Strategic Management: Formulation and Implementation

Characteristics Of Strategy

A second way to define strategy is in primary characteristics. This set of ideas places some limits on the sweeping task just sketched as the role of strategy.

Organizational decisions can be arrayed on a continuum, with strategic decisions at one end and tactical decisions at the other. The goals and objectives of an organization are established through strategic decisions.

Tactics, are specific actions the organization might undertake in carrying out its strategy.

A strategy has several distinguishing characteristics:

  1. The process of strategy formulation results in no immediate action.
  2. Therefore, strategy must next be used to generate strategic projects through a search process.
  3. Thus, strategy becomes unnecessary whenever the historical dynamics of an organization will take it where it wants to go (when the search process is already focused on the preferred areas).
  4. Strategy formulation must be based on highly aggregated, incomplete and uncertain information about classes of alternatives (at the time of strategy formulation it is no possible to enumerate all the project possibilities which will be uncovered).
  5. Successful use of strategy requires strategic feedback.
  6. Since both strategy and objectives are used to filter projects, they appear similar. However, they are distinct. Objectives represent the ends which the firm is seeking to attain, while the strategy is the means to these ends.
  7. Strategy and objectives are interchangeable; both at different points in time and at different levels of organization. A typical hierarchical relationship results: elements of strategy at a higher managerial level become objectives at a lower one.

Moreover, stating what strategy is not helps to remove unnecessary confusion:

  1. Strategy is not response to short-term fluctuations in operations or the environment, nor is it the response to the frequent short-term reports on, for example, sales, labor turnover, weekly output, or competitors' prices that every manager receives.
  2. Strategy is not a set of numbers merely projected out three to five years; it is not an extrapolation exercise based on this's years balance sheet and profit-and-loss statement. Rather, the emphasis in strategy is on the quality and texture of the business.
  3. Strategy is not a rationalization of what we did last year or of what appears in next year's budget. An actual strategy, in contrast, as a longer-term plan that set the direction and tone of the shorter- range plan.
  4. Strategy is not a statement of pious intentions or optimistic wishes. Instead, a strategy must identify ways by which at least some form of superiority over competitors is to be achieved.
  5. Strategy is not a cluster of ideas in the minds of a few select leaders of the company - ideas labelled strategy if and when they are voiced because they come from key individuals. Rather, the concepts are disseminated and understood by all managers to at least the middle levels of the organization and perhaps below.

Above all, strategy is an expensive process both in terms of money and managerial time.