Strategy, Strategic Planning and How Business ...

Assignment part 1

Strategy, Strategic Planning and How Business Functions Interrelate Words count: 1622

Amine Belmejoub – May 2016

Table of Content I.

Introduction

II.

What is strategy 2.1 Strategy and Strategic Management a. Strategy b. Strategic Management 2.2 How strategy develops 2.3 Strategic Planning a. Definition and Scope b. Framework for the developing of a strategic plan c. Implementation and Control

III.

Business functions of an organisation 3.1 Human Resources Management 3.2 Marketing 3.3 Operational Management 3.4 Financial management

IV.

Inter-relationship between the four The business functions

V.

Conclusion

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List of Figures Figure 1: Strategy as a process Figure 2: Strategy development Figure 3: Framework for developing a strategic Plan Figure 4: Main elements of implementation process Figure 5: Outcomes of the process of monitoring and control Figure 6: The interrelationship between business functions

List of tables Table 1: Five types of strategy Table 2: Marketing and the relationships with other functions Table 3: Interdependence matrix for different business functions

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I. INTRODUCTION Organisation might be concerned with growth, competitive rivalry, cost control, shareholder value and risk mitigation. The business strategy tends to manage the organisation resources and competences in order to match the aims of the organisation and the threats and opportunities in the environment. (Jeffs, 2008: p12). The organisation success depends substantially on decision made by its leaders, Strategies represents the agendas that guides and focuses these decisions in view to realise and build an idiosyncratic and sustainable competitive advantage over the organisation’s competitors. However, many organisations have implicit strategies that are often organic that evolves over time, rather than a culmination of processes of overt thought and planning. Although this may be true, empirical studies have shown that implicit strategies lack focus and often end in making unpredictable conclusions and soon become obsolete. Organisations that are missing clear strategies (perspective or emergent), are compelled by the pressure of current operational imperative rather than by planned future visions.

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II. What is strategy 2.1 Strategy and Strategic Management a. Strategy The definition of strategy may appear axiomatic; referring to a plan to achieve a long-term or an overall aim, however, when it is thought from a competitive perspective, several definitions come into sight. Lynch (2012:830) contended that a strategy begins with identification of the purpose of the organisation and the plans and actions to achieve that purpose. In the same fashion, Pearse & Robinson (2011: 3-4) argued that strategy in essence reflects a company’s awareness of how, when and where it should compete. Comparatively, McKeown (2012) reported that strategy is about shaping the future, and is the human attempt to get to desirable ends with available means. By contrast Mintzberg (1998) concluded that strategy process is more fluid and unpredictable that people had thought. Consequently, Mintzberg did not confine strategy to one process, but rather concluded that are five types of strategy:

Table 1: Adapted from Mintzberg 1998. Five types of strategy

b.

Strategic Management

Strategic Management is quintessential to all organisations as it provides the tools and frameworks to analyse the internal and external environment and it is part and parcel of the strategic decision making. It is regarded as the process of identifying, evaluating and implementing strategies in order to meet the organisational goals (Jeffs, 2008: p13). This would involve a need analysis, the process of evaluating the problems and solutions emphasising a normative expectation based on: Goal setting - identifying what ought to be, Performance measurement – determining what is, and discrepancy identification – ordering differences between what ought to be and what is (McKillip,1987). On the other hand, Lynch (2012: 7-8) described strategic management as the process of finding market opportunities, experimenting and developing competitive advantage overtime. This lead to understand that strategy requires different processes and is continuous. Broadly, strategic management requires three processes.

Figure 1: Adapted from Lynch. Strategy as a process 2012 :15

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2.2 How Strategy Develops In the light to develop an effective strategy accompanied with a successful implementation, decision makers are ought to consider both content and context. i.e. the strategy referring to the period of 2008-09 is improbable to be the same as the period prior to the economic declivity.

Figure 2: Adapted from Lynch. Strategy development 2012: 17-19

2.3 Strategic Planning a. Definition and Scope Planning is a sine qua non aspect of the strategic management and thinking. It is an orderly process for deciding on key decisions and approving actions that will serve as a guide and perceptibly define what an organisation is, what it does and why it does it. Strategy includes processes of formulation and implementation; strategic planning helps coordinate both. Markedly, strategic planning is analytical in nature as it involves synthesis i.e., connecting the dots (Mintzberg, 1996). Strategic planning can be conducted in a myriad of ways. A particular organisation operating for years in a particular environment in a given circumstance can set its specific priorities given income base to formulate a full four or five years’ strategic plan to monitor its works. Newer and lesser financially potent organisation may find that short strategies may be more useful to help in getting there, or an ordinary work plan may be more realistic.

b. Framework for developing a strategic plan An example of the structure of a strategic plan is represented in the following illustration

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Figure 3. Adapted from Lynch. Framework for developing a strategic Plan

c. Implementation and Control The implementation purpose is a translation of the strategy into achievable organisational actions that will effectuate the goals and objectives of the organisation. It is also the amalgamation process that combines the structure of the organisation, its culture and control system to form a strategy that results to a competitive advantage. The following figure shows the necessary elements for implementation process;

Figure 4: Main elements of implementation process. Adapted from Lynch 2012: 494.

Sequentially, the outcome from the monitoring and control process is then used to;

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Figure 5: Outcomes of the process of monitoring and control. Adapted from Lynch, 2012: 512

III. Business functions of an organisation 3.1

Human Resources Management

In its basic form of understanding, human resources management developed the concept of labour as a human resource. Boxal, Purcell and Wright (2007) distinguished among three major subfields of HRM: Micro HRM which covers the subfunctions of HR policy and practices and consists on managing individual and small groups (e.g., recruitment, selection, induction, training and development, performance management, remuneration, managing work organisation and employee voice system). The Strategic HRM which covers the overall HR strategies adopted by business units and companies. And international human resources management which covers companies operating across national boundaries. In fact, HRM represents all the management decisions affecting the relationship between organisations and employees – its human (Beer et al, 1984). Although this may be true, Guest (1991) defines HRM in terms of four key policy goals: high commitment, High quality, flexibility and strategic integration. On the other hand, Ulrich (1996) listed the functions of HR which are staffing, training and development, motivation and maintenance and the necessity to align those functions with the business strategy, re-engineering organisation processes, listening and responding to employees, and managing transformation and change.

3.2

Marketing

Marketing like HR is a function that corresponds to a specific business activity and fulfils a fundamental business purpose. McDonalds (2007), describes marketing as a process of defining markets in terms of needs, quantifying the needs of the customer group (segments) within these markets, putting together the value proposition to meet these needs and communicating these values propositions to all those people in the organisation responsible for delivering them, playing an appropriate part in delivering these value propositions (usually only communications), Monitoring the value actually delivered, and finally for this process to be effective, organisations need to be consumers/customer-driven. Unassailably, marketing works mutually with other functions at its boundaries to make and execute shared decisions, as such it must answer questions like:

Table 2. Marketing and the relationships with other functions

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3.3

Operational Management

The domain of operational management is primarily concerned with the responsibility of ensuring the efficiency of business operations in terms of using scanty resources as needed, mingled with effectiveness in terms of meeting customer requirements. Forrester (1958) stated that company success depends on the interactions between the flows of information, materials, money, manpower, and capital equipment. The ways these five flow systems interlock to amplify one another and to cause change and fluctuation will form the basis for anticipating the effect of decisions, policies, organisational forms, and investment choices. In a strategic context, operational management seeks a synchronization and convergence of intra-firm and interfirm operational and strategic capabilities into a unified, compelling marketplace force (Ross 1998). Thus, SOM suggest that the boundaries should not include only logistics but also all other functions within a firm and within a supply chain to create customer value and satisfaction. Accordingly, this lead to infer that operations function is as important as HR and marketing. Thriving firms nowadays assert that in order to compete effectively in the global market they must have an operation strategy to support the mission of the firm and its overall strategy.

3.4

Finance

Finance is the lifeblood of the business organisation, it is one of the interrelated functions which deal with personal function, marketing function, production function and research and development activities of the business concern. The business goal can be achieved only with the help of effective management of finance (Paramasivan & Cuppiraman ̣iyan, 2009). Financial management refers to actions that managers undertake to increase the value of the firm to the shareholders as well as the tools and analysis used to allocate financial resources. Prominently, finance deals with investment, involving the dynamics of assets and liabilities over a given time under circumstances of diverse degrees of uncertainty and risk. S.C. Kuchal (1969) defined financial management as the business function that deals with procurement of funds and their effective utilisation in the business. Strategic financial management defacto implies decision making, however, Kepner (1997) claimed that problem analysis must be done first so that the information gathered in that process may be used towards decision-making. In the case of financial decision, a data-driven analysis using several techniques should be used, followed by a rational choice leading to the best situation for the organisation.

IV. The interrelationship between the four business functions Assuming that the marketing department has suggested a new strategy that will help the business achieve a goal of increasing sales and profits. This new strategy will have the most effect on the area of operation. This is because operations include all the activities related to the realisation and distribution of a product or service. Employment relations will also be affected, as the new strategy may need extra workers with specific skill, training and experience. Marketing would need to design the new products or services according to consumer needs. Finally, the finance function would be required to allocate the finance needed to develop the new product or service.

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Figure 6: The interrelationships between business functions

Figure 5. Interdependence matrix for different business functions

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V. Conclusion Success hinges on innovation and transformation, organisations cannot simply operate solely to continue existing, they need to simultaneously develop as the world develops around them. As such, the strategic process by which this is achieved will inevitably involve uncertainty (Lynch 2012: 428-429). However, strategic planning helps adjust and modify the direction of the organisation in response to the internal and external environmental uncertainties, and permits to identify preliminary issues to tackle uncertainties appropriately. Prominently, strategic planning aims to set targets, goals and clear action to achieve them within the specified period of time in light of the possible human and financial resources.

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Reference list Boxall, P., Purcell, J., & Wright, P. M. (2007). Human resource management: Scope, analysis and significance. In P. Boxall, J. Purcell, & P.M. Wright (Eds). The handbook of human resource management (pp. 1-16). Oxford University Press. Jeffs, C. (2008). Strategic management. Los Angeles: SAGE. Lynch, R. (2012). Strategic Management, six ted., Cap Town: Pearson Education Limited. Kepner, C.H. (1997). The New Rational Manager. Princeton, NJ: Princeton Research Press. Kvint, V. (2009). The Global Emerging Market: Strategic Management and Economics. Routeledge. Mckeown, M. (2012). The strategy book. Harlow, England: Pearson. Mintzberg, H., & Quinn, J. B. (1996). The strategy process: Concepts, contexts, cases. Upper Saddle River, NJ: Prentice Hall. McDonalds, M., Smith, B and Ward, K. (2006), Marketing Due Diligence: Reconnecting Strategy to Share Price, Butterworth-heinemann, Oxford. Forrester, Jay W. (1958), ʻʻIndustrial Dynamics: A Major Breakthrough for Decision Makers,ʼʼ Harvard Business Review, Vol. 38, July-August, pp. 37-66.

Ross, David Frederick (1998), Competing Through Supply Chain Management, New York, NY: Chapman & Hall. Paramasivan, C., & Cuppiraman ̣iyan, T. (2009). Financial management. New Delhi: New Age International (P). Kuchhal, S. C. (1969). Financial management; an analytical and conceptual approach. Allahabad: Chaitanya Pub. House. Kepner, C. H., & Tregoe, B. B. (1997). The new rational manager: An updated edition for a new world. Princeton, NJ: Princeton research Press

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