Introduction
Planning comes after very next to the thought of a business. Starting a business, idea comes first, then comes planning which is the way the business will be conducted. Strategy is the "planning" of action of a business. People might think of business without the strategy but business is impossible without it. For a good example, setting a straightforward part shop at the nook of a street can be a basic business, but finding a concept of which kind of area shop likely; coffee shop, food shop or cyber cafe etc. could be hard. And it would be even harder to ' out of how to perform or set the business enterprise. Because of this, business needs appropriate strategy.
Knowing some strategies or putting into action some strategies into business is not enough. It is vital or the most crucial to know the appropriate strategy for a certain business. Normally a simple business can face failure.
What is strategy running a business?
Strategy is the permanent pathway to achieve business goals through the use of its resources in a competitive environment for the satisfaction of stakeholders. Strategy can lead the business in to the right direction. It could show which kind of planning need to cope up in a difficult situation also to make the business enterprise better for the reason that environment. It creates the the majority of its resources and fulfils the anticipations of the stakeholder.
Strategy Theory:
Despite the great literature on proper management, there is absolutely no single or unique classification, According to Ansoff (1985). Tactical management is a systematic approach to position and associate the organization to its environment is a means which will ensure its continued success and make it guaranteed from surprises (Ansoff, 1985). Cole argued that proper management is actually concerned with establishing the business headlines aspires, choosing the best option goals for such goals and obtaining both over time. Strategy is then understood to be behaving as a guiding map for the company to attain its clear intention for development and progress.
There are many other different definitions generated from the nature of strategy approach, nevertheless they all have one thing in common, which is desire to to maximize the organization performance by enhancing its capacity for competition with other organizations performing in the same competitive environment. Although strategic management as a concept can be identified, it seems to truly have a great deal of ambiguities and complications when it's contacted or developed. Hamel backed this argument by proclaiming that "anyone who declare to be always a strategist should be intensely embarrassed by the fact that the strategy industry doesn't have a theory of strategy creation" (Hamel 1998 p10).
The primary goal of those business strategies are to find a proper business design, which focus on the appraisals of the exterior and inner situations and reveal the threats and opportunities in that business environment that will later expose the talents and weakness of the company.
Compare and Comparison (Whittington's Strategy Approaches and Mintzberg's 10 Colleges of Thought):
There are different approaches found in strategy. Before utilizing or making decisions which approaches to follow, people responsible for making strategy have to understand the approaches thoroughly and also have to be reliable in tactical thinking. Corresponding to Whittington (2001) strategy can be categorized in four basic standard strategies: Classical, Evolutionary, Processual and Systematic which have different viewpoints about strategy. Classical procedure defines the strategy as a rational process of premeditated computation and analysis made to maximize long-term gain and organisational revenue. As the business environment has transformed and market is a lot more competitive now many analysts argued that classical strategy is not befitting any business practice, since classical approach has no mechanism to produce strategy and is not suited to the active and competitive business surroundings. French (2009) concluded that radical change to open up system thinking, especially intricate self applied adapting system, is necessary (French 2009).
In evolutionary procedure is different compare to traditional way. Competition is not detached calculation and research but by continuous struggle for success (Cuizon 2009). In evolutionary way successful strategies show up as the process of the accepted selection, which deliver its consequence. Corresponding to Whittington, important decisions have to be taken based on the marketplace not selections of managers. Evolutionary way considers the markets too competitive and difficult to guage and feels it is unpredictable to plan for long term strategies though it gets the similar view with the classical approach in terms of income maximizing. Nonetheless it generates a disagreement as the basic emphasis of this way is on success which obviously issues the aim of maximizing the profit.
Procession procedure has similarity with the evolutionary approach in conditions of permanent planning. This approach doubts the value of realistic long-term planning but it disagrees with the evolutionary way based on the market to choose the profit-maximizing final results as the market is at chaos and has lot of doubt. Processual approach says that strategy is an emergent process of learning and version (Whittington 2001); it adopts a pragmatic view aiming to make the advanced operations simple in light of the actual fact the environment is not ideal or perfect.
Systematic methodology considers that the organisation should have the capabilities and really should have the ability to plan and respond effectively. This approach is much less pessimistic than processual procedure about the capacities of the visitors to carry out rational plans of activities plus much more optimistic than evolutional strategy about its potential to define strategy no matter market causes. The approach is convinced strategies need to be efficient socially to comprehend the organisation's business environment. This means that there must not be any separation between organisational activities and social factors to ensure success.
Table below talks about the summery of Whittington's thoughts of strategy:
Indicators
Classical
Processual
Evolutionary
Systemic
Deterministic - Emergent
Deterministic
Deterministic
Emergent
Emergent
Single goal or Pluralistic
Single
Plural
Single
Plural
Strategy Style
Formal
Crafted
Efficient
Embeded
Influences
Economics
Psychology
Economics/Biology
Sociology
Period (10 years of Influences)
1960s
1970s
1980s
1990s
Table[1] : Whittington's four techniques of strategy development
Later Mintzberg elaborated those thoughts in contrast to Whittington's these four approaches we mentioned above. Mintzberg categorized strategy into ten classes of thought. Those universities of thought are categorized in two parts.
1. Prescriptive universities: This part consists of three universities of thought (Design, Planning and Placement). It explains the way the strategy should be formulated. In 70s and 80s these strategies were in vogue though to some extend still adored by a few of the organisations.
2. Descriptive schools: Contains 7 universities of thought (Entrepreneurial, Learning, Electricity, Culture, Environmental and Settings). These universities go through the way strategy is and seen, in other words are more about how precisely strategy arises and emerges.
The view of Mintzberg's strategy was fundamentally a reaction resistant to the linear, rational view of strategy that experienced dominated tactical management until middle 80s (Mintzberg 1994; Mintzberg et al. 1998). He suggested a useful and incremental view of strategy. This approach is dependant on observation of the way the organisations actually develop their strategies, that happen to be patterns of behavior that emerged and be ordered over time. Related to that of Mitzberg, Whittington's way differs subtly because the focus is upon strategy as a sociable practice.
Table bellow identifies the summary contrast of Mintzberg's school of thought and Whittington's solutions of strategy:
Mintzberg
(Learning & Settings)
Whittington
(Strategy as Practice)
Main messege
The stable actions we call strategy both emerge and are planned, But it is hard to steer changes
Strategy is produced by the tactics performed by strategists
Key concepts
Intended, deliberate, emergent and understood strategies. It starts from grassroots.
Practical action, means of doing things, exercises, discourse, technology and tools
Theoretical subjects
Instrumentalism - Quinn, Path & Mistake/Sense
Making - Weick Chandler and business history for configurations
General shift to social technology back again to practice
Theoretical assumptions
Too complicated - uncertain world for rigid plans to work
Day to day activities in local contexts
Cognitive approach
No primacy action/research. "Learning by doin" and emergence
Tools and solutions, discussion
Unit of analysis
The entire organisation
The individual strategist
Methodology
In-depth case studies, business histories
Qualitative discovered studies emerging
Strategy formation
Strategy is a partly emergent and partly prepared process when a certain plan of action stabilizes
The day-to-day techniques of strategists underpin organisational strategy formation process
The concept of the school of thought is usually that the resulting strategy is dependant on the personality of the strategists in addition to the results of the tools and models used. Plainly the various tools and models used to analyse the industry and finally Develop the strategy will rely upon the institution of thought. Hence this can be a poultry and egg situation.
However, organisations tend to be pursued internally or externally to examine their proper position within confirmed business, software industry or industry. To this end a variety of theories and models have been developed (Koch, p. xiii, 2000) with the objective to determine, develop and disseminate systematically competitive advantages for the company. The overall intended outcome is to fortify the company's position in industry and help maintain, if not improve, their competitive position within it.
All strategic approaches offer an understanding into the determination behind the company's perspective and what strategies they most likely implement. Strategists agree on one common point that strategic management process includes examination, choice, execution and responses. Prior to start out with strategic management process for just about any company, the strategist should ensure that the company already has a proper described and clear quest and vision claims.
Organisation's mission and perspective:
Organisation's quest is a public statement where an organisation places out its vision about how exactly to meet customer needs with respect to the market conditions and the success of such eye-sight. Success of any company is usually measured by evaluating its achievements using their group of missions, goals and targets. Strategic goals serves as a the key of business since they are very important for the success of the company.
Bearing at heart the firm's eye-sight and quest, the strategist works on strategic management process by firstly analysing and checking the inner and external environment to become better aware of the firm's position to develop and implement the near future actions appropriately.
Strategic management process
This and the next sections of this article are to clarify some of the strategic management process and how it could be applied in a structure company characterised by uncertainty and dislocations.
Porter's Approach
Porter (1980) analysed the composition of a business environment in terms of five basic makes which are clients, suppliers, potential competition, substitutes and competitive benefits (Porter, 1980). Among those causes competitive benefit is the most important force which helps to shapes the organisation based on the market environment. Competitive advantages is a combo of factors which makes an organization more lucrative than others. The resources of competitive advantage include: organization resources and capacities, quality in strategy implementation, quality, time, innovation and creative imagination (Feurer and Chaharbaghi, 1997). Regarding to numerous scholars, the best way to obtain sustainable competitive advantages is the organisation's potential to learn.
Subsequently, organisation has to understand the key external influences about them and has to equate to the organisation's talents and weaknesses. That is an essential factor for the strategist which allows them to help make the strategic decision. For instance, to choose whether to keep prices less than rivals or differentiate the offering to provide higher value in comparison to offerings of others.
Ansoff's Approach
Ansoff and Porter have developed the latest models of of strategy choices that can be used to develop possible strategies. Ansoff (1965) completed systematic series of analysis that could allow organisation to know what its strategy would be and the way to take the further important steps (Cole, 1997). Ansoff presented a matrix that focused on the company existing and potential products and market. For instance, a construction programmer may suffer from his dying product of developing luxury villas since there is a good opportunity in the neighborhood market to develop low cost villas. If the developer in conditions of marketing is strong, he is able to naturally go for the decision of developing the reduced cost villas.
Jay Barney's approach
Jay Barney's procedure is recognized as resource-based view of competitive edge manages on the assumptions that companies are heterogeneous in conditions of these control of important strategic resources which resources aren't flawlessly mobile between businesses. Organization resources are defines as "strengths that firms can use to conceive of and apply their strategies" (Barney 1991). Classifications of resources are physical capital resources, human being capital resources and organisational capital resources. Physical technology, flower and equipment, geographic location and access to raw materials come under physical capital resources. Real human capital resources are the training, experience, judgement, brains, relationships and understanding of the average person managers and staff of the organization. Organisational capital resources are the formal reporting framework, the casual and formal planning, coordinating and handling systems, the informal relations among groupings within a company and other agents in the firm's environment. Synopsis of resource-based view is the fact that firm can only have a suffered competitive advantage if it's applying a value creating Strategy not simultaneously being executed by any current or potential rivals and control buttons its physical, human or organisational resources that are valuable, uncommon, inimitable and non-substitutable.
However, the strategist needs to evaluate the options and make the strategy selection predicated on some conditions. First of all, the strategy must give the organisation a great chance of getting together with its goals and protect it from dangers that might move its performance below concentrate on levels. Subsequently, the strategy must make use of all the organisation's most impressive talents and perfect all major weaknesses. Finally, it must reduce the impact of risks and exploit all high potential opportunities (Fellows et al. , 2002).
Once the tactical choice is manufactured, execution is conducted within the construction of action designs. Strategists prefer to focus on revising a preexisting strategy in an innovative way alternatively than generating a new one from scratch. They need to consider all the factors of McKinsey 7S model for execution which are interdependent. Restructuring management is the hardest job for strategists where co-ordination of the organisation's businesses is the key key.
Feedback and control would be the final stage of strategic management process. This level involves a continuing monitoring of the strategies and action plans. Its goal is to give the organisation the ability routinely to both control the improvement also to review the complete strategic direction that is selected. This final level is conducted at three degrees of the company: functional level, business product and corporate level.
Practice of Strategy in engineering firms
If strategy process theoretically has clear and clean path as elaborated above, then the question is excatly why do some organisations in construction industry fail in practising it effectively? Corresponding to Mintzberg (1994), there may be very little proof strategic management implementation and performance (Mintzberg, 1994). The reasons may be referred to poor management understanding, lack of clarity about decision making, limited communication and cooperation and low degrees of accountability. The majority of strategic plans fail because they are just exported without being made from the heart and soul of the neighborhood dynamic environment and the firm's culture.
Construction industry has a distinctive blend of characteristics that requires an average treatment compared to other industries. For example, the creation activities are typically conducted on site and the training curve is jeopardized because of the uniqueness of projects. Accordingly, strategic solutions and thoughts should be versatile enough to get variations to suit this industry. There's a little books tackling the strategy approaches and thoughts in construction. This can be referred to the actual fact that structure is portrayed as a low development and low tech industry, where the industry has a wide selection of sub-sectors and variability in demand.
Fellows et al. (2002) argues that strategic management may be possible only in some organisations, where they are simply large enough to afford expensive research, have clear goals and operate in stable environment (Fellows et al. , 2002). This debate is challenged in the sense that the door is always open to innovative strategies that can be implemented to beat the difficulties associated with strategies in active environments like engineering. Cheah and Chew (2005) gave a hint for the necessity of such creativity stating that strong connections among issues such as project delivery methods and individuals aspects refute a short listing of generic strategies that might be more feasible for other industries (Cheah and Chew, 2005).
Latham and Egan information found such need before and urged the construction industry to perform better to meet the challenges. Accordingly, many innovative changes to industry began occurring including partnership, strategic alliances, supply string management and low fat construction (Langford and Men, 2001). Top professionals have taken further measures by deciding to extend in new markets, adopting new technology or come up with different products or attractive prices to remain competitive. However, they still need to think about further impressive strategies such as boosting customer leadership and accumulating company resources (Blayse and Manley, 2004). In addition they need to impose effective and specific implementation functions to have the ability to adopt innovation efficiently.
However, Fellows et al. (2002) made a spot about the high cost involved with strategy process, because the practice is available to be too advanced and subtle to control with local resources. Many scholars embraced the idea about the practice stating that strategy process is often disconnected from the outcomes due to its complexity (Pettigrew, Thomas and Whittington, 2002). However, the debate here's that the expensive cost associated with producing appropriate approaches for construction projectised businesses can not be compared with potential drastic deficits anticipated to high dangers threatening their business.
On the other hands, having various methods to strategy indicates the need to a unifying theory that can hook up such thoughts to suit the unique engineering environment. Also, the knowledge of strategy process needs a focus on habits of decisions and actions rather not over a discrete decision to accumulate into strategies over time. Strategic decisions making in projectised organisations is usually highly centralized and bureaucratic which deprives the organisation from the creative employees' ideas and thoughts. Organisational culture must change to motivate the head office staff to execute the designed strategy without reservation. This should be relevant to projects personnel as well who should be invited to contribute to the whole organisation strategy(Marja, Pivi and Heikki, 2007). . Consequently, they can attract after such strategy effectively and build their own job strategy to achieve the overall goals.
Case study of Guangsha group
Success storyline of Guangsha group, the primary Chinese construction enterprise in utilizing its strategy demonstrates the way the company has considered the initial characteristics of development environment it pertains to and has drawn after the strategy considering to reach its leading position in the global market.
Since the inception of Guangsha group in 1992, the founder envisioned that the group will expand into a multinational building giant by 2010. The founder focused on building the human asset of the organization. His management culture is people-centered, with imperatives to empower his managers and granting independence to the many strategic sections. These units are arranged interdependently, reinforcing and promoting each other to realize overall competitive benefit.
Within Guangsha Development, the firm is continuing to grow quickly through many acquisitions which have strengthened its individual resource functionality and technology and extended its market reach. Using its financial prowess, it developed its research and development knowledge, quality management system and created a brand name for itself in project performance. By integrating its building expertise with the Property and Investment business units, it provided a total service bundle to its home clients, a competency which offered it a competitive benefits in the industry. Through partnering and proper alliances, the international strategic business units had successfully penetrated into ten local and international marketplaces, offering industrial recreation area and infrastructure services to international clients.
Guangsha's success plainly shows a few of its strength factors. Firstly, the value of human possessions was represented by the founder eyesight in broadening the organization and the emphasis put on the development of the human belongings. Secondly, its 3rd party structure was formed to utilize the firm's acquisitions strategy also to respond to the powerful capital market. Finally, the firm's success has resulted in many awards that strengthened its reputation further.
Conclusion
In presence of various schools and methods to strategy, there's a demanding need to a unifying method of simplify the knowledge of tactical practice and make it more possible and effective for development firms. Strategists should deeply understand their powerful business environment and exploit their strengths effectively to remain competitive. In the lack of a unifying theory, strategists should implement innovative steps in adopting a mix of the most likely approaches to suit the initial characteristics of engineering. Last but not least, it is not the strategy that will determine the organisation success however the firm's effectiveness in using its capabilities and human resources to execute the strategy.
References:
Barney, Jay B (1991), "Firm Resources and Sustained Competitive Benefits, " Journal of Management, 17 (1), 99-120.
Koch R (2000), "The Financial Guide to Strategy - how to generate and deliver a useful strategy, " 2nd model, Prentice-Hall.
Mintzberg, Henry (1994), The Surge of Managerial Work, NY, Prentice-Hall.
Mintzberg, Henry (1998), Bruce Ahlstrand, and Joseph Lampel (1998), Strategy Safari, London, FT/Prentice-Hall.
Whittington, Richard (2004), "Strategy after modernism, " Western Management Review, 1 (1), 62-68.
Whittington, Richard (1996), "Strategy as Practice, " Long Range Planning, 29 (5), 731-35.
Tables:
"Whittington's four techniques of strategy development", http://129. 3. 20. 41/eps/get/papers/0506/0506002. pdf, seen on 2nd of December 2009.
