“Managers are the craftsmen and strategy is their clay”. This is the theory of Henry Mintzberg. A craftsman is an artist who is able to create marvelous work. He usually makes use of his talent, past experience, innovation etc to create a new piece of work. In case of management a manager like the craftsmen, also analysis the market situation, environment, political issues etc before implementing a strategy.
Strategy is a set of actions through which an organisation by accident or design develops resources and uses them to deliver services or products in a way which its users find valuable, while meeting the financial and other objectives and constraints imposed by key stake holders (Adrian Haberberg and Alison Rieple: 2008). This definition states that to attain the organisational goals the managers formulate the plans and actions to effectively utilize its resources in the best possible way. It also says the importance of its customer’s value and satisfaction in using their product which has been strategically improvised. Mintzberg defines strategy in terms of five P’s which are perspective, plan, ploy, pattern, and position. Where perspectives are the concepts of the company and the way in which these concepts are achieved, plan is the direction, a guide or a course of action which would lead the organisation from present to the future, ploy is the hard fought means of achieving the competitive advantage, pattern is the ability of an organisation to make decisions, position determines the enterprise location within its external and internal competitive environment.
Strategic management is a process that includes top managements analysis of the environment in which its organisation operates prior to formulating a strategy as well as the plans for implementation and control the strategy (John Parnell: 2008). In providing a strategy the management plays a vital role. In simple words we can define managers as a person who manages the workforce. These managers craft the strategies that are required for achieving the organisation goal. The managers are classified into three they are the corporate level managers, business level managers and the functional level managers. The corporate level managers are the individuals who hold the top most position in an organisation they include the chief executive officer (CEO), chief financial officer (CFO), chief operational officer (COO), chief information officer (CIO), chairperson of the board, president, vice president and corporate heads. The top level managers take strategic decision when they are aware of the current issues that affect their company as well as the global market. Regardless of the profit and non profit status of the CEO’s of an organisation they should understand the environment and its ability to survive and then develop strategies that would enable the organisation to attain its goal.
The business level managers are also known as the middle level managers. They come under the corporate level managers. They hold job titles such as general managers, plant managers, regional managers, and divisional managers. The main function of the middle level managers is to carry out the goals set by the corporate level managers by motivating the employees and giving the proper feedback to the top level managers. The functional level managers are the bottom level managers who carry out the operational functions of the organisation. They are the frontline managers and supervisors who are responsible for the daily management of the workers. They have job titles such as office manager, shift supervisors, department managers; fore person crew leader etc. strategies are formulated at all levels of the management and depending on the level it is originated strategies are classified into corporate level strategy, business level strategy and functional level strategy. For a large organisation, with more than one business areas will have the top level management known as the corporate who makes decision that does not relate directly to service users, but for the development of the organisation. Sony was a small company that manufactured rice cookers, voltmeters and other basic electronic equipment. One corporate strategic decision has allowed it to diversify into wireless audio and telecommunication equipments. This strategic decision has only favored Sony to be one of the best electronic manufactures in the world. Functional level strategies are short termed. They happens at all level individual functional level of the organisation. Business level strategies are those decisions taken by the management at business level for proper functioning. The organisation would choose their partners who would serve them in their business activities efficiently. The strategies that are formulated are not always the one that is implemented by the management. According to Henry Mintzberg there are two varieties of strategies, intended strategy (the strategy actually formulated by the management) and realized strategy (the strategy that management implements). This variation may happen as a result of better understanding of the environment; an improvement in the top management’s access to the environment, vital information received which was not available when the strategy was formulated. The managers are those who take the right choice of strategy for the growth of the organisation.
A good strategy is, when it is implemented, is by knowing its ability to fit in the organisational environment, its distinctiveness or uniqueness, and sustainability in the market. Strategy formulated is considered to be fit when it fits into the environment. The environment may be fast changing than others are dependable on government regulation. For example Sony has a market environment where technological innovations are very prominent. To fit into this environment they have very skilled workers as strategy which quickly allows them to incorporate these technology and are therefore not driven out by the competitors such as Samsung and LG. strategic fit also implies that any product of the same company should be fit that is every product by the company should make the customers privileged.
Distinctiveness is that quality of strategy that gives the organisation its competitive advantage. This will provide uniqueness for the product manufactures and will have a distinct position in the market place. Distinctiveness also depends on the customer choice, what he ants or what he finds so unique in the product. It can also be hidden such as its external partners, its division etc which are not accessible for its competitors, therefore they cannot be copy it. Sustainability is the ability for the organisation to remain in the market. Some of the sustainable factors are culture, architecture, organisational learning and knowledge management.
The initial stage of strategic planning is realizing the mission, vision, values, and goals. Mission statement of an organisation gives an account of the purpose of the organisation. The mission statement of Kodak is to provide “customers with the solution the need to capture, store, process, output and communicate images anywhere anytime” (Charles W L Hill, Steven L Mc Shane 2008) this statement proves that the mission statement of Kodak is customer oriented and not product oriented. A good mission statement focuses on customer need, and then only they can realize the market environment and produce products that would satisfy them. If the organisation is product oriented it will give quality products to customers but it will not sustain for long as it does not care for the customer needs. Vision is the future of the organisation, what it should produce next, how to expand etc, are the vision of an organisation. For example the vision of ford is to be the leading company in automobile products and service which would be a stretch for the company who is positioned third behind general motors and Toyota. That is the point of vision statement; it enables the organisation to achieve it by bringing new strategies, skilled employees, technologies etc.
Values are the philosophical priorities a manager is committed to. These values help the managers to build an enterprise that would satisfy the organisations missions and visions. Goal is a set of objectives that the organisation desires to achieve in future. Goals of an organisation specify what is to be done so that it can achieve its mission and vision. Most of the organisation establishes goals to attain profit growth.
While formulating a strategy the top level management should analysis the environment in two major analyses taken by the organisation they are PESTEL analysis and SWOT analysis. PESTEL is the acronym for political, economic, social, technological, environmental and legal. PESTEL analysis is a macro environmental analysis. Political factors that affect the business are the actions taken by local and national administrations, political parties, and international organisations such as European commission, world trade organisation and United Nations. Economic factors related to the customers ability to spend on a particular product manufactured or sold by the company. When the inflation rate increases then the organisation would increase its productivity and innovations in product happens because the consumers have money and are ready to spend. Social and cultural factors depend on the consumer taste which will determine the demand of product ultimately. Technological factors are the ways in which the organisation and the whole society have changed tremendously. The use of bar codes and electronic point of sales has enabled the markets to expand. Environmental factors are the factors that affect the society such as diseases, global warming etc. these factors affect the spending power of the society. Legal factors are the laws and regulations that rule the particular nation. The organisation has to consider the legal factors that exist.
SWOT analysis is an internal analysis always done after PESTEL analysis. SWOT is the acronym for strength, weakness, opportunity and threats. All these elements are considered within an organisation. The management determines the organisation strength and weakness and work on its strength, how to improve the strength, and to reduce its weakness. Threats and opportunities referred to the external environment such as its competitors and their competitive advantage. A successful strategy will lead to the success of the organisation, as seen in the case of Wal Mart (CEO Sam Walton), Apple computer (CEO Steve Jobs) etc.
Strategic formulation is done depending on the size of the organisation the formulation of strategies varies. For a large organisation the formulation of strategies happen in two variables they are corporate strategy and business strategy. In corporate strategy the formulation of strategy is done taking into consideration that these strategies will be dealing with the issues of the management as a whole. The issues that are considered are the capability and competence of the organisation, basic character, the areas in which it should develop its activities, nature of its management, its governance and structure, nature of relationship with sector, its competitors and the wider environment. Business strategy is formulated keeping in mind that these strategies set are utilized by the organisation for specific organisational activities, for specific market environment, and for a particular division of the unit where the operations are allocated. Strategic formulation in a large organisation will happen with two interrelated components that is corporate and business strategy. Corporate strategy deals with the issues of the management as a whole. The issues that are included in corporate strategy are capability and competence of the organisation, basic character, the areas in which it should develop its activities nature of its management, its governance and structure, nature of relationship with sector, its competitors and wider environment. Business strategy formulated by which the organisation sets strategies for specific organisational activities, for specific market environment, and a particular division or unit where the operations are allocated. In Small and Medium Enterprises (SME) the basics of strategic formulation is forced or self imposed, required, rationalistic, deliberate, logically incremental, emergent and opportunistic. Self imposed strategies are those strategies which are formulated by force or pressure on the decision makers who are the managers, or imposed on them due to certain external and internal conditions. The internal condition include lack of leadership and resulting managerial continuity, unstabilised turnover of senior managers, no specific strategic decisions and direction, more focus on short term goals, lack of competitive advantage. The external condition include the rapid changing environmental developments, change in the existing competitive policy or competitive strategies, technological innovations, political factors, pressure from environmental groups, change in the consumer behavior, ethical values etc.
Required strategies are formulated by knowing the need for a plan that that would meet the needs of the stakeholders, enterprise capability and competencies, mission of organisation etc. Rationalistic approach to strategic formulation is also known as centralized approach where the CEO and colleagues are the pioneers in the process of strategic management. The strategic plans are always thrown over the wall from the corporate centre to subordinates for its implementation. The subordinates or low level employees may be consulted but they are not involved in making strategic decisions.
Logically incremented strategy formulation is said to be dynamically evolved over time and responding to both the internal and external conditions the company had to face. Strategies are evolved when the decision makers decide that the plan or strategy they have chosen would be applicable for achieving the organisational goal, and would prevail the business. It is a step by step approach to strategy formulation where it analyses the risk, uncertainty, unpredictability of instances.
Strategic formulation can be explained with the help of two models, the positioning and resource model also called the industrial organisation model and resource based model respectively. The sequence of industrial organisation model is analyses the environment, identify alternate industry, procure a reasonable alternative competitive advantage, develop and gain adequate resources and implement strategy by utilizing the firms resources. In this model the organisation initially examines the environment and therefore they get an idea about the kind of strategy needed to be formulated, as strategy will depend on the external and the internal environmental conditions. Decisions about the positioning of enterprice are given more importance than the capacity to implement such positioning. The organisations ability to perform will enable it to position itself in the peak of business. In the resource model the steps involved are to determine the organisation resources, understanding the capability of the organisation, determine the key competencies and competitive advantage of the organisation, determining an alternative industry, formulate the appropriate strategy and implement it. In this method the managers should give more importance to what the company can do rather than what it should do. The managers make use of any one of these plans to formulate the strategy.
Once a possible strategy is formulated the next step for the top level management is to successfully implement these strategies. Strategic implementation consists of putting these strategies into effect. The crucial stage of strategy is its implementation. Two main reasons why implementing strategy is difficult is firstly due to the existence of a number of departments in the organisation, and different stake holders associated and secondly due to the nature of hierarchy that exist in the organisation, the different level of decision and strategy making. Some of the weaknesses of strategic implementation are tokenism, bureaucratization, considering strategy for a short term profits etc which needed to be avoided before implementing the strategy. To make the separate departments of the organisations working together while implementing strategy is by analyzing the five C’s which are coordination, communication, command, control and conflict.
Coordination should happen at every step of strategy making mainly in formulation and implementation between the different stakeholders, organisation levels, between cooperating enterprises etc. coordination is a two way interaction between any two strategists. Coordination can only happen through effective communication. Communication is the exchange of ideas, knowledge, thought etc by means of a transmission medium. It plays a key role in implementing strategy. Communication happens at all levels of the organisation.
Command is passed from a top level employee to lower levels, and is only issued under certain circumstances such as two resolve a conflict or crisis.
The decision makers have their own area of control and does not intervene other domains until they are invited or there is any crisis. Each and every strategy have outline accretions of control over it. Control is often exercised indirectly through motivated structures.
Conflicts are unavoidable in any type of organisations. Conflicts are vital aspects for creativity. Any new idea brought in strategy need to be discussed in forums and there would be some inevitable reasons to choose it. For every proposal of change invites conflicts. It represents a clash of viewpoints and result in the release of energy, which should be made use of to achieve the objectives of strategy.
Managers consider a number of issues such as organisational structure, reaction of the employees etc. before the implementation. Even though the need for change is well known it becomes difficult to adapt to the new systems as it takes time and patience. Implementation is the crucial stage of a strategic planning. Two important factors that hinder the strategic implementation are the failures of process and failures of substance. Factors of substance gives importance to the strategic planning elements such as analysing the mission and purpose of the organisation its core values and corporate culture, the organisaiton strengths and weakness and their opportunities and their threats. The factors of process include the poor ways of handling the strategic planning. One important failure factor is the lack of participation. When some of the employees lose their commitment then they would fall back from any form of planning and implementation of strategies that would help the organisation to achieve goal. Another process failure is the blogging down in details of planning such that the process itself comes to end. From the above study we are able to understand the different factors that a manager has to consider while crafting a strategy. According to Hendry Mintzberg (1987:661) “managers are the craftsmen and strategy is their clay”. This is very true the managers make good strategy for the success of the organisation, still some organisation fail miserably during strategic implementation. This is how we can say that manager are the craftsmen, because not all of them become successful by just formulating strategy, they should be aware of the environment, past business experience, how to make innovations etc.