An organizational strategy is one of the most important things an organization should have. Companies should have this strategy, not just have it for the sake of it but to put the strategy into an organization’s action plans. It has been my observation, that most start-up companies or SMEs are operating without an organization strategy, some have the strategy but it is not being implemented as it should and other organizations have only conducted the strategy and never reviewed the strategy. An organizational strategy is crucial for future growth regardless of whether you are an entrepreneur, small-business owner, or corporate firm.
If you are someone who wants to start a business or owns a business, if you don’t have a business strategy you might need to consider having this tool. Someone once told me, if you need to get to a certain destination, do you first walk around and try to get to your destination blindsided when you’re holding a map in your hands? Or do you first open your map and begin your journey guided by your map, following the route and instructions on getting to your destination?
In this article, we define organizational strategy, talk about the different essential elements of organizational strategy, and list the strategy types that exist. We also briefly discuss why your company requires an organizational strategy.
What is an Organizational Strategy?
Now think of an organizational strategy as a tool, and this tool aids organizations of all sizes to be competitive and grow, in other words, the future of an organization depends on this tool. An organizational strategy is a plan of action for how a business will reach its long-term objectives. It outlines how a corporation intends to employ its resources to support its operations over the long term. It offers direction on how a business might accomplish its goals. These action plans are used by businesses to fulfill their objectives and create strategic plans. Organizational strategies frequently contain thorough assessments detailing the company’s goals and objectives.
Ansoff (1965) defines organizational strategy as a conscious plan to align an organization with the opportunities and difficulties posed by its environment. This frequently necessitates organizations to understand not only the environment in which they are currently operating but also their current resources and the possibility of using these to overcome threats and seize any opportunities that may be available to them. The ability of any company to develop within its environment is frequently reliant on economies of scope in production (goods or services), learning curves, and process innovation, and this necessitates the alignment of the business’s strategy to be able to do this.
A company’s mission, which defines why it is in business, must inform organizational strategy. Every activity in the organization should strive to fulfill this aim, with the mission guiding all strategic decisions. The vision of a corporation outlines what the company will have accomplished in accomplishing its purpose. The long-term goals of an organizational strategy flow from the vision. In your organizational strategy, you can identify many business objectives, each with its own set of procedures to assist you reach them.
Levels of an Organizational Strategy
When creating your organizational strategy, you need to take into account the three main organizational levels of your company and their different roles in your overall plan.
You need to think of these levels as building blocks, the corporate-level plan being the most comprehensive and flexible strategy, while the functional strategy is the most immediately implementable. The levels apply to all organizations, whether small or large organizations.
As the saying goes, “A journey of a thousand miles begins with one step.” Of course, success isn’t always guaranteed even with a solid (or excellent) strategy, but if you want to succeed, you should start somewhere. A key component of producing quality work is comprehending the many levels of strategy.
Each of these three types is important in the formulation of a comprehensive organizational strategy. Let us try to grasp all three strategies in simple terms.
Corporate level strategy:
This level provides an answer to the fundamental question of your aim. Is it expansion, stability, or contraction? Corporate strategies have a broad reach and are intended to reflect the overall goals and mission of the organization. Diversification, differentiating, and growth strategies are all part of corporate strategies, which include high-level objectives for accomplishing strategic goals. It directs the creation of the business level and functional level strategies. The corporate-level strategy represents the main objective of your organization and the general direction it should be taking. A company’s mission, which defines why it is in business, must inform organizational strategy. Every activity in the organization should strive to fulfill this aim, with the mission guiding all strategic decisions. The vision of a corporation outlines what the company will have achieved in accomplishing its purpose. The long-term goals of an organizational strategy flow from the vision.
Business level strategy:
This level focuses on your strategy for competing. Will it be accomplished by close ties to customers, innovation in products or services, or the lowest overall cost? Differentiation and what is the basis for the differentiation?
This is where the rubber meets the road, where the corporate strategy is reduced to a set of measurable objectives are the business strategies. The departmental objectives for corporate strategies are broken down under this area. Examples of business-level strategy include exploring new markets, introducing new goods, or rebranding the company. A business strategy is necessary because successful businesses must integrate the idealism of a mission statement with the decision-making realities of day-to-day operations. Entrepreneurs who devote a lot of creative energy to innovation risk failure if they rely on generic business management strategies rather than creating strategies that are tailored to the particulars of their competitive market. You owe it to yourself to create a business plan that is worthy of your financial and emotional investment in your business.
Functional level strategy:
Moving down the funnel, functional strategies take on next-level specificity and provide action plans for team members to make strategic decisions. Functional strategies could involve minute details like making new landing pages or fixing problems or bugs in specific code. Think of the functional strategy as the operating end of an organization.
Simply said, this is the plan that will guide employees’ daily work and eventually keep your company moving properly. According to Cascade, the most crucial level of strategy is the functional strategy level. This is because, without practical strategies, your business may rapidly lose momentum and “become stuck” as the competition advances. If a functional-level plan is neglected, mismatched, or poorly carried out, even the most sophisticated corporate-level strategies won’t succeed in producing results.
Elements of an Organizational Strategy
Specific
It is not enough to just state that you want your company to “be better.” Think about it, better in what sense? Services or sales? public opinion? Cost reductions?
A good organizational strategy provides the specific methods for achieving corporate objectives. An ambiguous approach to strategy management leads to confusion and waste of resources. Instead, be as specific as possible about your plan. Incorporate numbers into your approach as well, such as achieving 75% customer happiness.
Measurable
How will you know when you’ve achieved your goal? You won’t unless you create observable metrics that you can use to monitor your development.
Goals should be stated in a way that enables data collecting and analysis in addition to focusing on particular aspects of your organization. Don’t just focus on quantitative information. You can gather qualitative data to assess progress that is less likely to show up on spreadsheets if you take the proper method.
Realistic
While we would advise you to aim high when setting your goals, it is best for a company to make goals that are practical and attainable. Naturally, since realistic goals are more likely to be accomplished, a series of modest objectives that build on one another are more effective than a single, bombastic objective. When deciding which future goals to strive towards, take into account the accomplishments your business has made in the past. If, for instance, your business increased its profits from $40,000 to $60,000 last year, think about aiming for $80,000 rather than $100,000, which may be outside of your existing trends.
Limited
Organizational strategies are time-bound or time-limited, which means they have a deadline. Businesses decide how long, say three years, they will spend working toward a specific objective. This enables users to monitor their progress toward their goals and ensures that activities are completed.
Types of Organizational Strategy
Focus
A focus strategy matches a company’s products and marketing to its target market. A company can develop items that its customers will buy and find useful by understanding their wants and needs and developing a successful focus strategy. Finding a niche market group is a key step in the focus strategy. Businesses that use this strategy cater to a small, specific audience. To foster consumer loyalty, it is important to offer top-notch goods and services. For instance, a company that sells almond milk focuses on vegans and lactose-intolerant people.
Differentiation
A corporation that uses a differentiation strategy aspires to be the best in its industry. They do this by providing innovative goods and services with distinctive qualities. To find out what draws customers, extensive market research is required. For instance, a business selling designer handbags can establish exclusivity and establish a waiting list for customers wishing to purchase their most recent model.
Growth
Growth strategies are ones that a business uses to grow. This can entail expanding their customer base or sales volume. Buying or acquiring a rival company is another form of growth strategy. A shoe company expanding its line of goods to include sportswear would be an example of a growth plan.
Rationalization
When a company decides to reorganize to increase efficiency, this is referred to as a rationalization strategy. In order to concentrate on what is best for the firm, this frequently involves reducing the number of employees or business outlets. After implementing a growth strategy, businesses often utilize this technique when their operations become more complicated. For instance, a food outlet may resolve to launch 20 new sites but then determine it would be more economical to concentrate on fewer. This might force them to close some of their brand-new locations and fire staff, and this will be a rationalization strategy.
Why Your Company Needs an Organizational Strategy
I had to take it back home on this one. Michael Chamunorwa Tigere and Research scholar Simbarahe Masamba did a study to assess the impact of strategy implementation on company performance in Zimbabwe and they found that there is a positive relationship between how organizations implement their strategy and the performance of that company. In their paper they also stated that a number of organizations in Zimbabwe have failed to generate profits, increase market share, and increase sales volume as a result of poor vision and strategy implementation, including Kingdom Bank, Interfin, National Railways of Zimbabwe, Food chain group, Shabani mine in Zvishavane, and ENG insurance, to name a few.
Another paper by Katsvamutima and Jeevananda investigates business-level strategies as well as the impact of strategy formation, strategy content, and strategy implementation on competitive performance in Zimbabwe’s food manufacturing sector. The study’s findings demonstrated that strategy formulation and implementation, when completely implemented in food manufacturing organizations, improves efficiency, profitability, and competitive advantage in dynamic situations.
In short, business owners need to have knowledge about organizational strategy, so that they can plan and implement it well for their organization. If you do not know how to do it, outsource people who can. An organizational strategy is a map, and you need it to get your firm to its destination. Strategy helps in aligning departments and teams towards business goals, provides a framework for better decision-making processes, helps with sustainability and gaining competitive advantage, and clarifies direction and priorities.
Final Thoughts
You must first create an organizational strategy in order to guarantee that your company reaches all of its objectives. Your organizational strategy must include more general corporate goals, mid-level business goals, and specific functional goals if you want to create a workable strategy. In order to ensure that your business is set up for long-term success, don’t forget to evaluate and modify your plan frequently. With this information, “zviri kwauri mwene wejira kufuka kana kuwarira.”
“Business strategy is the battle plan for a better future.”
_Patrick Dixon_
Reference
Ansoff, H. I., 1965. Corporate Strategy, New York: McGraw-Hill
Katsvamutima, Emmanuel and S, Jeevananda, Strategy Formulation and Implementation in Zimbabwe’s Food Manufacturing Industry (May 19, 2014). International Journal of Science and Research (IJSR), Volume 3 Issue 5, May 2014, Available at SSRN: https://ssrn.com/abstract=3240449
Kelin Kundai Zvomuya is psychology graduate and an HR Consultant.
Email: kelinzvomuya@gmail.com
LinkedIn: https://www.linkedin.com/in/kelin-zvomuya-746364133
Cell: 0785419889/0714793382