Organization managers use various strategies to help allocate resources such as workers, money, and stock within their firms. Moreover, these assets help the administrators in executing different business activities, which include marketing and production. When executives start creating their organizational tactics, they begin by dividing them into corporate, business, and functional level strategies (Mukhezakule & Tefera, 2019). Supervisors use corporate-level strategies to make a business’s diversification, profit, and liquidation decisions. Company bosses use business-level strategies in a more focused manner. For instance, they can try increasing the marketing budget or investigating new markets if a firm’s corporate-level strategy is diversification. Functional level strategies comprise the particular activities that administrators allocate to divisions and employees to help a company attain its goals. According to Mukhezakule and Tefera (2019), leaders use strategies in setting business directions and priorities and align teams and divisions with a common objective. Organizational strategies also assist superintendents in clarifying and simplifying the decision-making process. Therefore, different types of strategies have their history, advantages, and disadvantages; and are specific, measurable, and realistic.
History of Organization Strategy
The application of strategies began a long time ago in the Bible. God told Moses to face Pharaoh and lead the Hebrews out of Egypt because they were suffering in that country (New International Version Bible, 2011, Exod. 3:7-10). Moses was the only strategist in this movement, and since he was overwhelmed leading the many people, he delegated some power to other leaders to oversee small teams of individuals. One of such people was his brother Aaron who acted as the spokesman (Ben-Nun, 2018). Likewise, company chief executive officers face several demands; but entrust some of these essential responsibilities to their deputies and other administrators as they cannot handle all of them alone.
Organization strategy started in the 1960s using the experience curves, which showed the association between the number of goods manufactured and their costs. Latimer and Meier (2017) assert that “the experience curve has a long history of application throughout industrial cost projections” (p. 2). Therefore, business managers with adequate manufacturing experience produced goods cheaply as they strategized on the items’ appropriate quantities, manufacturing costs, and selling prices. These tactics were the basis of organizational competitiveness, which Michael Porter expanded later with other strategies. In 1985, Porter asserted that corporations must optimize their activities to outperform their competitors by lowering costs or differentiating products (Bashir & Verma, 2017). In 1990, Prahalad and Gary posited that firms should look at both their rivals and inside their companies to gain competitive advantages (Li, 2019). Organization strategies continued developing and becoming more analytical and changed from senior managers’ daily responsibilities to being the strategy experts’ everyday jobs. However, this shift resulted in problems because it became difficult to distinguish between who should formulate and implement strategies. Technology worsened the scenario as tactics became more sophisticated in their implementation, which is a big issue nowadays.
Types of Organization Strategies
The major types of organizational strategies include growth, stability, and renewal. Institution managers use the growth tactic to help their corporations expand their business activities, for instance, increasing product lines, acquiring clients, or entering new markets (Seif, 2019). In most cases, an institution’s target market and sector determine the growth strategy that it chooses. Growth strategies are highly beneficial to organizations because they help them work towards their future objectives; they make leaders and workers remain focused on an institution’s long-term goals. Therefore, business managers should concentrate on the growth strategy because it helps them attract new employees and acquire assets as their firms continuously become profitable.
When institutions use the stability strategy, they continue performing the duties that they presently execute. For instance, a firm can keep on serving the same customers and sell them the same goods. In short, the business fails to grow, although it does not go down. The main reason why institutions choose the stability strategy is to funnel all their resources into their present activities while avoiding the risks of expanding and growing marketplaces and products. Furthermore, this approach assists in minimizing the effects of the changing customer needs and environment. This strategy is, therefore, most suitable for successful companies that operate in highly predictable business environments.
Managers use renewal strategies when their firms’ conditions decline; therefore, they think of reversing the fall and returning the institution to good paths that help them achieve their goals. When companies encounter problems, executives must act by formulating renewal strategies, which help them address declining performances. Sometimes, strategic choices that administrators make result in situations that prevent their institutions from exploiting competitive advantages. Therefore, poor management is the main reason why the performance of businesses declines. Highly incompetent executives who cannot strategically manage all their organizations’ aspects are most likely to make their firms’ performance decline.
Advantages of Organization Strategy
Organization strategies have several benefits, which include encouraging institutions to be proactive and not reactive. When organizations are always ready before anything happens, they easily predict the future and plan appropriately. Managers use institution strategies to assist them in anticipating particular adverse situations before they occur and act in time to avoid them. Consequently, strong tactics help firms to be proactive instead of simply responding to conditions after happening. Therefore, proactive companies persevere with trends that continue to change in the marketplace and stay ahead of their competitors at all times.
An organization’s strategy also increases a firm’s operational effectiveness by providing the managers with the standard procedures, which they should follow in aligning institutions’ functional activities to attain their set objectives. According to Abubakar, Elrehail, Alatailat, and Elci (2019), administrators use business tactics to make decisions that help them determine the budgets and resources that their firms require to accomplish the set goals. As a result, optimal asset allocation significantly increases a firm’s operational efficiency.
Organization strategies help administrators establish a sense of direction within their firms. Therefore, the managers identify the route that their companies should follow as they effortlessly set up realistic goals, which conform to the firms’ visions and missions. The measurable objectives help keep businesses on track; therefore, firms’ managers must be exceptionally cautious when setting up goals, which might require backing up with realistic measures to assess outcomes. Therefore, organization strategies provide the foundation that firms highly need to grow, evaluate their achievements, compensate workers, and create boundaries for making decisions effectively.
Managers who use organizational strategies help their businesses last long as they operate in turbulent environments. In most cases, companies thrive in doing their commercial activities for a year and then become heavily in debt in the subsequent periods. Such firms do not have strong foundations, although they are in sectors and global marketplaces that keep changing. Therefore, if the organizations remain in the same situations where they do not focus, they might be in danger and fail to ride the future waves.
Disadvantages of Organization Strategy
The disadvantages of organization strategy include its complexity because administrators continuously assess critical elements, for instance, the organizational structures, firms’ internal and external environments, long-term goals, and strategic management. All these components have a strong relationship, and making any change to a single element affects the others. For instance, in a financial depression, businesses might decrease the number of workers. Therefore, a poor economic condition, which is an external factor, causes the internal environment’s changes, which are the employees. As a result, such corporations might evaluate their goals and adjust them. This action influences the companies’ management styles and decision-making processes.
An organization’s strategy consumes a lot of time as the executives spend long periods preparing, researching, and communicating the strategic management procedure. This action might obstruct daily firms’ operations and negatively affect their business. For instance, administrators can ignore the day-to-day activities that require immediate resolutions and regrettably cause a reduction in workers’ short-term sales and productivity. This assertion means that if managers do not resolve issues early, many workers might leave the company. Therefore, the corporations may be forced to redirect critical assets and leave strategic organization plans on a sidetrack.
Organization strategies are hard to implement because the procedure requires the managers to communicate their plans clearly and everybody in the firm to participate actively. Furthermore, executing the tactics requires full attention, and all employees should be accountable for their actions within the corporation. Andersson (2019) claims that “contemporary management trends have increased demands on individual employees to take greater responsibility for everything from quality and efficiency, to the brand of the organization” (p. 60). For this reason, administrators ought to build and enhance synergies among workers always to make sure that they support them in attaining the corporation’s goals. However, sometimes this action might be particularly challenging because if administrators formulate strategic processes; but do not participate in implementing them, they might not feel responsible for the firms’ choices.
Since implementing organizational strategies requires full attention and all employees to be accountable for their actions within the corporation, companies should use their personnel effectively. The human resources managers ought to help with institutional efficiency by assisting in designing new business strategies. These administrators are highly beneficial to companies because they hire new employees and impact the corporations’ objectives. Furthermore, these specialists implement changes and improve their firms by offering exclusive perspectives, and they identify the right people to fill new positions in their corporations.
An organization’s strategy is time-consuming, therefore, managers should use technology to improve their efficiency. Computer software can help an administrator share information quickly within the company, hence keeping various team members updated even if the employees are not actively executing their duties. For instance, managers can use MS-Excel effortlessly to communicate changes across the workers from time to time. Therefore, technological tools assist administrators in improving their companies’ efficiency without decreasing their products’ quality.
The history of organizational strategies dates back to Moses’s time when God told him to lead the Hebrews out of Egypt because they were suffering there. Moses thought about how he could lead many overwhelming individuals, hence he delegated some power to other leaders to oversee small teams of people. Managers who use organizational strategies are highly beneficial to their institutions because they encourage them to be proactive and not reactive. Furthermore, the executives increase firms’ operational effectiveness and help establish a sense of direction within their companies. However, organizational strategies have disadvantages that include administrators finding it hard to implement them, they consume a lot of time, and it is complex to assess critical elements. Therefore, managers should use human resources effectively and utilize the appropriate technology to improve their job efficiency.
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New International Version Bible. (2011). Bible Gateway. Web.
Seif, J. (2019). Growth strategy, entrepreneurial capability, and business success of SMEs in Mbeya City [Unpublished doctoral dissertation]. Mzumbe University, Tanzania.