Organizational strategy is an important aspect of business success. It uses the missions and goals of the organization to develop plans. The plans include policies, projects, and resources to meet the goals. Organizational strategy allows managers to create, develop, and evaluate their decisions.
Basics of Organizational Strategy
Organizational strategy is a plan to meet the goals of the company and team. The strategy will include specific methods managers will take to meet the goals. Before these goals are determined, the business must be carefully examined. A SWOT analysis is good place to start.
SWOT = Strengths, Weaknesses, Opportunities, and Threats:
- Strengths: These are internal characteristics that create a competitive advantage.
- Weaknesses: Internal weaknesses that need to be improved such as turnover, sales, or operations are defined in this category.
- Opportunities: Opportunities are external, and require managers to take advantage of them. They involve market trends and a strong economy.
- Threats: External threats that companies cannot control and need to prepare for include a poor economy and changing demographics.
Sustainable Competitive Advantage
A sustainable competitive advantage is any advantage that an organization has, and that their competitors are not able to reproduce or duplicate easily. For example, a well-known copyright brand is a sustainable competitive advantage because other organizations cannot copy the protected branding. This should become apparent after the SWOT analysis. It will be in the list of strengths. There are different ways that organizations can create and sustain competitive advantages.
- Customer service: Customer service can distinguish an organization.
- Products or services: Fine-tuning products or services will create an advantage.
- Reputation: The good reputation of a company will define it from other organizations.
- Brand: Branding is a simple way for organizations to differentiate themselves from the competition.
- Management and employee loyalty: Effective management and company culture makes a difference in how well the organization functions.
The strategy-making process is aligned with organizational strategy.
Organizational strategies allow managers to guide the direction of teams. It is important to build organizational strategies with the support of team members.
- 1: The first step to an organizational strategy is to develop goals based on the mission and vision statements. The goals need to be SMART. (SMART = Specific, Measurable, Achievable, Realistic, and Timely)
- 2: Once goals are created, it is time to collect information to guide the plan.
- 3: Use the information to create a strategic plan. This will include product changes, deliverables, policies, budgets, and employee expectations.
- 4: Evaluate the effectiveness of the plan.
Corporate, Industry, Firm Level Strategies
Organizational strategies are unique to different levels of business. There are corporate level strategies, industry level strategies, and firm level strategies.
This is done at the top level of the company and looks at the organization as a whole. Corporate strategy covers everything from products and production to resource allocation and market competition. This type of strategy determines what the business will be. There are two corporate strategies: Portfolio and Grand. Portfolio strategy focuses on acquisitions and diversification. Grand strategy focuses on growing, stabilizing, or recovering business, based on the needs assessed.
Industry strategy examines how to compete in the industry. The four forces that motivate industry strategies are: Threats, Rivals, Buyers, and Suppliers. The four forces need to be examined in order for the company to become adaptive. This includes choosing whether or not to differentiate or focus on a particular product.
This type of strategy deals directly with competition. There are two different firm strategies: Attack or Defend. The names are fairly self-explanatory. The defense strategy is used to defend the company’s position in marketing and retain customers. This is typically done in times of financial growth. Attacks occur in times of financial stress. Attacks are marketing attempts to take customers from competitors.