Organizational strategy is the creation, implementation and evaluation of decisions within an organisation that enables it to achieve its long-term objectives. Organizational strategy specifies the organisation’s mission, vision and objectives and develops policies and plans, often in terms of projects and programs, created to achieve the organisation’s objectives. It also allocates resources to implement them.
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Processes of Strategy
Organizational strategy is related to organizational studies, an academic field that analyses organisations and what makes them succeed or fail. It provides overall direction for the organisation. Formulating a strategy combines the following three main processes. The first process is performing an analysis of the organisation’s situation--internal and external, micro- and macro-environmental. This means asking both what is going on with its competitors and with each part of the organisation. The second process involves setting objectives--both short-term and long-term. This means creating vision and mission statements. The final process is developing a strategic plan that provides details about how to achieve the organisation’s objectives.
The Johnson, Scholes and Whittington model of corporate strategy contrasts an organisation’s strategic options with three criteria, or questions the organisation must ask itself. The first of these criteria include suitability: "Would it work?" What is the overall rationale of the strategy?" The organisation needs to ascertain if the strategy is economically possible and if the environment fits. It would not be suitable, for example, to establish a new restaurant in an area that already has too many.
The second criteria is feasibility: "Can it be made to work?" Feasibility asks if the resources (which include funding, staff, time, and information) needed to implement the strategy or if they can be developed. An organisation must ascertain if it has adequate cash flow or if the outcomes they desire can be forecast, a business term having to do with the process of making statements about events whose actual outcomes have not yet been observed.
The third criteria is acceptability: "Will the stakeholders work it?" An organisation needs to ascertain if the stakeholders (its shareholders, employees, and customers) will accept its strategy. This is done by analysing the stakeholders’ expectations of the organisation’s expected outcomes, which include return, risk, and reactions. Return is defined as the benefits that they expect to experience, and risk has to do with the strategy’s probability and consequences of failure. The stakeholders' reaction to the strategy is often the most difficult to anticipate.
It is certain that we live in an age of accelerating change. Alvin Toffler wrote in his 1970 book "Future Shock" that each succeeding generation has experienced sweeping social and technological norms more and more quickly. These changes cause a great deal of psychological stress, making the need for organizational strategy more important than ever. They also cause great conflict and opportunity in the business world, something that organisations can utilise to their benefit if they have an organizational strategy in place.
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