Marketing mix refers to the set of variables (controllable by the organization) that managers and owners use to influence the target audience and satisfaction of customers. Marketing-mix provide the tools and methods used by marketers to achieve their marketing objectives through their marketing strategies. Marketing mix can be classified into two (2) categories: physical goods or services. By carefully integrating the elements of the marketing-mix, companies can ensure they have a visible, in-demand product or service that is competitively priced and promoted to their customers.
Marketing-mix for Physical Goods The marketing-mix, when marketing physical goods, is intended to bridge the gap between production (producer) and consumption (consumer) of goods through values assigned to the marketing-mix variables of product, price, place, and promotion.
Goods marketing is the marketing and selling of tangible products - goods. Marketing-mix for Services In the service marketing context there isn't a gap between producer and consumer (as in the goods-based case), since the service provisioning and production occurs right between producer and consumer. The marketing-mix used in service marketing is expanded to the 7Ps of marketing-mix variables, and is a combination of the goods-based factors described above, in addition to service specific factors, such as:
Service marketing is the marketing and selling of intangible products. Service marketing is concerned with marketing intangible products - services, and is based on value and relationship. The purpose of service marketing is to utilize effective methods of communication, to create demand for service among customers, like advertisement, promotional deals or offers. Marketing Mix - Implementation Marketing mix development and implementation are guided by the chosen marketing strategy. The marketing mix decision are used to achieve the general marketing strategies by guiding the decisions within important marketing areas such as defined by the marketing mix elements:
Companies can use the marketing-mix model to set objectives, conduct a SWOT analysis, and undertake competitive analysis.
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Introduction
A decision is a deliberate selection made after assessing various options or alternatives. It involves evaluating relevant factors, considering the potential benefits and drawbacks, and ultimately reaching a conclusion. Decisions can vary in complexity, ranging from mundane everyday choices (such as deciding what to have for lunch) to pivotal life-altering ones (like selecting a career path or a life partner). In the context of business, decisions can be categorized as follows:
Decision-Making Decision-making is the intricate process by which individuals arrive at choices. It involves several mental steps, including:
In essence, decision-making is a fundamental cognitive process that shapes our actions, behaviors, and ultimately, our lives. Decision-Making in Business Organizations Decision-Making in Business Organizations: In the dynamic landscape of business, organizations function as dynamic social, open, and adaptive systems. Their ability to make informed decisions is crucial to their success. Whether you’re a seasoned executive, an entrepreneur, or a team member, the choices you make directly impact the trajectory of your organization. Effective decision-making isn’t just a skill; it’s the lifeblood of successful enterprises.
Decision-making is a continuous process, and organizations must adapt swiftly to remain competitive. By understanding their role within the broader system, decision-makers can navigate complexities and steer their organizations toward prosperity. Decisions at various levels drive the business toward its short-term, medium-term, and long-term goals. Whether it’s expanding into new markets, optimizing supply chains, or improving customer service, each decision contributes to the overall success of the organization. The circumstances/situations in which people have to make a decision varies widely. The term decision is used, in a variety of different circumstances, when people have to make up their minds in specific commitment to action to resolve an issue or question. A decision is the specific commitment to action to resolve a question or issue. The situation and nature of the problem impacts the deliberations and affects decision quality. The use of the same word "decision" for these different kinds of deliberations, in a variety of very dissimilar situations, varying in scope, complexity, and type of problems can be a source of confusion for decision makers. Decision-making is a critical aspect of managerial roles, and understanding the type of decision required in a given situation is essential for effective management.
[TBD] for example
[TBD] The decision-making process involves selecting the best option from a number of choices to achieve a goal or objective. The process is deliberate and involves considering a number of available options, evaluating them, and selecting the best one that will achieve the desired outcome. When making a decision, it is important to consider all the available options and evaluate them based on the desired outcome. However, in certain situations, decision makers may not have any known available options from which to choose. In such cases, decision makers may have to rely on their intuition, experience, and creativity to come up with a solution that will achieve the desired outcome. The role of known available options in the quality of decisions is significant. When decision makers have access to a wide range of options, they can evaluate each option based on its merits and drawbacks, and select the one that is most likely to achieve the desired outcome. However, when decision makers have limited options, they may not be able to evaluate each option thoroughly, which can lead to suboptimal decisions. Similarly, when decision makers have too many options, they may become overwhelmed and unable to make a decision, which can also lead to suboptimal decisions. Based on the availability of options, decision making can be classified into four categories:
The role of known available options in the quality of decisions is significant. The ability to determine what options are available to you as a decision maker depends on the situation and the nature of the problem. The problem can be simple, requiring routine deliberation, or complex, requiring more involved deliberation and discussions. Problems can be classified based on their level of complexity into three categories: simple, intermediate, and complex.
The factors that influence the quality of decisions include the situation in which someone has to make a decision, the objective to be achieved, the degree of deliberation, and the decision maker’s mindset. By understanding the nature of the problem and the availability of options, decision makers can make informed decisions that will achieve the desired outcome. Decision-Making and Decisions in Business Organizations A business decision is any choice made by a business professional that determines short-term or long-term company activities. Professionals make business decisions in response to a variety of different situations, including determining which job candidate to hire, how to distribute department budgets, when to expand into a new product market, if they should merge branches and other situations that require well-thought out actions.
In business organizations, the circumstances or situations in which managers have to make a decision may vary widely in complexity, type and scope. Business decisions can be classified into four categories based on their scope and impact: administrative, operational, tactical, and strategic.
These decision types are interconnected. A system of these decision types collectively shape the functioning of the organization. Administrative decisions support operational efficiency, which in turn affects tactical choices. Strategic decisions guide the overall framework. A business organization operates as a dynamic system where decisions at different levels interact, collectively determining its success. The impact of one decision type influences subsequent decisions. For example, operational challenges may trigger tactical adjustments. Effective decision-making across these types ensures alignment, agility, and sustainable growth. Business Decision-Making and Decision Rights Decision-making in business is a cognitive process that involves making decisions of one of the following types: administrative, operational, tactical, and strategic. It is a deliberative process of making choices by identifying a set of available options, gathering information, and assessing and selecting an alternative solutions (courses of action). The quality of business decisions is influenced by a number of factors, including the situation in which someone has to make a decision, the objective to be achieved, the degree of deliberation, and the decision maker’s mindset. Decision-making in business organizations occurs at all levels in the organization. Decision makers are assigned the responsibility for certain decisions based on the decision rights and authority assigned to an individual or groups through their positions and/or roles in the organization.
Business decisions are an essential part of running a successful organization. An organization’s ability to execute well rests on its ability to make and implement the decisions that matter most. By understanding the different types of decisions, and the decision-making processes, organizations can make informed decisions that drive the long-term success of the organization. Decision-making is a cognitive process resulting in the selection/choice of a course of action among several possible alternatives/options available. It is a deliberative process of making choices by identifying a set of available options, gathering information, and assessing and selecting an alternative solutions (courses of action). There are different approaches to decision-making in organization, such as:
The decision-making process is carried out through an intuitive, logical/rational, bargaining process, or a combination of all three. When making business decisions, it is important to take into consideration the potential risks and benefits of each option, as well as the long-term implications of the decision. It is also important to involve stakeholders in the decision-making process to ensure that their concerns and perspectives are taken into account. Business decisions are an essential part of running a successful organization. By understanding the different types of decisions, as a system of decisions, and how they shape the functioning of the organization, management can make informed decisions that drive the long-term success of the organization. [TBD] System of Business Decisions Managers at all levels in the organization must make decisions on behalf of a company. A manager/decision maker has to apply his/her business judgment, evaluation and intuition into the definition of the problem statement and decision choices. The difference between decision-making at the various management levels, typically, lies in the type and scope of the decisions being made. Some examples of business decisions made by managers in various positions and roles with specified responsibilities may include:
The decision-making at the various management levels in the organization can be aligned directly with the broader management functions: planning, organizing and staffing, leading, and controlling of the management process. Managers face in the course of their daily responsibilities, a range of decisions that are consistent with their positions and roles in the organization. The management decision levels and associated positions, roles and responsibilities may have designated decision rights and decision authority associated to each position. [TBD] The factors that influence the quality of business decisions include the situation in which someone has to make a decision, the objective to be achieved, the degree of deliberation, and the decision maker’s mindset. Strategic Decisions and Decision-Making
A strategic decision is a type of decision that significantly impacts the organization's long-term direction, performance, and competitive position. Strategic decisions are those decisions, taken by top management, that have influence over years or decades, and even beyond the lifetime of the projects that implemented/realized those decisions. They are taken in accordance with the organization's mission, vision, and values. A strategic decision is a specific commitment to action (usually, a commitment of resources). Unlike routine administrative or operational decisions, which focus on day-to-day activities, strategic decisions are broader in scope and involve the entire environment in which the firm operates, its resources, and the people who form the company. Strategic decisions are characterized by a number of features including:
Strategic decisions are novel (new) - there are no well understood or agreed upon procedures for making them, important (i.e., consequential) and non-routine. Success depends on the ability of managers to influence the desired outcomes through its people, and the need/expectation to outperform rivals. Understanding the nature of a decision - whether it’s routine or strategic—is crucial for effective decision-making. Some examples of strategic decisions include:
Strategic decisions concern the organization's external environment(s), the organization's resources, the people who form the organization, and the interface between the organization and its environment. The success of strategic decisions depends on the ability of decision makers to influence the desired outcomes through the people that are members of the organization, and the expectation to outperform the competition/rivals. Strategic decision makers such as business executives, coaches in sports, or political candidates are not like shoppers or administrators making routine choices that lead to one outcome, or another. With strategic decisions, decision makers can actively influence outcomes of strategic choices, using their abilities to make things happen, and success means doing better than rivals. They can influence the outcomes by the way they lead and communicate, and through their ability to inspire and encourage others. Moreover, executives are in charge of organizations that compete vigorously with others; success means doing better than rivals. Strategic decisions require the decision maker to provide judgment based on insights into the problem situation and choices from alternatives. Strategic Decision-Making Strategic decision-making in concerned with how strategic decisions are made - formulated and implemented (Elbanna 2006). Strategic decision-making is the means by which management intentions are realized (formulated and implemented). Strategic decision-making is inextricably linked to strategic planning because it concerns the distribution of resources and the company's long-term direction. Strategic decision-making is typically more complex, novel (new) and open-ended (Mintzberg, Raisinghani and Theoret, 1976), and is characterized by independent elements that by definition cannot be formulated, let alone solved independently of one another.' (Mitroff and Emshoff, 1979:1). Strategic decision-making is about making choices related to an organization's overall, long-term direction, including objectives, resources, and capabilities to be developed and the key actions needed to achieve these objectives. Strategic decisions-making requires decision makers possess the ability to influence outcomes by the way they lead and communicate, and through their ability to inspire and encourage people to perform better than the competition. Strategic decision-making is a complex process that shapes an organization’s future. Strategic decision-making involves issue comprehension, concepts structuring, and concepts formulation into cause-effect relations model. While the cause-effect relations are based on logical and deductive reasoning, the issues comprehension that triggers it, involves choice of assumptions which is to some extent arbitrary and inductive in nature. It is important that managers understand that their choice of assumptions is arbitrary and influenced by their beliefs and mind-set (mental model), and might not accord with reality. So strategic decisions logically flowing from these assumptions, if they turn out to be bad/erroneous assumptions, can lead to failure.
Strategic decisions are both logical and influenced by subjective assumptions. Managers must balance deductive reasoning with humility, acknowledging that their mental models may not perfectly align with reality. Vigilance in challenging assumptions and staying adaptable is crucial to avoiding strategic pitfalls. Factors Influencing Success of Strategic Decision-Making The success of strategic decision-making can be affected by a number of factors, including:
Successful strategic decision-making requires:
Strategic decisions are not just about making choices; they shape the organization’s destiny. Strategic decision-making involves making choices that shape an organization’s future, strategic thinking focuses on long-term vision and effective planning, and systems thinking helps us understand interconnectedness and navigate complexity. Together, they empower better decision-making and sustainable outcomes. Strategic Thinking Strategic thinking is more about making decisions directed towards achieving defined outcomes. Strategic thinking is the ability of the organization to plan, leadership - the ability to influence the desired outcomes through its people, and the ability to motive the people in the organization to outperform rivals. Strategic thinking is active and ongoing, and is a way of understanding the fundamental drivers of a business organization. Strategic thinking requires envisioning what you want to accomplish and formulating solutions to problems. Systems Thinking Systems thinking is a way of making sense of the complexity of the world by looking at it in terms of wholes and relationships, rather than by splitting it down into its parts. Systems thinking is a useful form of planning and problem-solving that considers interdependence shared within and between organizations, the short-term and long-term consequences of individual and organizational actions, and the influences of society and the environment upon organizations. Systems thinking is a way of making sense of the complexity of the world by looking at it in terms of wholes and relationships, rather than by splitting it down into its parts. Systems thinking plays a crucial role in enhancing the strategic decision-making process. Let’s explore how it contributes:
Systems thinking encourages a holistic view, aligns actions with interconnected realities, and fosters adaptable strategies. It’s a powerful lens for navigating the complexities of our ever-changing world. [TBD] Systems Thinking Systems thinking is a way of making sense of the complexity of the world by looking at it in terms of wholes and relationships, rather than by splitting it down into its parts. Systems thinking is a useful form of planning and problem-solving that considers interdependence shared within and between organizations, the short-term and long-term consequences of individual and organizational actions, and the influences of society and the environment upon organizations. Systems thinking is a way of making sense of the complexity of the world by looking at it in terms of wholes and relationships, rather than by splitting it down into its parts. Systems thinking plays a crucial role in enhancing the strategic decision-making process. Let’s explore how it contributes:
Systems thinking encourages a holistic view, aligns actions with interconnected realities, and fosters adaptable strategies. It’s a powerful lens for navigating the complexities of our ever-changing world. [TBD] Strategic decision-making is a critical skill for effective leadership in business and other organizations. The outcomes of a leader's choices significantly impacts employees, customers, the market and success of the organization.
A major problem in strategic decision making is predicting the future of the organization in achieving its mission and its environment, and matching the characteristics of the organization to the environment. The decision-maker has to perceive and understand problems underlying identified issues; once perceived, solution ideas must be formulated then choices have to be made about a particular solution which is then implemented. For example, customers’ utility for a product (goods or service), and managers’ opinions of the customers’ perceptions of quality for that product (goods or service), can be inversely related. These beliefs influence the choice of assumptions underlying the manager’s strategic decisions and determine how good/bad the decision is. Erroneous assumptions can lead to bad/poor strategic choice which in turn, can lead ultimately to strategic decision failing at implementation. Strategic decision-making is a critical skill for effective leadership in business and other organizations. The outcomes of a leader's choices significantly impacts employees, customers, the market and success of the organization. Strategy Implementation
Strategy implementation is the responsibility of top, middle and lower/line managers focused on building capacity through projects and programs to strengthen the organization, and enable it to better deliver value to customers while meeting stakeholders expectations. Strategy implementation is an action-oriented process for building a capable organization that can make the selected planned/formulated strategy work as intended. A strategy is implemented if the corporation has the capabilities, enterprise advantage, and business portfolio it wants, its corporate strategy is implemented. If the business unit has the customers, value proposition, and skills it has chosen to have, its business strategy is also fully implemented. Technically, a strategy can never actually be fully implemented because everything that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. There will always be a gap between where the company is and what its (corporate and business) strategy calls for. Closing this gap is implementation. Why Strategy Implementation Fails Strategy implementation can fail - not accomplishing the desired outcomes - for myriad reasons including the inability of the organization to manage its strategy very well when faced with challenging situations such as:
These challenges are not the reasons at fault, since other businesses are able to survive, grow and thrive. The real (causal) reason can be attributed to mismanagement - inability of the business organization to manage its strategy very well. Effective Strategy Management Effective strategy implementation management involves closing the "execution" gap - the gap between actual/current strategy performance and intended desired performance. Strategy implementation involves change in people that typically takes over a long period of time, this makes it more likely that the conditions under which the strategy formulation took place will change and unforeseen circumstances may arise to derail the execution. Management needs to also understand the interactions among key execution decisions and actions, and contextual forces that create significant and persistent execution gap as measured by the Operating Model. An important task of managers is to design strategic control systems for successfully implementing and executing a strategy. Managing organizational change requires a system of controls - a tool designed by managers to help them monitor and evaluate the progress of activities directed towards executing the organization's implemented strategy. Some of the factors that influence execution success/failure include:
All these factors are interdependent and their influences are non-deterministic; this typically, makes it very difficult for managers to comprehend the contribution of each of the factors to successful outcomes of strategy execution. Each of the factors influences execution success/failure in a different way; if an organization fails to pay proper attention to one of these factors, it can result in execution failure, therefore an organization needs a system and approach to support management of these factors and their influence on successful execution. Strategy Implementation Management Strategy execution management is a process of managing people, strategy and operations. Strategy execution management is a disciplined and systematic approach to managing - directing, controlling and facilitating - the day-to-day decisions and activities undertaken at all levels in the organization involving top management through middle management, and front-line managers and workers that carryout the ongoing pursuit of a strategy and complete it. Strategic managers create control systems to monitor the quality of products. Strategic control systems provide managers with the tools to regulate and govern their activities. In strategic control, managers first select strategy and organization structure, and then create control systems to evaluate and monitor the progress of activities directed towards implementing and executing strategies. Finally, they adopt corrective actions through adjustments in the strategy if variations are detected. Strategic control systems provide managers the tools to regulate and govern their activities through both proactive (feed forward) and reactive (feedback) mechanisms. Proactive control systems help in keeping an organization on track, anticipating future events and responding to opportunities and threats. Reactive control systems help detect deviations after events have occurred and then take corrective actions. Strategic control systems further help managers achieve superior efficiency, quality, innovation and responsiveness to customers. Strategic control systems can also help in encouraging employees to think about innovation. Strategic control systems make employees more responsive to customers through monitoring and evaluating employees' behavior and contact with customers. Strategy Implementation / Execution
A strategy has to be successfully implemented and executed to be effective and of any use to an organization. Strategy implementation is a function of strategic management It is the process of making the selected strategy (strategic choice) operational by translating it into action plans which can executed successfully. Implementation provides the connecting loop between strategy formulation and the actual strategy realized. The actual strategy of an organization is the strategy realized from execution; it is the combination of the executed part of the intended (deliberate) strategy - what managers have set out in advance and intend to do - as part of some important strategic plan, and emergent strategy - the executed as-needed reactions to unanticipated developments and fresh competitive pressures. Strategy is implemented through the use of projects, programs and portfolios.
Together, they combine to deliver the beneficial change required to implement, enable and satisfy the strategic intent of the organization. Some examples of strategy implementation include: developing and executing a new marketing plan to help increase sales of the company's products to consumers. Strategy implementation is a function of strategic management, and it encompasses strategy implementation planning and execution. Strategy Implementation Planning The planning aspects of strategy implementation is an action-oriented plan of activities that revolve around management of people, resources, and business processes. Strategy implementation planning is one way by which an organization's objectives, strategies, and policies are put into action through development of initiatives (programs and projects), budgets and procedures. Strategy Execution Strategy execution is the implementation of a strategic plan in an effort to reach organizational goals. It comprises the daily structures, systems, and operational goals that set your team up for success. Strategy execution makes the strategy implementation plan work as intended, and turn strategy implementation plan into organizational success. Execution involves doing things to create "fits" between the way things are done and what it takes to make the strategy work as intended. (how things should be done) within the context of the strategy implementation. Successful strategy execution involves decisions about managing changes to appropriate elements of the organization's Operating Model. The operating model is concerned with how resources are organized and operated to get critical work done. Changes to elements of the organization's Operating Model may include: governance, accountability, or culture, and in some cases overhauling the whole structure, when a company's strategy changes. These decisions about change take place within an organizational context of power, culture, leadership, and ability to manage change. This makes it more difficult for managers to control execution. Components of Strategy Implementation Strategy implementation require a number of key components to be in place to be successful. These components include:
Effective strategy implementation provides the context for successful execution, and involves managing change in the organization's internal environment which then allows the organization to successfully adapt to the changing external environment in which it operates but cannot control. [TBD] Factors Influencing Successful Strategy Implementation Strategy Implementation is fraught with challenges as evidenced by the low percentage of strategies that are effectively implemented. Implementation failure is influenced by myriad of factors including: including:
All these factors that influence the successful implementation of a strategy are interdependent and their influences are non-deterministic it is typically very difficult for managers to comprehend the contribution of these factors to the successful outcomes of strategy implementation making strategy implementation very hard. Each of the factors influences implementation outcomes (closing the gap) in a different way; if an organization fails to pay proper attention to one of these factors, it can result in implementation failure, therefore an organization needs a system and approach to support management in successful execution. Effective Strategy Implementation and Management Strategy implementation is the responsibility of top, middle and lower/line managers focused on building capacity through projects and programs to strengthen the organization, and enable it to better deliver value to customers while meeting stakeholders expectations. A strategy is implemented if the corporation has the capabilities, enterprise advantage, and business portfolio it wants, its corporate strategy is implemented. If the business unit has the customers, value proposition, and skills it has chosen to have, its business strategy is also fully implemented. Technically, a strategy can never actually be fully implemented because everything that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. There will always be a gap between where the company is and what its (corporate and business) strategy calls for. Closing this gap is implementation. Strategic gap analysis attempts to determine what a company should do differently to achieve a particular goal by looking at the time frame, management, budget and other factors to determine where shortcomings lies. The implementation gap can be manifested as:
Typically, the gap between the strategic plan and its implementation - is caused by missing integrative links such as:
Strategy implementation involves change - closing the gap between organization's current capacity and the capacity the strategy calls for. In a rapidly changing world any competitive advantage a firm creates is temporary and not sustainable; without systematic changes to the firm's strategy and plans so it can respond and take advantage of opportunities that emerge as a result of changes in the environment while managing emerging threats that successful execution. [TBD] Strategy implementation decisions and actions are the means through which management intentions and choices are actually realized. Typically, the value delivered by enhanced and strengthened existing assets or new assets is causally and temporally separated from the successful completion of the strategic initiatives that produced those assets. Any cause-effect relationships may involve two (2) or more stages; making it difficult for managers to fully comprehend the contribution of these assets to the success/failure of the execution of the strategy. In the absence of certain cause-effect relationships or experience in how these dialectical (verbal) processes between organizations will unfold, the firm can only hypothesize about the effects of different possible initiatives, and learn more about them through interaction with other actors such as competitors, regulators, customers, suppliers, and partners in its competitive landscape. Introduction
A strategic issue is essentially an issue - an unresolved question (i.e., a fundamental policy question) or critical challenge needing a decision or waiting for some clarifying future event. It is strategic in that it affects or has a major impact on successfully achieving the organization's mission. It is an issue that must be resolved if the organization is to achieve its mission. An organization may believe that the strategic issue will be relatively easy to resolve or extremely difficult or even impossible to resolve (or somewhere in between). The degree of difficulty should not be the focus, but rather, the focus should be on the degree to which the issue is an obstacle to the organization achieving its mission. The identification and prioritization of strategic issues sets the strategic focus for the development of strategies. The strategic issue is derived from the facts and data provided by the external and internal analysis and its synthesis through the SWOT model. Strategic issues are triggered by any one of a myriad of organizational issues or events of strategic relevance, such as:
In order for an issue to be raised and resolved effectively, the organization must be prepared to deal with the conflicts associated with the issue. Strategic issues by definition embody conflicts. These conflicts may be over ends ("what"); means ("how"); philosophy ("why"); location ("where"); timing ("when"); and who might be helped or hurt by the different ways of resolving the issue ("who"). Strategic Issues Diagnosis Strategic issues diagnosis is a problem formulation process involving strategic decisions and decision-making processes to identify problems underlying strategic issues that are of strategic relevance, and deciding on potential courses of action (strategies) to pursue to resolve those problem(s). Strategic issues diagnosis defines the methods/process for identifying strategic issues and problems facing the organization. Deciding how to solve the problem, i.e., strategy development, creates the need for more information and analysis. Strategic Issues Identification Strategic issues identification focuses organizational attention on what is truly important for the survival, prosperity and effectiveness of the organization - and provides useful advice on how to achieve these aims. The strategic issues identification step focuses organizational attention on what is truly important for the survival, prosperity and effectiveness of the organization - and provides useful advice on how to achieve these aims. It is vital that strategic issues be identified and dealt with expeditiously and effectively if the organization is to survive and prosper. An organization that does not address its strategic issues may be unable to head off threats, and unable to capitalize on important opportunities, or both. Problem Formulation Strategic issues must clearly relate to specific strategic problems facing the organization; additionally, they must be specific to the particular organization or industry. Analysis is the process of organizing and presenting information in an analytical way/manner that assists in better defining the problem scope or narrowing down its causes so that solutions may be more effectively created. This includes such things as determining what caused the problem, why does it continue to exist, will it go away on its own, how long has it existed, how serious is it, how soon does it have to be solved, and what internal and external factors contribute to the problem. Problem Analysis Problem analysis requires you to build a model of the problem, collect some data and information to test your hypotheses and assumptions underlying the problem to even discover what the real problems are to solve. The process is akin to an "empirical discovery loop" that enables systematic discovery and formulation of problems in complex real world situations such as strategy and policy making. Deciding how to solve a problem once its been stated creates the need for more information and data gathering, and analysis and synthesis. Problem Statements Defining problems of strategic relevance is hard because identifying these problems are difficult, partly because of complexity induced by the complicated structures of these problems, uncertainty due to incomplete information, and turbulence in the environment. Strategic issue problems are cross-functional in nature and have major long-term consequences for the organization's success because they impact the organization's competitive position - performing better than rivals/competitors. A strategic issue problem is composed of many interrelated sub-problems, possibly from different domains, e.g., such as expressed through business architecture domains, etc. A problem statement for a strategic issue is based on a model comprising three (3) elements:
The problem statement describes the problem scope, variables and factors, and narrows the assumptions of cause-effect relationships so that potential solutions may be more effectively explored. Strategic Issues Diagnosis Outputs/Results The substantive outputs of strategic issues diagnosis are assumptions, cause-effects understanding (beliefs), predictive judgments, and symbolic language labels. These elements facilitate decision-making during the strategy (solution) development stages of strategic planning.
These elements can constrain or facilitate strategic decision-making during the issues diagnosis and subsequent strategy formulation stages of strategic management. Strategic decision making requires the decision makers to provide judgement, evaluation, and insights into the problem definition. Solutions (Strategy) Formulation Defining solutions to strategic issues' problems is a problem solving process that results in the formulation of a set of strategic alternatives/options. A solution - option/alternative - is a set of hypothetical solution approaches to solving the problems identified from strategic issues diagnosis. Solutions lead to the generation of possible strategic objectives. Linking Strategic Issues to Strategy Formulation and Mission A solution may link strategic issue(s) directly to strategy formulation. The strategy derives most of its content directly from the strategic issues. This content is restated and augmented with additional information in the form of decisions - captured in a formal model - which clearly enunciates the organization's vision as to future course and direction. Formulation involves crafting appropriate strategies to respond to the strategic issues/problems, and is an intellectual and entrepreneurial endeavor. It often requires you to build a model of the problem, collect some data and information to test your hypotheses and assumptions underlying the problem, to even discover what the real problems are to solve. A model of the strategy allows us to explore and evaluate the upside potential, the downside risk, the resource consumption and the probabilities of success for the alternatives, and select the best direction. Strategic issues may also link to the mission - defines the future role of the organization and organization goals - general and continually intended results necessary and sufficient to satisfy the organization's concept of success. This is a two (2) relationship: (1) these may arise because of the recognition that the organization is not fulfilling the commitments made in the mission statement; (2) the content of the mission statement and goals reveals some misalignments. These lead to identification of those strategic initiatives required in the next year or so to close the gap Introduction
Organizations have to change in order to grow. Typically, organizations change as a result of their strategies to re-position themselves and adapt or react to changes in external factors that create market opportunities and/or threats. All businesses have internal and external environments in which they exist and operate; organization change invariably involve change in these environments' factors. Change is a certainty so business managers must actively engage in a process that identifies change in the environments and modifies organizational behavior to best take advantage of this change. Organizational change invariably involves change in people's behavior and relationships in the internal/external environments of the organization. Change in the internal environment factors involve those factors that are influenced by how the company is run, or strategic decisions that introduce conditions inside an organization that forces a change. Managers however, do have some control over how the business reacts to changes in the external environment through management of the internal environment factors which is to some extent are controllable and changeable through the strategic management process. Change in the external environment involve external environment factors that are not controllable by the organization; these include business competitors, changes to law, general economic conditions, etc. Internal Environment and Factors The internal environment is defined by the set of internal factors resulting from either the way the business is run, or decisions made, or both. The factors resulting from how the business is run include: business reputation and image, credit worthiness, etc. The factors resulting from business decisions include:
The factors resulting from the way the business is run - how the organization moves forward both as a self contained organizational entity and its responses to factors in its external and enabling environments - include:
Internal factors can be controlled directly or indirectly; but changing these factors usually involves indirect costs such as lost productivity for example, while new employees are being trained, some direct costs such as a penalty for terminating a lease before it expires. The performance of an organization is influenced by factors or elements in the internal and/or external environments that shape the behavior as well as determine the strengths and weaknesses of the organization that are relevant to its survival and growth. External Environment Factors The external environment is defined by external factors such as characterized by PESTEL factors e.g., Economic conditions - tight lending conditions, Legal - government regulations, etc., and competition. These factors are uncontrollable, and can be modeled as the institutional relations between the business and the external organization/entity of interest to the business, but are not directly controlled by it. [TBD] Managing Organizational Change [TBD] Competitive Advantage A competitive advantage is what makes an organization's goods or services superior to all of a customers' other choices. An organization is unlikely to achieve sustainable competitive advantage leading to sustainable growth and profitability if it fails to effectively convert ideas into good strategies, and translate those strategies into workable and effective actions which are executable. Competitive advantages are attributed to a variety of factors including: cost structure, branding, quality of product offering, the distribution network, intellectual property, and customer service. the more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage. To be successful, you need to be able to articulate the benefit you provide to your target market that's better than the competition. This is your competitive advantage. You must reinforce that message in every communication to your customers and employees through advertising, public relations, sales aids; and even your store front and messaging to employees. Types of Competitive Advantage Competitive advantage can be of two (2) types:
These elements are comprised of factors that allow the productive organization to generate more sales or superior margins compared to its market rivals leading to sustained profitable organization growth. [TBD] An organization can be defined as a 4-tuple, composed by a set of goals and objectives, a set of (direct internal) sub-organizations, a set of institutional relationships, and a set of external organizations.
Organization System Structures The organization structure defines the arrangement of accountability, authority and responsibility of a group of people in a hierarchy, and network of functional and business units, and the governance relations between these units. The organization structure is designed to enhance communication and information flow among organization system elements (people or groups of people) that comprise the organization social system. Within the structure, rules, policies, and procedures are uniformly and impersonally applied to exert control over members’ behaviors. Organizational structures are the manifestation of strategic orientations and regulate information flows, decision making, and patterns of behavior, that is, the “internal allocation of tasks, decisions, rules, and procedures for appraisal and reward, selected for the best pursuit of a strategy. Structures develop due to the need to organize behavior in a meaningful way and provide orientation for organizational members to set actions that comply with organizational strategy, organizational culture, and, as a result, accepted patterns of behavior. The structure is comprised of organization units that organize activity within these units (business units, bureaus, teams, or departments) in which people perform specialized functions such as manufacturing, sales, IT, human resource management, accounting/finance, etc. People who perform similar functions (tasks) are clustered together. Organizations as Systems An organization as a system is a set of interacting or interdependent functional entities and individuals/groups of individuals forming an integrated whole. It can be one organization, a set of organizations, population groups or individuals. Organization as systems are “open”, social systems.
An organization is a system in that it is greater than the sum of its parts. How it performs cannot be calculated by adding up all the work arrangements - like departments - with the resources and processes that connect it all together. Actors Actors represent the perspectives and objectives of the individuals themselves responsible and accountable for implementing the organization design and strategy through their behavior. Actors are taken to be inherently autonomous, i.e., their behaviors are not fully controllable, or are they perfectly knowable. Although the behavior of actors is not perfectly knowable or fully controllable, they are nonetheless not completely random. The behavior of actors can be explained and rationalized through the motivations and intentions attributed to actors. Organization System Behavior The behavior of an organization is usually guided by its strategic and tactical goals. The performance of the organization can be expressed through goal-based performance indicators and measures. Behavior and performance unfolds as observable manifestations (phenomena) of predefined strategies as regulated by organizational structures. This domain puts into effect patterns of behavior, derived from strategies and structures. It makes an organization’s existence as a market player visible. Organizational System Dynamics Organizations are dynamic social systems which are a collection of people with a common purpose. The dynamics of social systems are expressed in terms of the intentional properties of the actors that comprise the system, and the interaction relationships between these actors rather than the actual behavior of the actors. An intentional description of actors' behavior offers a way of characterizing actors that respects the autonomy premise underlying the actor concept. Organization System Interactions Interactions between actors can occur to satisfy goals that are either common to actors or global goals which pertain to the society (organization) as a whole and lay outside the scope of any one individual actor. Considering sub-organizations as a kind of structured logical actor, interactions among the sub-organization units can be viewed as a way of realizing society goals. Introduction
The term strategy, in business, generally refers to a singular thought - an answer or solution to a specific business problem. strategic decision-making involving choices from the myriad of ways and the means by which a stated objective will be achieved. Strategy, in a business context, is about how an organization seeks to survive and prosper within its environment over the long-term. Strategy in business exists at various levels in an organization, board level, executive level, senior management level, etc. The various levels at which strategy exists in an organization can be defined as: corporate level, business unit level, operations level, and business functions level. The strategies at those levels can be organized into a layered strategy model of the organization. The term "strategy", as used in everyday business conversations, is an overloaded word. Every company ( "for-profit" or "non-profit") has a strategy, but most people including professional practitioners do not bother to explicitly establish their perspectives (points of view). This creates confusion, since strategy in the business context, is essentially, a layered concept. Strategy in Business Organizations Most executives in business organizations realize that to proper in the future, they need to turn to the fundamental issue of strategy. Strategy, in the business context, answers two (2) basic questions:
Strategy combines the "where?" and "how?" to create a continuing flow of temporary and shifting competitive advantage. Creating a series of shifting advantages is challenging. This involves selecting an attractive market, choosing a defensible strategic position, or building core competencies. It requires effective strategic decision-making at several levels in the organization; at the unit level, to improve business competitive strategy; at the multi-business level, to create collective strategy and cross-business synergies; and at the corporate, to articulate major inflection points in strategic direction. Strategy provides an organization with an offensive device to compete against competitors and guides their decisions and actions when faced with a range of choices. Strategy - A Layered Model The various levels at which strategy exists in an organization can be defined as: corporate level, business unit level, operations level, and business functions level. The strategies at these various levels can be organized into a layered hierarchy, such as: corporate strategy, business competitive strategy, and operations strategy, with a crosscutting layer comprising the strategies of the other business functions functional strategy. The scope of each of the layers is described below.
The actual/realized strategy of an organization is the combination of the executed parts of deliberate strategy and emergent strategy.
Strategy as Strategic Decision-Making Process Strategic decision-making in concerned with how strategic decisions are made - formulated and implemented (Elbanna 2006). At various levels in a business organization, management's (strategic) decision-making is the process of making choices by recognizing the problem, gathering information about feasible solutions, and finally choosing the best alternative. Strategic decision-making is the means by which management intentions are realized (formulated and implemented). Strategic decision-making is inextricably linked to strategic planning because it concerns the distribution of resources and the company's long-term direction. Strategic decision-making involves issue comprehension, concepts structuring, and concepts formulation into cause-effect relations model. While the cause-effect relations are based on logical and deductive reasoning, the issues comprehension that triggers it, involves choice of assumptions which is to some extent arbitrary and inductive in nature. It is important that managers understand that their choice of assumptions is arbitrary and influenced by their beliefs and mind-set (mental model), and might not accord with reality. So strategic decisions logically flowing from these assumptions, if they turn out to be bad/erroneous assumptions, can lead to failure. Strategic decision-making is a critical skill for effective leadership in business organizations and other organizations, i.e., military, sports, political, etc. The outcomes of a leader's choices significantly impacts employees, customers, the market and success of the organization. Strategic decision-making is typically more complex, novel (new) and open-ended (Mintzberg, Raisinghani and Theoret, 1976), and is characterized by independent elements that by definition cannot be formulated, let alone solved independently of one another.' (Mitroff and Emshoff, 1979:1). Strategy Viewpoints The concept of strategy is usually used in different ways, even though traditionally, it has been defined in only one way. Explicit recognition of the multiple definitions corresponding to the different viewpoints can help people when developing strategies. The various viewpoints can be defined in terms of Mintzburg's 5Ps of strategy:
Decision makers or managers start with a given perspective, conclude that it calls for a certain position, and sets about achieving it by way of a carefully crafted plan. Over time things change; a pattern of decisions and actions marks movement from starting point to destination end-point (goal). Strategic Decisions A strategic decision is a specific commitment to action (usually, a commitment of resources). Strategic decisions are long-term decisions; they are taken in accordance with the organization's mission, vision, and values. Strategic decisions are characterized by a number of features including:
Strategic decisions concern the organization's external environment(s), the organization's resources, the people who form the organization, and the interface between the organization and its environment. Strategic decisions are those decisions, taken by top management, that have influence over years or decades, and even beyond the lifetime of the projects that implemented/realized those decisions. Some examples of strategic decisions include:
The success of strategic decisions depends on the ability of decision makers to influence the desired outcomes through the people that are members of the organization, and the expectation to outperform the competition/rivals. Strategic decisions are novel (new) - there are no well understood or agreed upon procedures for making them, important (i.e., consequential) and non-routine. Success depends on the ability of managers to influence the desired outcomes through its people, and the need/expectation to outperform rivals. Strategic decisions are different from administrative, tactical and operational decisions. For these decisions, decision makers can actively influence outcomes of strategic choices, using their abilities to make things happen, and success means doing better than rivals. Strategic decisions require the decision maker to provide judgment based on insights into the problem situation and choices from alternatives. Strategic decision makers such as business executives, coaches in sports, or political candidates are not like shoppers or administrators making routine choices that lead to one outcome, or another. They can influence the outcomes by the way they lead and communicate, and through their ability to inspire and encourage others. Moreover, executives are in charge of organizations that compete vigorously with others; success means doing better than rivals. Roles of strategy in Business Strategy plays a number/variety of roles in organization's success, including:
Strategy is a significant determinant on a company's success or failure, in addition to the significance of competence of its managerial leadership. |
AuthorI am a computer scientist by education and training. My interests are in modeling complex business and social systems to foster better strategic and operations management processes in delivering value to customers while meeting the expectations of stakeholders. Archives
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