The Importance of Strategy Process

Introduction

According to Swamidass and Newell (1987), Strategy denotes actions or patterns of actions intended for the attainment of goals. In other words, under an organizational setting, strategy as a management terminology goes much farther than mere intentions to act or planned strategy; it (strategy) also takes into account those ‘sequence of decisions’ that show evidence of a ‘posteriori consistencies’ in the manner of which decisions are taken, particularly within a corporate structure setting (Mintzberg, 1978). Primarily, the term strategy refers to “organizational strategy that specifies how an enterprise or its business units achieve and maintain competitive advantage within its industry” Pun (2005:284). One of the fundamental topic of discussion that has remained central to researchers and authors in the fields of macro organizational behaviour of actors within the corporate circle and strategic management is the study of the relationships that exist between strategy and structure in large, complex firms. However, Burgelman (1983) asserts that previous research conducted in this area has only produced apparently conflicting propositions with regards to the directionality of these relationships. Reiterating further, he asserts that both propositions: ‘strategy follows structure’ and ‘structure follows strategy’ seem to be valid depending on which body of empirical evidence is used to strengthen the argument.

Notwithstanding, the content of a strategy is very important when issues of reliability on, and consistency of the strategy are of utmost concern. The Pettigrew and Whipp (1993) model has referred to the content of strategy as “the assessment and choice of products and markets, setting objectives and targets with some evaluation” (cited from Hutchinson, 2001:271). In the context of area regeneration, according to Hutchinson (2001), the content of strategy may be the choice of themes, priority areas, or groups rather than products and markets. The ‘area of regeneration’ perspective, as Hutchinson (2001) has also argued, can be used to examine what a strategy actually says since the area of regeneration may be used to prioritize areas of needs. Reiterating further, he is of the view that strategy content might be the choice made to focus on key issues such as business support, environment improvement, and inward investment. The area of regeneration strategies, however, is highly cynical of the value of the strategies, and the mission and value statements in particular, of an organization (Hutchinson, 2001:272).

A number of forces that act as the determinants of strategy content, which are also referred to as the ‘trinity of forces’, have been identified. These include strategy process, content, and (internal and external) context forces (Pettigrew and Whipp, 1993; Hutchinson, 2001; and Pun, 2005). In this report, emphasis will be on a critical evaluation of the importance of the process and context of strategy in determining strategy content. In the next section, an evaluation of the role of strategy process as a determinant of strategy content will be provided. An evaluation of the role of strategy context in relation to strategy content determination will succinctly follow in a subsequent section. A section on concluding remark to draw on the gains of this report will be given afterwards.

Strategy Process as a Determinant of Strategy Content

Primarily, strategic process, as a force, is composed of the following entities: change managers, models of change, strategy formulation and/or implementation, and pattern through time (Pettigrew and Whipp, 1993; Hutchinson, 2001; and Pun, 2005). The strategy process, as an important force that determines strategy content, can best be described as models. Three models have thus been identified, namely: the rational process model (this supports fund allocation to projects and strategic advice formulation often directed to management), the stakeholders model (this proposes that an organization’s strategy will only be effective if it meets the needs of its stakeholder groups), and the decision process model (in this case, strategy development answers the following major questions: “Where are we going? How do we get there? What actions do we take? How do we know if we are on track?”) (Hutchinson, 2001:270-271).

With the change managers’ factor, a rational process of strategy development is often guided by top management officers, and sometimes by consulting a wider spectrum of experts. On the other hand, a stakeholder model naturally assumes that all stakeholders readily consider much wider discussion, and therefore, identification of issues and negotiation in achieving a mutual agreement among all key stakeholders is on course (Pun, 2005). The decision model emphasizes on the issue of domiciliation of decision-making power. However, Hutchinson (2001) claims that the dynamic underlining the rational process model is such that the formulation of a strategy is a major output; it may even be viewed that the process of putting the various parts of a strategy together is often as important as the document itself. Notwithstanding, Healey has noted that: “strategy does not just lie in the text of some plans. It lives in the minds of actors in policy communities” (Healey, 1997:4). Therefore, the case that if a range of partners has participated within the strategy development process they are more committed to its successful implementation is true. In a different development, the pattern through time provides a premise to understanding a strategy, which must be in line with the length of time it takes to implement the strategy. One of the major inferences drawn from Bramwell (1997) is that: “an effective strategic response has only evolved after the event, but that nevertheless it is effective. The extent of that success will however only be observable over a long-term perspective” Bramwell (1997:173).

Strategy Context as a Determinant of Strategy Content

In the models identified above, strategy context, as another important force when determining strategy content, can be broken into two basic elements, namely: internal and external environmental strategy context elements. With the internal strategy context element, ways at which an organization configures itself in order to achieve its strategic aims are often incorporated in the strategy development. This idea has been fully supported in the business literature (Hutchinson, 2001; Richter and Schmidt, 2005; and Pun, 2005). Specific aspects of the internal strategy context elements are identified as administrative framework, power distribution, and the management team characteristics (Richter and Schmidt, 2005). The external environmental strategy context element plays a major role as key explanatory variable within the confinement of the organization’s external environment, wherein strategy content is defined as function of external factors, which are taken into consideration in the structuring of the entire strategy content of the organization (Hutchinson, 2001; and Muralidharan, 2004). Within the external structure, items identified with the strategy context include uncertainty, complexity, munificence (Richter and Schmidt, 2005).

The relative importance of decision-specific vis-à-vis related organizational factors, which shape the decision-making process of an organization in relation to antecedents of consistency between individual decisions on resource allocations, and the concept of corporate strategy, were investigated by Richter and Schmidt (2005). A model was used to derive hypotheses on the influence of organizational and decision-specific factors on consistency. Statistical tests were then conducted on the hypotheses using data from 493 resource allocation decision sources. From the analysis conducted, they found out that the decision-specific individual resource allocation factors are much more important due to their consistency with the prevailing corporate strategy concept than are the organizational factors. In this guise, it is therefore imperative to hypothesize that the manner at which an individual organization constructs its own business strategies as well as those strategies of the areas in which it operates, can easily be shaped by the drive to become more business-oriented and improve business economic variables: efficiency, economy, and effectiveness. The eminent result in this regard is evident in the important role strategy context plays from an internal purvey.

Concluding Remark

In the foregoing, the issue of strategy process and strategy context with respect to the important roles they play in the determining strategy content in its entirety have been the focus of the discussion in this report. In particular, a critical review of the various roles the strategy process and context factors play in the determination of the strategy content of an organization has been provided. Firstly, a background review of organizational strategy in its entirety was considered. This gave rise to a conscious consideration of the roles strategy process and strategy context will play in defining the various elements of strategy content as well as its eventual development into proper organizational structure. It was therefore concluded that the strategy process contributes immensely to strategy content by drawing on its constituent elements, which include change managers, models of change, strategy formulation and/or implementation, and pattern through time. On the other hand, it was also concluded that an organization striving to become more business-oriented while improving its business economic variables such as efficiency, economy, and effectiveness would always work frantically to shape up those strategies within its immediate operations; and this can best be achieved by focusing on the issues underlining strategy context.