. If the new product involves a patented technological breakthrough, it can also lead to an inefficient market (monopoly power) and high complexity. Formal planning is expected to be useful in these situations.
Keep in mind that these hypotheses on the relationship of the situation to planning are not drawn from
significant prior research: Furthermore, there may be other, more important, characteristics of the situation that have been overlooked by me and by the convenience sample.
Results of Formal Planning
One of the expected benefits of formal planning is that it will avoid sub-optimization. It should lead to greater success in light of all of the organization’s objectives. Thus, an examination should be made of the impact of planning upon each of the stakeholders. The previous discussion on monitoring provided the necessary conditions for the evaluation of planning from the viewpoint of the complete system
(e) Analyse your own organisation’s approach to its strategic planning process.
The Strategic Planning Process
In the 1970’s, a lot of large firms employed a formalized top-down strategic planning form. Though my organization is not a big organization but strategic planning will be a bit same here. Under this form, strategic planning seen a intentional process in which top executives frequently would prepare the firm’s strategy, then flow it down the organization for implementation. The following is a flow chart model of this procedure:
The Strategic Planning procedure
This procedure is largely valid to strategic management at the business unit level of the organization. For big corporations, strategy at the corporate level is more connected with managing a portfolio of businesses. For example, corporate level strategy includes decisions about which business units to raise, assets allocation among the business units, taking benefit of synergies among the business units, and mergers and acquisitions. In the process outlined here, “company” or “firm” will be used to signify a single-business firm or a sole business unit of a diversified firm.
A company’s mission is its grounds for being. The mission frequently is expressed in the form of a mission statement, which expresses a sense of reason to employees and projects a company image to customers. In the strategy formulation procedure, the mission statement sets the frame of mind of where the company should go.
Objectives are real goals that the organization hunts for to reach, for example, an earnings development target. The objectives should be demanding but achievable. They also should be assessable so that the company can monitor its development and make improvement as needed.
Once the firm has specified its objectives, it begins with its existing state to invent a strategic plan to arrive at those objectives. Changes in the external environment frequently present new opportunities and new ways to get to the objectives. An environmental search is performed to spot the on hand opportunities. The firm also must know its own capabilities and boundaries in order to select the opportunities that it could able to follow with a superior probability of success. The situation study therefore engages an analysis of both the external and internal environment. The external environment has two faces: the macro-environment that influences all firms and a micro-environment that influences only the firms in a specific industry. The macro-environmental investigation includes political, economic, social, and technological factors and sometimes is known as a PEST analysis.
A significant feature of the micro-environmental study is the industry where the firm operates or is considering operating. Michael Porter developed a five forces framework that is helpful for industry analysis. Porter’s 5 forces include barriers to entry, customers, suppliers, substitute products, and rivalry among competing firms.
The internal analysis takes the state within the firm itself, such as:
Access to the natural resources
Place on the experience curve
Patent and trade-secret
A situation analysis can produce a large amount of data, much of which is not particularly concerned to strategy making. To make the information further handy, it sometimes is useful to fix the internal factors of the firm as strengths and weaknesses, and the external environmental factors as opportunities and threats. Such an analysis often is known as SWOT analysis.
Once I viewed my firm clearly and its environment is in my hand, specific strategic alternatives can be made. While different firms have different substitutes depending on their situation, there also continue living generic strategies that can be applied across a wide range of firms. Michael Porter considers cost leadership, differentiation, and focus as three generic strategies that may be taken into account when elaborating strategic substitutes. Porter advised in opposition to implementing a mixture of these strategies for a given product; rather, he suggested that only one of the generic strategy substitutes should be pursued.
The strategy likely will be articulated in high-level theoretical terms and preferences. For efficient implementation, it needs to be taken as more detailed policies that can be understood at the functional level of the organization. The appearance of the strategy in terms of functional policies also performs as to highlight any practical issues that may not have been able to be finding at a higher level. The strategy should be interpreted into precise policies for functional area as:
? Research& development
? Human Resources
? Information System
In adding to developing functional policies, the implementation stage occupies recognizing the needed resources and set into area the necessary organizational transforms.
Once executed, the results of the strategy have to to be computed and evaluated, with changes ended as needed to keep the plan on track. Control systems should be expanded and implemented to facilitate this monitoring. Standards of performance are put, the actual performance measured, and proper action taken to make success certain.
Dynamic and Continuous Process
The strategic management process is either dynamic or continuous. A modification in one component can lead to a change in the entire strategy. As such, the method must be repeated often in order to adapt the strategy to environmental changes. All through the process the firm may require to succession back to a former stage and make tunings.
(f) Discuss ways in which the planning process could be improved?
The disadvantage in planning process.
The strategic planning process discussed above is only approach to strategic management. It is best fit for stable environment. A pitfall of this top-down approach is that it may not be receptive enough for swiftly changing competitive environment. In era of change, some of the extra successful strategies come out informally via lower levels of the or
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