- Email: [email protected]
Helping managers to develop strategies
56
Long Range Planning, Vol. Printed in Great Britain
18, No. 2, pp. 56 to 68, 1985
Helping Managers Strategies M. D. Skipton,
School
0024-6301 j85 %3.00 + .OO Pergamon Press Ltd.
to Develop
of Business, Kingston Polytechnic, Survey, U.K.
Concepts within strategic management are defined and a framework for strategic analysis and planning is presented. Within the planning operation, corporate strategy and corporate integration are central to strategic management, The timetable largely prescribes the procedural steps involved in strategic analysis and planning, and the character of each of these steps is determined b y the frame of reference. or the aims and purpose of strategic managers, which are established during strategic planning. As a practicalmanagement tool, the framework developed here offers the possibility to improve management performance and to increase corporate effectiveness and flexibility.
Introduction The practice of management is extremely difficult and complex, and successful performance is hard to achieve. This is especially true of strategic management, not least because strategic management as a process is relatively undefined, and it is open to every strategic manager to have his or her own concept of strategic management. In the business firm, it is the responsibility of the Board of Directors to carry out strategic management. Here, this process is seen to consist of the procedural operations of analysis, planning, implementation and control. Strategic analysis and planning are most important, as these lead to some which is then implemented and strategic plan, controlled. Within strategic planning, the steps of corporate strategy and corporate integration are seen as central to and characteristic of strategic management as a whole. This paper explores a number of concepts within strategic management, and goes on to outline a normative, procedural framework for strategic analysis and planning. It is hoped that the discussion in this paper will assist strategic managers in their The author is now Assistant Professor, Faculty Admmistration, Memorial University of Newfoundland, Newfoundland, Canada, Al B 3X5.
of
Business St. John’s,
search for improved effectiveness, efficiency ing one way ofdefining management.
performance, i.e. greater and flexibility, by illustratand systematizing strategic
Discussion of strategic management is particularly affected by lack of agreement in the literature with respect to concepts and definitions, as well as variations in semantics. The words policy, aim, mission, purpose, objective, goal, strategy, ffleans and tactics have been used by different writers to mean different things. These words have particular meanings here and they are defined in the Glossary of Terms at the end of this paper. The same words are used to describe procedural steps in strategic analysis and planning, and the corresponding substantive items in a written strategic analysis or strategic plan. This paper is mainly concerned with strategic management in business firms, but it may also be applied to other types of organization. The phrase, strategic manager, should be taken to include the staff position of strategic planner, where appropriate.
Management
and Performance
The strategic management process is characterized by corporate strategy and by corporate integration, and operational management is characterized by functions/actions and co-ordination. Structural linkage and the main channel of communication between the two types of management, in any organization, are seen to be through corporate integration and operational co-ordination. In strategic managers must always balance practice. considerations of corporate strategy, 1.j considerations of corporate integration. Similarly, opcrational managers must balance filnction/actions against operational co-ordillation.’ The continuing a whole, and,
performance of the organization therefore, of its ma’nagemcnt, may
as be
Helping
to Develop
Strategies
Dimension
The strategic management process is here to consist of four organizational, operations of management; i.e. Analysis, Implementation and Control. These are and each is made up of one or more steps in series or in parallel, as appropriate.
Strategic
conceived procedural Planning, sequential, carried out
Analysis
Strategic planning for the future is only as good as the information on which it is based. Strategic analysis, therefore, precedes strategic planning and situation of the is to define the strategic organization in its environment. The conclusion of
Effectiveness
Purpose/Throughput
(Corporate
Strategy)
Administrative
(Function/Action)
Efficiency
Flexibility
Resources The Boundaries of Strategic Management The Boundaries of Operational Note: This Figure is Reproduced
Figure
57
Analysis and planning are always carried out before the start of the planning period to which they refer. The resultant plan is implemented and controlled during the planning period to which that plan refers. Therefore, during any one planning period 1 year), strategic (assumed to be, typically, management should be engaged in implementation and control of the old plan, i.e. the plan which refers to the current planning period and is the outcome of analysis and planning carried out in the previous planning period. Simultaneously, strategic management should be performing the analysis and planning operations to produce the new plan, which refers to the next planning period in the future. The sequence of operations within iterations of the strategic management process is shown in Figure 2.
assessed according to the criteria of effectiveness, efficiency and flexibility. Effectiveness is mainly dependent on the relationship between objectives and opportunities brought about by strategic management, and characterized by corporate strategy. The fit between opportunities and resources is the responsibility of operational management through their functions/actions, and is the main determinant of overall efficiency of the organization. Flexibility is largely governed by corporate integration and operational coordination and is termed directional or functional, respectively. The relationship of these performance criteria to the ends of management, i.e. objectives, opportunities and resources, is shown in Figure 1.
The Time
Managers
1. Relationship
between
effectiveness,
efficiency
are Shown as
Management
are Shown as -
from Reference
and flexibility,
-
-
-
-
(1).
and the ends of management
58
Long
Range
Time
Planning
Vol. 18
Planning Period (1)
Planning Period (2)
Planning Period (3)
Analysis and Planning (2)
Analysis and Planning (3)
Analysis and Planning (4)
and
Implementation Control (2)
----
---
2. Iterations
-
of the strategic
Iteration
(1)
Iteration
(2)
Iteration
(3)
Iteration
(4)
management
strategic analysis is a SWOT analysis. This would summarize organizational Strengths and Weaknesses and environmental Opportunities and Threats. SWOT analysis is the link between strategic analysis and strategic planning. This SWOT philosophy is thought to underlie many of the matrix methods of business analysis reported in the literature.24 A fixed, analytical frame of reference is necessary in order to discriminate organizational strengths and weaknesses, and environmental opportunities and threats, and to do this with some consistency. The frame of reference for strategic analysis is the i.e. the policy/aims and frame of reference, mission/purpose (see below), formulated in the old plan in the previous iteration of the process. This must be so, since a frame of reference may only be established during strategic planning, and analysis always precedes planning in any iteration of the strategic management process.
Strategic
1985
w
implementation Control (1)
Figure
April
Planning
Strategic planning is a subjective operation. It is the choice of objectives and means for the future. A clear and explicit frame of reference is the key to strategic management in practice, as it is through their frame of reference that strategic managers strategic to formulate their own are able management-individually and as a group. The frame of reference is here constituted by the first steps in strategic planning. These steps are policy/aims, which is the choice of objectives applied to the immediate environment for strategic management (and the organization), and the definition of this environment in mission/purpose.
and
Implementation Control (3)
and
process A frame of reference can be a tender trap for any strategic manager or management group. There is danger in being confident in an established frame of reference, especially if this underlies successful business performance up to the present. It is possible to be so confident in a frame of reference that it comes to represent a kind of certainty with respect to the future, especially concerning the external environment. In reality, the business environment is inherently changeable. The unhappy results of such management myopia have been described in classic papers by Levitt.s,6 Policy/aims and mission/purpose should, therefore, be questioned and evaluated during the planning operation of every iteration of the strategic management process. Strategic thinking leading to the formulation of corporate strategy and corporate integration is logically not possible until the immediate environment of strategic management has been chosen and defined. A clearly stated and commonly agreed frame of reference is essential if the strategic management group is to act as a team rather than a collection of individuals with differing views. As well as providing the starting point for strategic thinking, policy/aims and mission/purpose are the criteria for choice between alternative corporate strategic and integrative proposals in planning for the future. Objectives and means should be specified, ah appropriate, in all steps of strategic planning. There should be a progression from general considerations its environment, its business of the organization. and its technology. as defined in policy/aims and through corporate strategy and mission/purpose, corporate integration to corporate tactical objec-
Helping
Managers
to Develop
Strategies
59
tives and means which are specific in cost, time and performance.
could encourage initiative choice of strategic and/or
Strategic planning is always carried out in the present, but it is concerned with the future. A strategic and/or integrative gap may be perceived in the future, as the difference between the projection of the organization vs its environment into the future, as part of strategic analysis, and the new frame of reference specified in strategic planning. Corporate strategy and corporate integration are, therefore, the objectives and means that are formulated in order to close a perceived future strategic and/or integrative gap. Corporate strategy and corporate integration are, therefore, central to strategic planning and characteristic of the strategic management process. As a rule, integration follows strategy as structure follows rtrafegy.7,8
As with any matrix technique, strategic managers should be very clear when they are using a policy/aims matrix for strategic planning and when they are using one for strategic analysis. In looking to the future there is great scope for the distinctions between analysis and planning to become blurred, and this must not happen. Therefore, for the analysis operation, a policy/aims matrix should be constructed, answering the question, What are we? A new matrix should always be constructed for planning, answering the question, What do we want lo be?
Mission/Purpose Mission/purpose
During strategic planning, assuming that a frame of reference has been defined, it is possible for so-called strategic managers, consciously or unconsciously, to jump directly from the general considerations in policy/aims and mission/purpose to the detailed specification of corporate tactics, missing out the steps of corporate strategy and corporate integration. The logic of strategic planning would predict that their company would inevitably become ineffective and inflexible, and that it would be likely to disintegrate.
Policy/Aims Policy/aims is determined as the answer to the question, What do we want to be? This is comprised of two subordinate questions, What do we want to be relative lo OUY environment? and, What kind of organization do we want to be! Policjr/aims would, therefore, consist of statements, elucidating the general objectives of the firm, with respect to the organization and its external environment. A frame of reference is also necessary during strategic analysis, in order to provide criteria for identifying and selecting those factors which are important to strategic managers, and to provide criteria for judgment with respect to these factors. The frame of reference to be used in strategic analysis, in any one iteration of the strategic management process, is the frame of reference established in the old plan. Therefore, any strategic analysis uses a policy/aims which is the answer to the question, What are we? This single question is split into two subordinate questions which are, What are we relative to our environment? and, What kind of organization
are we?
The matrix shown in Figure 3 depicts policy/aims as a first step in planning and is a mirror in which strategic managers should be able to construct an image of what they want to be. Providing answers to the questions asked as the axes of this matrix
to choose and conscious integrative direction.
What
is the
answer
to the question,
do we want
to do? This is divided into two subordinate questions, What business do we want? and What total technology do we want? As part of the
strategic management process, mission/purpose describes opportunities in their widest sense with respect to the organization and its external environment. Total technology is the sum of scientific, technical and professional knowledge, skills and expertise in the organization, multiplied by management. catalyst which Management is the essential converts this collection of knowledge, skills and expertise within the company into its total technology. If there is no management then there is no total technology. Technology must be present in the organization as a whole before it can be put into its processes and its products. Total technology is the basis for strategic competitiveness and it may be conceptualized similar to distinctive competence.’ As for policy/aims above, mission/purpose also forms part of the frame of.reference for strategic analysis. Strategic analysis of the past, present and future uses a mission/purpose which is the answer to the question, IVhat are we doing? This consists of two questions, Ll’hat is OUY business! and, What is OUY total technology?
The matrix given in Figure 4 is for use in planning and should enable strategic managers to build up a picture of what they want to do. An appropriately different mission/purpose matrix should be used for strategic analysis. to build up a picture of what they are doing.
Strategic
and Integrative
Thinking
The overall frame of reference for strategic planning is the combination of policy/aims and mission/purpose. A particular frame of reference, which may be deduced from Table 1, would underlie and colour corporate strategic and integrative thinking during strategic planning.
60
Long
Range
Planning
Vol.
18
April
1985
What do We Want to be Relative to Our Environment? Existing Ambition(s) New Organizational Motivations
Existing Organizational Motivations
Existing Inducements to Commitment to the Organization by its Members
Existing Concept(s)
Yfhat Kind Organization do We Want to be?
New Inducements to Commitment to the Organization by its Members
New Concept(s)
New Inducements to Commitment to the ~;ga-rization
(,)
r_
New Ambition(s) New Organizational Motivations
__~~~~~~~.(~~~___~~~~~~_,
(V) Ambition Development
I
I I I I I I
I I I
1 I
Organization Intensification
Motivation Development
I I I
I
(Ill) Organization Development
(IV) OrganizationMotivation Development
I
(VI) OrganizationAmbition Development
I I
I
I I
I
I
I
I
I
I L-----------_------____J (VIII) Organization Motivation Development
(VII) Organization Concept Development
(IX) Organization ConceptAmbition Development
Concept-
Members Notes:
1. ----
-
Boundary of Existing Strategic and Integrative Thinking
2. This Figure is Only Concerned With the Instances Where Initiatives an Initiative Through Decision or by Default 3. The Numbers I-IX
are Taken.
It is Possible Not to Take
are Code Numbers Used in Table 1
4. Each of the Assignments in this Matrix, for Example, ‘Organization Intensification’, is a Continuum Described by the Relative Weight Given to Either of the Questions Used for the Classification
Figure
3. A policy/aims
matrix
What Business do We Want? (Visualization of Underlying
Needs/Wants
of Selected Customers)
Existing
Existing Market(s) (a)~arket__---__
What Total Technology do We Want?
Existing Product(s)
New Market(s) __‘(b)--
-_I
I (C)I IProduct I Development
New
fd) Product-Market Diversification
I I I I 1 ,
Need Development
(f) Product-Need Development
I
L___________.____________i (h)
(g) New Product(s)
New Market(s) te)
__-,
I I
(Total Technology Required)
1. ----
--
Market Development
~Penetration
Existing
New Product(s)
Notes:
New
Technology Development
li) Technology-Market Development
Technology-Need Diversification
Boundary of Existing Strategic and Integrative Thinking
2. For a Discussion of ‘Growth Directions’ Within the Boundary of Existing Strategic and Integrative Thinking Related to Mission/Purpose See Ansoff, H.I., Corporate Strategy, Penguin Books, 1973, Chapter 6 3. This Figure is Only Concerned With the Instances Where There is Monitoring and Knowledge of the Environment or Technology. It is Possible Not to Monitor or Have Knowledge Through Decision or by Default 4. The Letters (a) - li) are Code Letters Used in Table 1 5. Each of the Assignments in This Matrtx, for Example, ‘Market Penetration’, Relative Weight Given to Either of the Questions Used for the Classification
Figure
4. A mission/purpose
matrix
is a Continuum
Described by the
Helping Table
1. Policy/aims
and mission/purpose
Managers
to Develop
Strategies
61
combined Policv / Aims
Mission / Purpose
VI
I-E-t,
Market Penetration
a
la
Ila
Illa
IVa
Va
Vla
Vlla
Villa
IXa
Market Development
b
lb
Ilb
Illb
IVb
Vb
Vlb
Vllb
Vlllb
IXb
Product Development
c
IC
llc
IIIC
IVC
vc
Vlc
VIIC
Vlllc
Product - Market Diversification
d
Id
Ild
Illd
IVd
Vd
Vld
Vlld
Vllld
IXd
Need Development
e
le
Ile
Ille
IVe
Ve
Vie
Vlle
Vllle
IXe
Product - Need Development
f
If
Ilf
Illf
IVf
Vf
Vlf
Vllf
Vlllf
IXf
Technology
g
lg
Ilg
Illg
IVg
Vg
vkl
Vllg
Vlllg
1%
Technology - Market Development
h
Ih
Ilh
lllh
IVh
Vh
Vlh
Vllh
Vlllh
IXh
Technology - Need Diversification
I
Ii
Iii
Illi
IVi
Vi
Vli
Vlli
Vllli
IXi
Development
Note: This table is the combination of Figures 3 and 4.
Looked at another way, policy/aims and mission/purpose as a frame of reference, are seen to form the axes of the continuum of corporate strategic and integrative thinking, as shown in Figure 5.
to the questions, What do we want to be relative to our What business do we want? environment? and, Similarly corporate integration is described by answers to the questions, What kind oforganization do we want to be? and, What total technology do we want?
Only the extremes are labelled in Figure 5. Corporate strategy is characterized by the answers What do We Want to be Relative to Our Environment
Motivations of the Organization
There
are, however,
two
DirectionTechnology
other
/ / /
/
extremes Corporate Sjrategy /
I
I
Policy/Aims
I
What Kind of Organization do We Want to be?
*
Commitment to the Organization
Integration
Organization
Product(s)
Market(s)
Whai Total -Mission/PurposeTechnology do We Want? Notes:
1. This Figure is a Continuum,
Only the Extremes
Have Been Labelled
2. For Policy/Aims Matrix, See Figure 3; For Mission/Purpose and Mission/Purpose Combined, See Table 1
Figure
5. A continuum
of strategic
and integrative
Whst Business do We Want?
thinking
Matrix,
See Figure 4; For Policy/Aims
to this
62
Long
Range
Planning
Vol. 18
April
Direction- Technology and During strategic and integrative thinking in any one iteration of the strategic management process there must be a change of emphasis from considerations of corporate strategy to considerations of corporate integration. Direction-technology and businessorganization represent the extremes towards which strategic managers might lean, in making this change of emphasis. Some consideration of direction-technology and business-organization is necessary in order to maintain the mutual dependence and mutual reinforcement of corporate strategy and corporate integration.
continuum.
These
are
Business-Organization.
In strategy formulation there is potential for conflict within strategic management and across the organization as a whole, since subjective views and proposals are being evaluated against a subjective frame of reference. (This assumes that there is agreement on a common frame ofreference. If there is not, then there is even greater scope for conflict!) A strategic management group that is unable to utilize this potential constructively is likely to ignore the steps of corporate strategy and corporate integration in its strategic planning. As stated above, this would be the beginning of the end for the company. Corporate strategy, covering at least productmarket relationships and possibly all stakeholder relationshipslo involves not only objectives and means concerning the attraction of resources into the organization in the face of competition, but also subordinate objectives and means for discretionary expenditures to support and develop these relationships. Multiple objectives are usually present concerning the relationships of the organization and its stakeholders, and these objectives will be affected by other objectives of the strategic management group with respect to competing organizations. Strategic judgments and tradeoffs are inevitable with respect to stakeholders vs competitors, and also between the short-term and long-term future, i.e. between the urgent and the important. Strategic management’s frame of reference for planning should provide criteria for manipulating multiple objectives and means, within strategic thinking.
Corporate
Strategy
and Business
Strategies Corporate strategy should contain objectives and means relative to product-market relationships that the strategic management group identifies and wishes to create and exploit in the future, based on their overall SWOT analysis, in the light of their new frame of reference for strategic planning. Other stakeholder relationships may also be included in corporate strategy, but for the business firm, these will normally be subordinate to
1985 product-market relationships, through which the bulk of the firm’s resources are obtained from its environment. (The stakeholders in a firm are its customers, shareholders, bankers, employees, suppliers and the government.“) If the company does not know, during a particular planning period, what product-market and other relationships it is trying to create or exploit, and in what ways, there are no criteria for resource allocation decisions. If there is no strategy, operational managers are likely to act independently to formulate their own objectives and seek their own opportunities, to the detriment of the firm as a whole. Here, in this strategic context, one identifiable, generic product-market relationship is defined as a business. Therefore, a business strategy is to do with one such product-market relationship, including the objectives and means relative to it. Corporate strategy is the sum total of business strategies in the firm. Where the firm has one major product, its corporate strategy will essentially be a business strategy. For each planning period, the set of objectives and means constituting the business strategy for each relationship product-market would reflect policy/aims and mission/purpose for that period. These characteristics would be the basis for assigning that business strategy to some position in the matrix that is Figure 6. The pattern of all business strategies for a firm, plotted according to Figure 6, adds up to the corporate strategy for the organization as a whole for that planning period. It is a matter ofjudgment as to what overriding features there may be in this pattern strategies which would of business characterize the resultant corporate strategy. A priori, it is not possible to say that, in Figure 6, any of the positions that may be chosen by decision is better than any of the others, either absolutely or relatively. However, it is reasonable to suggest that all the positions that may be chosen through decision are superior to default assignments. In practice, businesses are dynamic and it may be expected that individual business strategies would move around the Figure 6 matrix from one assigned position to another, as they change from planning period to planning period. On the other hand, strategic managers may havepre_ferredpnsitiorr\ in the matrix which they strive to maintain for particular product-market relationships.
Corporate Integrative
Integration
and Business
Characteristics
Integration is also central to and characteristic of the strategic management process and is the step in the
Helping Policy/Aims-What
MissionlPurposeWhat Business do We Want?
Monitor/Have Knowledge of Environment
New Direction(s)
(1)
(2)
Positive Consolidation (Company Strengthens its Hold)
Explorative
t--
Do Not Monitor/ l?Zvledge
of Environment
l l
*
IBY Default
63
1 By Default
(10) Frustrated
*
l
(6aJ Waiting Game”
(11) Incapable
(6b) No ;**
(81 Overconfident
Negative Consolidation (Company Digs a Hole for Itself)
115) Complacent
Strategies
Take initiative
(5a) Waiting Game*
(3) Initiative
(9) Through Decision
Do Not Through Decision
(5b) RejzLon
(4) Reluctant
N&V
I 1 I
-r
Existing
to Develop
do We Want to be Relative to Our Environment?
Take Initiative Same Direction(s)
Managers
(71 Indifferent
(
(121 Defeated
(16) Lost
‘Waiting Game’ Implies That Strategic Management Retains the Capacity to Take an Initiative When it Chooses to do SO ‘Rejection’ and ‘No Go’ Imply That Strategic Management Does Not Retain Any Capacity to Take an Initiative
Notes: 1. This Matrix Assumes That Knowledge is Correlated With Best Assessment of the Risks Involved 2. With Respect to Mission/Purpose it is Assumed That if the Organization Does Not Monitor, Then it Does Not Monitor New or Existing Environment and Capabilities 3. With Respect to Policy/Aims it is Assumed That if No Initiative is Taken the Organization Continues in the Same Direction(s) Through Inertia 4. Each of the Business Strategies in This Matrix Represents a Continuum
Figure
6. A business
strategy
matrix
for corporate
planning operation where strategic managers allocate human resources, in the light of mission/purpose and policy/aims, corporate strategy for the planning period under consideration. This is in line with the conclusion of Chandler and others, that structure follows strategy. However, integration as defined here is primarily a function of total technology and commitment. Organization structure should follow from strategic management’s desired total technology and level of commitment. The ideally integrated firm would be expected to possess a number of the characteristics of the Theory 2 organization described by Ouchi.”
strategy
ation are made explicit in the light of corporate strategy. Although integration always follows strategy in any new plan, through time a new strategy always follows the integration specified in the old plan. The extent to which the new strategy is conditioned by the old integration is open to question. Some writers have stated that strategy follows structure.’ Z A prevailing mode of integration which is inappropriate or incomplete could limit strategic thinking and could underlie resistance by (the members oq the organization to strategic change. Second, it is possible for this inappropriate or incomplete integration to be the major cause of strategic management in an organization losing contact with its environment, and so failing to recognize and utilize the correct inputs for strategic thinking.
Total technology implies the establishment of appropriate structural linkages and communication pathways within and between the strategic and operational management groups. Commitment of members to the organization as a whole implies the development of an appropriate organization climate by the strategic management group, and their adoption of an appropriate management style. An organization which is truly integrated should be able to accommodate to any corporate strategy, assuming that corporate strategy is correctly formulated. It follows that the measure of strategic integration is directional flexibility.
Business integrative characteristics may be seen to make up corporate integration in the same way as business strategies were seen, above, to constitute corporate strategy. There are a selection of business integrative characteristics available to strategic management during planning. These are defined b) policy/aims and mission/purpose and are shown in Figure 7.
During desired
The integrative product-market
strategic planning at any one time, the integrative characteristics of an organiz-
characteristics for each business relationship would be reflected
or in
Long Range
64
Planning
Vol. 18
April
1985
Policy/Aims-What
Mission/PurposeWhat Total Technology do We Want?
Kind of Organization do We Want to be? Do Not Take Initiative
Take Initiative New Kind
Through Decision
(A) Positive Intensification (Company Finds Flexible Cohesion)
(B) Experiential
(Ei) Wait and See*
(D) Unwilling
(C) Metamorphic
Same Kind Existing Monitor/Have Knowledge of Total Technology
By Default (J) Restricted
(Eii) OK i: We Are’”
(K) Powerless
(Fi) Wait and See* Or
I
(Fir) Unresponsive**
Do Not Monitor/ Have Knowledge of Total Technology
l
Through Decision
II) Negative Intensification (Company Becomes Increasingly Rigrd)
Bv
(0) Unthinking
(L) Hopeless
(G) No Choice
(H) Optimistic
(P) Impotent
(M) Withdrawn
(N) Rash
Default
I
I
I
Wait and See’ Implies That Strategic Management Retains the Capacity to Take an initiative When it Chooses to do so
““OK As We Are’ and ‘Unresponsive’ Imply That Strategic Management Does Not Retain Any Capacity to Take an Initiative in This Fashion Notes:
Figure
1.
This Matrix Assumes That Knowledge is Correlated With Best Assessment of Risks Involved
2.
With Respect to Mission/Purpose it is Assumed That if the Organization Does Not Monitor, Then it Does Not Monitor New or Existing Total Technology
3.
With Respect to Policy/Aims it is Assumed That if No initiative is Taken the Organization Remains of the Same Kind Through Inertia
4.
Each of the Integrative Charactenstics Shown in This Matrix Represents a Contrnuum Defined by the Relative Weights Given to Policy/Aims and Mission/Purpose
7. A matrix
of business
integrative
characteristics
its assignment to a place in the Figure 7 matrix. The total pattern of business integrative characteristics would show the resultant corporate integration. Again, none of the positions in Figure 7, which may be chosen through decision, can be said to be intrinsically better than any other, but any position that may be chosen by decision would be superior to a default assignment.
Corporate
Tactics
Corporate strategy and integration, together with policy/aims and mission/purpose, provide the criteria for the specification of corporate tactics. Strategy and integration contain both objectives and means, and tactics may be seen as the detailed exposition of strategic and integrative means. It is a matter for the judgment of a strategic management group, during planning, as to how much scope is left for the exploration of tactical alternatives within the means of their corporate strategy and integration. Corporate tactics form the basis for functional or divisional strategies which are central to operational planning by operational managers. There would be variations from one organization to the extent to which the another concerning specification of corporate tactics allows exploration of alternatives by operational managers in their operational planning.
for corporate
integration
Corporate tactical objectives are thought to fall into two categories: programmes and projects. Tactical means are budgets and schedules, respectively. The on-going responsibilities of the strategic management group, including those relating to the separate operating functions or divisions of the company, are included in programmes. These would relate to established products and processes and utilise established administrative procedures. Projects are those things which have not been done before by strategic managers or are not part of their established routine. Corporate tactics include only those projects of corporate significance, e.g. major capital expenditure, new products, etc. Such projects would be of such great importance because of cost, risk or expectations, that they must be the responsibility of the strategic management group. Also, a project may touch so many parts of the firm that the strategic management group is the only group that can realistically manage it. Strategic and integrative thinking would be futile if strategic managers as a group were unable to formulate or agree on an explicit corporate strategy and integration for their firm. Such disagreement is thought to stem from the lack of a common frame of reference within a strategic management group. An inability to develop a common frame of reference may be rooted in the assignment of operational, functional or divisional responsibilities to particular individuals within a strategic management group, and their interpreting their role as an
Helping operational or tactical manager, rather than as a strategic manager. Too often, bitter arguments over corporate tactics may reflect the fact that a collection of so-called strategic managers is not performing strategic management. It may, of course, be perfectly rational, from their own point of view, for individual members of a strategic management group to think and act like operational managers, even if they know better. This may be so, for example, where their salary, or even their position, largely depends on relatively short-term operating results from their division or function. Where competition between operating units is formalized and encouraged, great care is needed to ensure that this does not destroy corporate integration and co-ordination, to the detriment of the firm as a whole. In practice, tactical trade-offs and compromises to reconcile conflicting objectives of each function or division may be essential in order to obtain corporate co-ordination as part of tactics. Ideally, corporate strategy and integration should provide the criteria against which tactical trade-offs are made.
Summary
and Conclusions
It is open to every strategic manager to have his or her own concept of strategic management, and its associated performance criteria, depending on that manager’s personal world-view. It is a paradox that there are few general rules concerning the process of strategic management, although strategic management is about the formulation of decision rules for the guidance of the organization into the future. It is reasonable to assume that strategic managers, as individuals and as a group, wish to improve their performance and that of their organization. It has been implicit in this discussion that performance criteria for management are effectiveness, efficiency and flexibility. Achievement of improved performance, in line with these criteria, could be assisted by an explicitly defined, procedurally systematic process of strategic management. Hence, one normative, procedural framework for strategic management has been offered in this paper, with the intention of contributing to the improvement of strategic managers’ performance in practice. A strategic management process has been described. The time dimension largely prescribes the procedural operations and steps within the suggested process of strategic management. The frame of reference of individual strategic managers, or the strategic management group, determines the substantive character of each of the operations constituting strategic management. Matrices
for the representation
of policy/aims
and
Managers
to Develop
Strategies
65
mission/purpose have been suggested, to facilitate the explicit formulation of a frame of reference during strategic planning. The frame of reference defines a continuum of corporate strategic and integrative thinking. Corporate strategy has been discussed as the means for closing a perceived, future strategic gap, and a matrix for describing business strategies within corporate strategy has been developed. Formulation of corporate strategy involves choices and these bring an inherent for disagreements to the strategic potential management group. The business strategy matrix could assist in the making of appropriate choices, and help bring about positive resolution of conflicts. Corporate integration follows corporate strategy during any strategic planning, and is also central to and characteristic of strategic management. Hence, a suggested representational matrix of business integrative characteristics within corporate integration is thought to offer benefits to the strategic management group. These benefits would be similar to those of the business strategy matrix, but, in this case, they should assist the strategic management group in formulating an appropriate integration. The characteristics of corporate strategic management, at any time, are given by combining corporate strategy and corporate integration. This may be achieved by combining the business strategy matrix and the matrix of business integrative characteristics. In theory, corporate strategy, corporate integration and the frame of reference of strategic management would determine corporate tactics. However, the dynamics of the strategic management group, and’ in the previous steps within its performance strategic analysis and planning, would decide whether corporate tactics were the basis for coordination or further conflict. An explicit conceptual and procedural framework for strategic analysis and planning is thought to offer the potential for improved performance to individual strategic managers, and to strategic management groups, especially in business organizations. This paper has presented one such framework as -a -possible tbol for management practice.
Glossary of Terms Policy/Aims
and tnisrion/pctrl,ost’ arc used here as composite phrases. All objective is something that -. strategic management wishes (the orgamzatlon) to achieve in the future. The word godI is not used. A mwu is a future course ofaction through which an objective is to be achieved. Stratqy is given a special in the phrase corporate strategy.‘3.‘4 rneaning Corporate strategy is seen as central to and
66
Long Range
Planning
Vol. 18
April
characteristic of the strategic management process. Corporate integration is defined below and is also characteristic of the strategic management process and central to it. Statements of policy/aims and mission/purpose which reflect what strategic management wants for the future are always subjective even if they contain objectives, so-called by management writers. For the strategic management group it may be more correct to call them strbjectives since they are selfimposed and guides to thinking rather than action. They may become managerial objectives when passed on to other members of the organization as targets for action, but their origin or acceptance in the minds of strategic managers is still subjective. With this qualification the term objectives is used in this paper. Policy/aims, mission/purpose, corporate strategy, etc. describe steps in the strategic planning operation, as well as statements within the strategic plan, which is the output of planning. These terms are defined below. Policy/Aims
At any one time, policy/aims is strategic managers’ answer to the question, ‘What do we want to be?’ This answer will include specification of the planning horizon. Mission/Purpose
is strategic At any one time, mission/purpose managers’ answer to the question, ‘What do we want to do?’ This answer will include specification of the planning horizon. Corporate
Strategy
At any one time, corporate strategy is strategic managers’ objective specification for the future of the relationship between their primary objectives, as specified in their policy/aims, and their chosen environmental opportunities, as specified in their This objective specification inmission/purpose. cludes the formulation of courses of action and the planned allocation of the organization’s human and other resources as the means to ensure that the organization appropriately obtains resources from its environment for its own maintenance and further discretionary use, so that policy/aims and mission/purpose are achieved. is the primary planning Corporate strategy means through which strategic managers intend to achieve their policy/aims and mission/purpose. (For the business firm, corporate strategy will be mainly concerned with the relationships between customers and the technological offerings of the firm, i.e. its products and/or services. However, other stakeholder relationships, i.e. with shareholders, suppliers, bankers, Government and employees,10
1985 will be considered activity.)
in the
light
of competitive
Integration
Corporate
At any one time, corporate integration is strategic managers’ objective specification for the future, in the light of their corporate strategy, of the relationship between the nature of their organization, as specified in their policy/aims, and the total technology of their organization, as specified in their mission/purpose. This objective specification includes the planned structuring of the organization’s human and other resources as the means to ensure that corporate strategy, policy/aims and mission/purpose are achieved. Corporate integration is the planning means, secondary to corporate strategy, through which strategic managers intend to achieve their policy/aims and mission/purpose. (Total technology is the sum of the scientific, technical and professional knowledge, skills and expertise of individual members of the organization, multiplied by management. Total technology underlies the products or services that a company is able to offer, and it is, therefore, the source of strategic competitiveness.) Corporate
Tactics
At any one time, corporate tactics is strategic managers’ objective specification, for the future, of organizational activities and individual actions, as a result of corporate strategy and integration. This objective specification of co-ordinated, functional or divisional programmes and projects of corporate significance, together with the budgets and schedules they require, is the means to ensure that policy/aims, mission/purpose, corporate strategy and corporate integration are achieved. Corporate tactics are specific in cost, time and performance, and assign management authority, responsibility and accountability to strategic and operational managers. Corporate tactics is the planning means through which strategic managers intend to achieve their corporate strategy and corporate integration. It is the activities and actions specified in corporate tactics that are implemented during Strategic Implementation which follows Strategic Planning.
Example:
An Electronics
Subcontractor of This company is small, with a turnover approximately A:0.4m, and all of its current business is derived from the subcontracting of It is and manufacturing. electronics design dependent on a relatively small number of larger customers. Figures
3 and 4 were used to facilitate
discussions
Helping and to explore the company’s strategic thinking. The objective was to obtain an analysis of strategic thinking, accepting that strategic thinking itself is always concerned with planning for the future. Using Figure 3, relative to its environment the company had not achieved its existing ambitions. For it to do so, the managers felt that they and the other members must be motivated to achieve in new directions. This was interpreted as a desire for New Organizational Motivations. The kind of organization that the company wanted to be was not explicit, although the Managing Director had his own implicit concept. It was recognized that there was a great deal of commitment to the firm by its staff, and that this could largely be due to the relatively small size of the company. The exact nature of the inducements to commitment that the firm offered, and the resultant perceptions of its members, had not been explicitly determined. There was, therefore, uncertainty whether existing inducements could utilized relative to New Organizational be Motivations, or whether new inducements would be necessary in the future. Figure 3 was used primarily to pose questions concerning strategic thinking. In the Figure 3 matrix, the company could be described as ideally wanting Motivation Development or Organization-Motivation Development. Relative to Figure 4, the business that the company wanted was to maintain their subcontracting activities, and to develop some products of their own in order to reduce their dependence on their existing customers and give greater margins than subcontracting allows. This was interpreted as involving a new visualization of customer needs/wants that would necessarily involve new markets. In discussion of total technology the company acknowledged that they had no products as such. Second, while its existing task technology could be used to produce new products, the overall task technology required would be very different to that appropriate for subcontracting. Again, the main use of the matrix was to pose questions. However, the company could be identified as ideally wanting Technology-Need Diversification in the future. The visualization in Figure 4 of the great distance between Market Penetration and Technology-Need Diversification has stimulated the company to incorporate new dimensions into its strategic thinking.
Example: An Electronic Manufacturer This company,
with a turnover
to Develop
is marketing electronic L7m, measurement and monitoring industry and elsewhere.
Strategies
67
instruments of processes
for in
Figures 3-7 were used to facilitate discussions and to explore strategic thinking. Again, the objective was to obtain an analysis of strategic thinking, accepting that strategic thinking itself is always to do with planning for the future. Regarding Figure 3, the company is clear that they want Organization-Motivation Development for the future. With respect to Figure 4, they wish to penetrate existing markets to a greater extent, using existing and new total technologies and new products. They are categorized as wanting Product Development and Technology Development. The firm has a number of different product ranges aimed at different customers. In terms of Figure 6, these products were seen as different businesses, with Positive Consolidation, Explorative and Indifferent business strategies desired for the future. Using Figure 7, the company recognized that they wanted to maintain particular integrative characteristics for each of their businesses; a No Choice form of integration being appropriate for their Indifferent business, and Positive Intensification and Experiential integrative characteristics for their Positive Consolidation and Explorative businesses, respectively. The avoidance of Negative Intensification and Optimistic integrative characteristics was seen as particularly important. This prompted the recognition that, since they would always be taking initiatives, they should not cease to monitor and develop their total technology; and that decisions regarding their total technology are crucial. The company had long been aware that its corporate strategy consisted of the separate business strategies described above. However, they had not explicitly recognized that their corporate integration should combine the desired integrative characteristics of each of the separate businesses.
References
(1)
M. D. Skipton, A strategic-operational approach to management, Management Research News, 6 (4). 7-l 5 (1983).
(2)
B. Hedley, Strategy and the business portfolio, Planning. 10 (1). 9-15, February (1977).
(3)
General Electric’s Stoplight Strategy, Business Week, 28 April (1975); reprinted in J. M. Higgins, Organisational Policy and Strategic Management-Text and Cases, The Dryden Press, Hinsdale, III (1979).
(4)
S. J. Q. Robinson, R. Hichens and D. P. Wade, policy matrix-Tool for strategic planning, Planning. 11 (3). 8-15, June (1978).
(5)
T. Levitt, Marketing myopia, Harvard Business Review, 38 (4). 4556. July-August (1960); reprinted 53 (5). 26-44 and 173-l 80. September-October (1975).
Instruments of approximately
Managers
Long
Range
The directional Long Range
Long
68
Range
Planning
Vol.
18
April
(10)
R. M. Cyert and J. G. Marsh, A Behavioural Theory of the Firm, Prentice-Hall, Englewood Cliffs, NJ (1963).
(11)
W. G. Ouchi, Theory Z-How American Business Can Meet the Japanese Challenge, Addison-Wesley, Reading, Mass. (1981).
(12)
D. J. Hall and M. A. Saias. Strategy follows structure, Strategic Management Journal, 1, 149-l 63, April-June (1980).
6. R. Scott, The industrial state: Old myths and new realities, Business Review, 51 (2), 133-148. March-April
(13)
J. Bracker, The historical development of the strategic management concept, Academy of Management Review, 5 (2). 219-224 I1 980).
C. R. Christensen, K. R. Andrews Policy-Text and Cases (Fourth Homewood, ill. (1978).
(14)
C. W. Hofer and D. Schendel, Strategy Formulation: Analytical Concepts, West Publishing Company, St. Paul, Minn. (1978).
(6)
T. Levitt, innovation in Marketing, McGraw-Hill, New York (1962); reprinted Pan Books, London (1968); see Chapter 2, Management Myopia.
(7)
A. D. Chandler, Strategy and Structure: Chapters in the History of American Industrial Enterprise, MIT Press, Cambridge, Mass. (1962).
(8)
Harvard (1973). (9)
1985
and J. L. Bower, Business Edition), R. D. Irwin Inc.,
Long Range Planning, Vol. Printed in Great Britain
18, No. 2, pp. 56 to 68, 1985
Helping Managers Strategies M. D. Skipton,
School
0024-6301 j85 %3.00 + .OO Pergamon Press Ltd.
to Develop
of Business, Kingston Polytechnic, Survey, U.K.
Concepts within strategic management are defined and a framework for strategic analysis and planning is presented. Within the planning operation, corporate strategy and corporate integration are central to strategic management, The timetable largely prescribes the procedural steps involved in strategic analysis and planning, and the character of each of these steps is determined b y the frame of reference. or the aims and purpose of strategic managers, which are established during strategic planning. As a practicalmanagement tool, the framework developed here offers the possibility to improve management performance and to increase corporate effectiveness and flexibility.
Introduction The practice of management is extremely difficult and complex, and successful performance is hard to achieve. This is especially true of strategic management, not least because strategic management as a process is relatively undefined, and it is open to every strategic manager to have his or her own concept of strategic management. In the business firm, it is the responsibility of the Board of Directors to carry out strategic management. Here, this process is seen to consist of the procedural operations of analysis, planning, implementation and control. Strategic analysis and planning are most important, as these lead to some which is then implemented and strategic plan, controlled. Within strategic planning, the steps of corporate strategy and corporate integration are seen as central to and characteristic of strategic management as a whole. This paper explores a number of concepts within strategic management, and goes on to outline a normative, procedural framework for strategic analysis and planning. It is hoped that the discussion in this paper will assist strategic managers in their The author is now Assistant Professor, Faculty Admmistration, Memorial University of Newfoundland, Newfoundland, Canada, Al B 3X5.
of
Business St. John’s,
search for improved effectiveness, efficiency ing one way ofdefining management.
performance, i.e. greater and flexibility, by illustratand systematizing strategic
Discussion of strategic management is particularly affected by lack of agreement in the literature with respect to concepts and definitions, as well as variations in semantics. The words policy, aim, mission, purpose, objective, goal, strategy, ffleans and tactics have been used by different writers to mean different things. These words have particular meanings here and they are defined in the Glossary of Terms at the end of this paper. The same words are used to describe procedural steps in strategic analysis and planning, and the corresponding substantive items in a written strategic analysis or strategic plan. This paper is mainly concerned with strategic management in business firms, but it may also be applied to other types of organization. The phrase, strategic manager, should be taken to include the staff position of strategic planner, where appropriate.
Management
and Performance
The strategic management process is characterized by corporate strategy and by corporate integration, and operational management is characterized by functions/actions and co-ordination. Structural linkage and the main channel of communication between the two types of management, in any organization, are seen to be through corporate integration and operational co-ordination. In strategic managers must always balance practice. considerations of corporate strategy, 1.j considerations of corporate integration. Similarly, opcrational managers must balance filnction/actions against operational co-ordillation.’ The continuing a whole, and,
performance of the organization therefore, of its ma’nagemcnt, may
as be
Helping
to Develop
Strategies
Dimension
The strategic management process is here to consist of four organizational, operations of management; i.e. Analysis, Implementation and Control. These are and each is made up of one or more steps in series or in parallel, as appropriate.
Strategic
conceived procedural Planning, sequential, carried out
Analysis
Strategic planning for the future is only as good as the information on which it is based. Strategic analysis, therefore, precedes strategic planning and situation of the is to define the strategic organization in its environment. The conclusion of
Effectiveness
Purpose/Throughput
(Corporate
Strategy)
Administrative
(Function/Action)
Efficiency
Flexibility
Resources The Boundaries of Strategic Management The Boundaries of Operational Note: This Figure is Reproduced
Figure
57
Analysis and planning are always carried out before the start of the planning period to which they refer. The resultant plan is implemented and controlled during the planning period to which that plan refers. Therefore, during any one planning period 1 year), strategic (assumed to be, typically, management should be engaged in implementation and control of the old plan, i.e. the plan which refers to the current planning period and is the outcome of analysis and planning carried out in the previous planning period. Simultaneously, strategic management should be performing the analysis and planning operations to produce the new plan, which refers to the next planning period in the future. The sequence of operations within iterations of the strategic management process is shown in Figure 2.
assessed according to the criteria of effectiveness, efficiency and flexibility. Effectiveness is mainly dependent on the relationship between objectives and opportunities brought about by strategic management, and characterized by corporate strategy. The fit between opportunities and resources is the responsibility of operational management through their functions/actions, and is the main determinant of overall efficiency of the organization. Flexibility is largely governed by corporate integration and operational coordination and is termed directional or functional, respectively. The relationship of these performance criteria to the ends of management, i.e. objectives, opportunities and resources, is shown in Figure 1.
The Time
Managers
1. Relationship
between
effectiveness,
efficiency
are Shown as
Management
are Shown as -
from Reference
and flexibility,
-
-
-
-
(1).
and the ends of management
58
Long
Range
Time
Planning
Vol. 18
Planning Period (1)
Planning Period (2)
Planning Period (3)
Analysis and Planning (2)
Analysis and Planning (3)
Analysis and Planning (4)
and
Implementation Control (2)
----
---
2. Iterations
-
of the strategic
Iteration
(1)
Iteration
(2)
Iteration
(3)
Iteration
(4)
management
strategic analysis is a SWOT analysis. This would summarize organizational Strengths and Weaknesses and environmental Opportunities and Threats. SWOT analysis is the link between strategic analysis and strategic planning. This SWOT philosophy is thought to underlie many of the matrix methods of business analysis reported in the literature.24 A fixed, analytical frame of reference is necessary in order to discriminate organizational strengths and weaknesses, and environmental opportunities and threats, and to do this with some consistency. The frame of reference for strategic analysis is the i.e. the policy/aims and frame of reference, mission/purpose (see below), formulated in the old plan in the previous iteration of the process. This must be so, since a frame of reference may only be established during strategic planning, and analysis always precedes planning in any iteration of the strategic management process.
Strategic
1985
w
implementation Control (1)
Figure
April
Planning
Strategic planning is a subjective operation. It is the choice of objectives and means for the future. A clear and explicit frame of reference is the key to strategic management in practice, as it is through their frame of reference that strategic managers strategic to formulate their own are able management-individually and as a group. The frame of reference is here constituted by the first steps in strategic planning. These steps are policy/aims, which is the choice of objectives applied to the immediate environment for strategic management (and the organization), and the definition of this environment in mission/purpose.
and
Implementation Control (3)
and
process A frame of reference can be a tender trap for any strategic manager or management group. There is danger in being confident in an established frame of reference, especially if this underlies successful business performance up to the present. It is possible to be so confident in a frame of reference that it comes to represent a kind of certainty with respect to the future, especially concerning the external environment. In reality, the business environment is inherently changeable. The unhappy results of such management myopia have been described in classic papers by Levitt.s,6 Policy/aims and mission/purpose should, therefore, be questioned and evaluated during the planning operation of every iteration of the strategic management process. Strategic thinking leading to the formulation of corporate strategy and corporate integration is logically not possible until the immediate environment of strategic management has been chosen and defined. A clearly stated and commonly agreed frame of reference is essential if the strategic management group is to act as a team rather than a collection of individuals with differing views. As well as providing the starting point for strategic thinking, policy/aims and mission/purpose are the criteria for choice between alternative corporate strategic and integrative proposals in planning for the future. Objectives and means should be specified, ah appropriate, in all steps of strategic planning. There should be a progression from general considerations its environment, its business of the organization. and its technology. as defined in policy/aims and through corporate strategy and mission/purpose, corporate integration to corporate tactical objec-
Helping
Managers
to Develop
Strategies
59
tives and means which are specific in cost, time and performance.
could encourage initiative choice of strategic and/or
Strategic planning is always carried out in the present, but it is concerned with the future. A strategic and/or integrative gap may be perceived in the future, as the difference between the projection of the organization vs its environment into the future, as part of strategic analysis, and the new frame of reference specified in strategic planning. Corporate strategy and corporate integration are, therefore, the objectives and means that are formulated in order to close a perceived future strategic and/or integrative gap. Corporate strategy and corporate integration are, therefore, central to strategic planning and characteristic of the strategic management process. As a rule, integration follows strategy as structure follows rtrafegy.7,8
As with any matrix technique, strategic managers should be very clear when they are using a policy/aims matrix for strategic planning and when they are using one for strategic analysis. In looking to the future there is great scope for the distinctions between analysis and planning to become blurred, and this must not happen. Therefore, for the analysis operation, a policy/aims matrix should be constructed, answering the question, What are we? A new matrix should always be constructed for planning, answering the question, What do we want lo be?
Mission/Purpose Mission/purpose
During strategic planning, assuming that a frame of reference has been defined, it is possible for so-called strategic managers, consciously or unconsciously, to jump directly from the general considerations in policy/aims and mission/purpose to the detailed specification of corporate tactics, missing out the steps of corporate strategy and corporate integration. The logic of strategic planning would predict that their company would inevitably become ineffective and inflexible, and that it would be likely to disintegrate.
Policy/Aims Policy/aims is determined as the answer to the question, What do we want to be? This is comprised of two subordinate questions, What do we want to be relative lo OUY environment? and, What kind of organization do we want to be! Policjr/aims would, therefore, consist of statements, elucidating the general objectives of the firm, with respect to the organization and its external environment. A frame of reference is also necessary during strategic analysis, in order to provide criteria for identifying and selecting those factors which are important to strategic managers, and to provide criteria for judgment with respect to these factors. The frame of reference to be used in strategic analysis, in any one iteration of the strategic management process, is the frame of reference established in the old plan. Therefore, any strategic analysis uses a policy/aims which is the answer to the question, What are we? This single question is split into two subordinate questions which are, What are we relative to our environment? and, What kind of organization
are we?
The matrix shown in Figure 3 depicts policy/aims as a first step in planning and is a mirror in which strategic managers should be able to construct an image of what they want to be. Providing answers to the questions asked as the axes of this matrix
to choose and conscious integrative direction.
What
is the
answer
to the question,
do we want
to do? This is divided into two subordinate questions, What business do we want? and What total technology do we want? As part of the
strategic management process, mission/purpose describes opportunities in their widest sense with respect to the organization and its external environment. Total technology is the sum of scientific, technical and professional knowledge, skills and expertise in the organization, multiplied by management. catalyst which Management is the essential converts this collection of knowledge, skills and expertise within the company into its total technology. If there is no management then there is no total technology. Technology must be present in the organization as a whole before it can be put into its processes and its products. Total technology is the basis for strategic competitiveness and it may be conceptualized similar to distinctive competence.’ As for policy/aims above, mission/purpose also forms part of the frame of.reference for strategic analysis. Strategic analysis of the past, present and future uses a mission/purpose which is the answer to the question, IVhat are we doing? This consists of two questions, Ll’hat is OUY business! and, What is OUY total technology?
The matrix given in Figure 4 is for use in planning and should enable strategic managers to build up a picture of what they want to do. An appropriately different mission/purpose matrix should be used for strategic analysis. to build up a picture of what they are doing.
Strategic
and Integrative
Thinking
The overall frame of reference for strategic planning is the combination of policy/aims and mission/purpose. A particular frame of reference, which may be deduced from Table 1, would underlie and colour corporate strategic and integrative thinking during strategic planning.
60
Long
Range
Planning
Vol.
18
April
1985
What do We Want to be Relative to Our Environment? Existing Ambition(s) New Organizational Motivations
Existing Organizational Motivations
Existing Inducements to Commitment to the Organization by its Members
Existing Concept(s)
Yfhat Kind Organization do We Want to be?
New Inducements to Commitment to the Organization by its Members
New Concept(s)
New Inducements to Commitment to the ~;ga-rization
(,)
r_
New Ambition(s) New Organizational Motivations
__~~~~~~~.(~~~___~~~~~~_,
(V) Ambition Development
I
I I I I I I
I I I
1 I
Organization Intensification
Motivation Development
I I I
I
(Ill) Organization Development
(IV) OrganizationMotivation Development
I
(VI) OrganizationAmbition Development
I I
I
I I
I
I
I
I
I
I L-----------_------____J (VIII) Organization Motivation Development
(VII) Organization Concept Development
(IX) Organization ConceptAmbition Development
Concept-
Members Notes:
1. ----
-
Boundary of Existing Strategic and Integrative Thinking
2. This Figure is Only Concerned With the Instances Where Initiatives an Initiative Through Decision or by Default 3. The Numbers I-IX
are Taken.
It is Possible Not to Take
are Code Numbers Used in Table 1
4. Each of the Assignments in this Matrix, for Example, ‘Organization Intensification’, is a Continuum Described by the Relative Weight Given to Either of the Questions Used for the Classification
Figure
3. A policy/aims
matrix
What Business do We Want? (Visualization of Underlying
Needs/Wants
of Selected Customers)
Existing
Existing Market(s) (a)~arket__---__
What Total Technology do We Want?
Existing Product(s)
New Market(s) __‘(b)--
-_I
I (C)I IProduct I Development
New
fd) Product-Market Diversification
I I I I 1 ,
Need Development
(f) Product-Need Development
I
L___________.____________i (h)
(g) New Product(s)
New Market(s) te)
__-,
I I
(Total Technology Required)
1. ----
--
Market Development
~Penetration
Existing
New Product(s)
Notes:
New
Technology Development
li) Technology-Market Development
Technology-Need Diversification
Boundary of Existing Strategic and Integrative Thinking
2. For a Discussion of ‘Growth Directions’ Within the Boundary of Existing Strategic and Integrative Thinking Related to Mission/Purpose See Ansoff, H.I., Corporate Strategy, Penguin Books, 1973, Chapter 6 3. This Figure is Only Concerned With the Instances Where There is Monitoring and Knowledge of the Environment or Technology. It is Possible Not to Monitor or Have Knowledge Through Decision or by Default 4. The Letters (a) - li) are Code Letters Used in Table 1 5. Each of the Assignments in This Matrtx, for Example, ‘Market Penetration’, Relative Weight Given to Either of the Questions Used for the Classification
Figure
4. A mission/purpose
matrix
is a Continuum
Described by the
Helping Table
1. Policy/aims
and mission/purpose
Managers
to Develop
Strategies
61
combined Policv / Aims
Mission / Purpose
VI
I-E-t,
Market Penetration
a
la
Ila
Illa
IVa
Va
Vla
Vlla
Villa
IXa
Market Development
b
lb
Ilb
Illb
IVb
Vb
Vlb
Vllb
Vlllb
IXb
Product Development
c
IC
llc
IIIC
IVC
vc
Vlc
VIIC
Vlllc
Product - Market Diversification
d
Id
Ild
Illd
IVd
Vd
Vld
Vlld
Vllld
IXd
Need Development
e
le
Ile
Ille
IVe
Ve
Vie
Vlle
Vllle
IXe
Product - Need Development
f
If
Ilf
Illf
IVf
Vf
Vlf
Vllf
Vlllf
IXf
Technology
g
lg
Ilg
Illg
IVg
Vg
vkl
Vllg
Vlllg
1%
Technology - Market Development
h
Ih
Ilh
lllh
IVh
Vh
Vlh
Vllh
Vlllh
IXh
Technology - Need Diversification
I
Ii
Iii
Illi
IVi
Vi
Vli
Vlli
Vllli
IXi
Development
Note: This table is the combination of Figures 3 and 4.
Looked at another way, policy/aims and mission/purpose as a frame of reference, are seen to form the axes of the continuum of corporate strategic and integrative thinking, as shown in Figure 5.
to the questions, What do we want to be relative to our What business do we want? environment? and, Similarly corporate integration is described by answers to the questions, What kind oforganization do we want to be? and, What total technology do we want?
Only the extremes are labelled in Figure 5. Corporate strategy is characterized by the answers What do We Want to be Relative to Our Environment
Motivations of the Organization
There
are, however,
two
DirectionTechnology
other
/ / /
/
extremes Corporate Sjrategy /
I
I
Policy/Aims
I
What Kind of Organization do We Want to be?
*
Commitment to the Organization
Integration
Organization
Product(s)
Market(s)
Whai Total -Mission/PurposeTechnology do We Want? Notes:
1. This Figure is a Continuum,
Only the Extremes
Have Been Labelled
2. For Policy/Aims Matrix, See Figure 3; For Mission/Purpose and Mission/Purpose Combined, See Table 1
Figure
5. A continuum
of strategic
and integrative
Whst Business do We Want?
thinking
Matrix,
See Figure 4; For Policy/Aims
to this
62
Long
Range
Planning
Vol. 18
April
Direction- Technology and During strategic and integrative thinking in any one iteration of the strategic management process there must be a change of emphasis from considerations of corporate strategy to considerations of corporate integration. Direction-technology and businessorganization represent the extremes towards which strategic managers might lean, in making this change of emphasis. Some consideration of direction-technology and business-organization is necessary in order to maintain the mutual dependence and mutual reinforcement of corporate strategy and corporate integration.
continuum.
These
are
Business-Organization.
In strategy formulation there is potential for conflict within strategic management and across the organization as a whole, since subjective views and proposals are being evaluated against a subjective frame of reference. (This assumes that there is agreement on a common frame ofreference. If there is not, then there is even greater scope for conflict!) A strategic management group that is unable to utilize this potential constructively is likely to ignore the steps of corporate strategy and corporate integration in its strategic planning. As stated above, this would be the beginning of the end for the company. Corporate strategy, covering at least productmarket relationships and possibly all stakeholder relationshipslo involves not only objectives and means concerning the attraction of resources into the organization in the face of competition, but also subordinate objectives and means for discretionary expenditures to support and develop these relationships. Multiple objectives are usually present concerning the relationships of the organization and its stakeholders, and these objectives will be affected by other objectives of the strategic management group with respect to competing organizations. Strategic judgments and tradeoffs are inevitable with respect to stakeholders vs competitors, and also between the short-term and long-term future, i.e. between the urgent and the important. Strategic management’s frame of reference for planning should provide criteria for manipulating multiple objectives and means, within strategic thinking.
Corporate
Strategy
and Business
Strategies Corporate strategy should contain objectives and means relative to product-market relationships that the strategic management group identifies and wishes to create and exploit in the future, based on their overall SWOT analysis, in the light of their new frame of reference for strategic planning. Other stakeholder relationships may also be included in corporate strategy, but for the business firm, these will normally be subordinate to
1985 product-market relationships, through which the bulk of the firm’s resources are obtained from its environment. (The stakeholders in a firm are its customers, shareholders, bankers, employees, suppliers and the government.“) If the company does not know, during a particular planning period, what product-market and other relationships it is trying to create or exploit, and in what ways, there are no criteria for resource allocation decisions. If there is no strategy, operational managers are likely to act independently to formulate their own objectives and seek their own opportunities, to the detriment of the firm as a whole. Here, in this strategic context, one identifiable, generic product-market relationship is defined as a business. Therefore, a business strategy is to do with one such product-market relationship, including the objectives and means relative to it. Corporate strategy is the sum total of business strategies in the firm. Where the firm has one major product, its corporate strategy will essentially be a business strategy. For each planning period, the set of objectives and means constituting the business strategy for each relationship product-market would reflect policy/aims and mission/purpose for that period. These characteristics would be the basis for assigning that business strategy to some position in the matrix that is Figure 6. The pattern of all business strategies for a firm, plotted according to Figure 6, adds up to the corporate strategy for the organization as a whole for that planning period. It is a matter ofjudgment as to what overriding features there may be in this pattern strategies which would of business characterize the resultant corporate strategy. A priori, it is not possible to say that, in Figure 6, any of the positions that may be chosen by decision is better than any of the others, either absolutely or relatively. However, it is reasonable to suggest that all the positions that may be chosen through decision are superior to default assignments. In practice, businesses are dynamic and it may be expected that individual business strategies would move around the Figure 6 matrix from one assigned position to another, as they change from planning period to planning period. On the other hand, strategic managers may havepre_ferredpnsitiorr\ in the matrix which they strive to maintain for particular product-market relationships.
Corporate Integrative
Integration
and Business
Characteristics
Integration is also central to and characteristic of the strategic management process and is the step in the
Helping Policy/Aims-What
MissionlPurposeWhat Business do We Want?
Monitor/Have Knowledge of Environment
New Direction(s)
(1)
(2)
Positive Consolidation (Company Strengthens its Hold)
Explorative
t--
Do Not Monitor/ l?Zvledge
of Environment
l l
*
IBY Default
63
1 By Default
(10) Frustrated
*
l
(6aJ Waiting Game”
(11) Incapable
(6b) No ;**
(81 Overconfident
Negative Consolidation (Company Digs a Hole for Itself)
115) Complacent
Strategies
Take initiative
(5a) Waiting Game*
(3) Initiative
(9) Through Decision
Do Not Through Decision
(5b) RejzLon
(4) Reluctant
N&V
I 1 I
-r
Existing
to Develop
do We Want to be Relative to Our Environment?
Take Initiative Same Direction(s)
Managers
(71 Indifferent
(
(121 Defeated
(16) Lost
‘Waiting Game’ Implies That Strategic Management Retains the Capacity to Take an Initiative When it Chooses to do SO ‘Rejection’ and ‘No Go’ Imply That Strategic Management Does Not Retain Any Capacity to Take an Initiative
Notes: 1. This Matrix Assumes That Knowledge is Correlated With Best Assessment of the Risks Involved 2. With Respect to Mission/Purpose it is Assumed That if the Organization Does Not Monitor, Then it Does Not Monitor New or Existing Environment and Capabilities 3. With Respect to Policy/Aims it is Assumed That if No Initiative is Taken the Organization Continues in the Same Direction(s) Through Inertia 4. Each of the Business Strategies in This Matrix Represents a Continuum
Figure
6. A business
strategy
matrix
for corporate
planning operation where strategic managers allocate human resources, in the light of mission/purpose and policy/aims, corporate strategy for the planning period under consideration. This is in line with the conclusion of Chandler and others, that structure follows strategy. However, integration as defined here is primarily a function of total technology and commitment. Organization structure should follow from strategic management’s desired total technology and level of commitment. The ideally integrated firm would be expected to possess a number of the characteristics of the Theory 2 organization described by Ouchi.”
strategy
ation are made explicit in the light of corporate strategy. Although integration always follows strategy in any new plan, through time a new strategy always follows the integration specified in the old plan. The extent to which the new strategy is conditioned by the old integration is open to question. Some writers have stated that strategy follows structure.’ Z A prevailing mode of integration which is inappropriate or incomplete could limit strategic thinking and could underlie resistance by (the members oq the organization to strategic change. Second, it is possible for this inappropriate or incomplete integration to be the major cause of strategic management in an organization losing contact with its environment, and so failing to recognize and utilize the correct inputs for strategic thinking.
Total technology implies the establishment of appropriate structural linkages and communication pathways within and between the strategic and operational management groups. Commitment of members to the organization as a whole implies the development of an appropriate organization climate by the strategic management group, and their adoption of an appropriate management style. An organization which is truly integrated should be able to accommodate to any corporate strategy, assuming that corporate strategy is correctly formulated. It follows that the measure of strategic integration is directional flexibility.
Business integrative characteristics may be seen to make up corporate integration in the same way as business strategies were seen, above, to constitute corporate strategy. There are a selection of business integrative characteristics available to strategic management during planning. These are defined b) policy/aims and mission/purpose and are shown in Figure 7.
During desired
The integrative product-market
strategic planning at any one time, the integrative characteristics of an organiz-
characteristics for each business relationship would be reflected
or in
Long Range
64
Planning
Vol. 18
April
1985
Policy/Aims-What
Mission/PurposeWhat Total Technology do We Want?
Kind of Organization do We Want to be? Do Not Take Initiative
Take Initiative New Kind
Through Decision
(A) Positive Intensification (Company Finds Flexible Cohesion)
(B) Experiential
(Ei) Wait and See*
(D) Unwilling
(C) Metamorphic
Same Kind Existing Monitor/Have Knowledge of Total Technology
By Default (J) Restricted
(Eii) OK i: We Are’”
(K) Powerless
(Fi) Wait and See* Or
I
(Fir) Unresponsive**
Do Not Monitor/ Have Knowledge of Total Technology
l
Through Decision
II) Negative Intensification (Company Becomes Increasingly Rigrd)
Bv
(0) Unthinking
(L) Hopeless
(G) No Choice
(H) Optimistic
(P) Impotent
(M) Withdrawn
(N) Rash
Default
I
I
I
Wait and See’ Implies That Strategic Management Retains the Capacity to Take an initiative When it Chooses to do so
““OK As We Are’ and ‘Unresponsive’ Imply That Strategic Management Does Not Retain Any Capacity to Take an Initiative in This Fashion Notes:
Figure
1.
This Matrix Assumes That Knowledge is Correlated With Best Assessment of Risks Involved
2.
With Respect to Mission/Purpose it is Assumed That if the Organization Does Not Monitor, Then it Does Not Monitor New or Existing Total Technology
3.
With Respect to Policy/Aims it is Assumed That if No initiative is Taken the Organization Remains of the Same Kind Through Inertia
4.
Each of the Integrative Charactenstics Shown in This Matrix Represents a Contrnuum Defined by the Relative Weights Given to Policy/Aims and Mission/Purpose
7. A matrix
of business
integrative
characteristics
its assignment to a place in the Figure 7 matrix. The total pattern of business integrative characteristics would show the resultant corporate integration. Again, none of the positions in Figure 7, which may be chosen through decision, can be said to be intrinsically better than any other, but any position that may be chosen by decision would be superior to a default assignment.
Corporate
Tactics
Corporate strategy and integration, together with policy/aims and mission/purpose, provide the criteria for the specification of corporate tactics. Strategy and integration contain both objectives and means, and tactics may be seen as the detailed exposition of strategic and integrative means. It is a matter for the judgment of a strategic management group, during planning, as to how much scope is left for the exploration of tactical alternatives within the means of their corporate strategy and integration. Corporate tactics form the basis for functional or divisional strategies which are central to operational planning by operational managers. There would be variations from one organization to the extent to which the another concerning specification of corporate tactics allows exploration of alternatives by operational managers in their operational planning.
for corporate
integration
Corporate tactical objectives are thought to fall into two categories: programmes and projects. Tactical means are budgets and schedules, respectively. The on-going responsibilities of the strategic management group, including those relating to the separate operating functions or divisions of the company, are included in programmes. These would relate to established products and processes and utilise established administrative procedures. Projects are those things which have not been done before by strategic managers or are not part of their established routine. Corporate tactics include only those projects of corporate significance, e.g. major capital expenditure, new products, etc. Such projects would be of such great importance because of cost, risk or expectations, that they must be the responsibility of the strategic management group. Also, a project may touch so many parts of the firm that the strategic management group is the only group that can realistically manage it. Strategic and integrative thinking would be futile if strategic managers as a group were unable to formulate or agree on an explicit corporate strategy and integration for their firm. Such disagreement is thought to stem from the lack of a common frame of reference within a strategic management group. An inability to develop a common frame of reference may be rooted in the assignment of operational, functional or divisional responsibilities to particular individuals within a strategic management group, and their interpreting their role as an
Helping operational or tactical manager, rather than as a strategic manager. Too often, bitter arguments over corporate tactics may reflect the fact that a collection of so-called strategic managers is not performing strategic management. It may, of course, be perfectly rational, from their own point of view, for individual members of a strategic management group to think and act like operational managers, even if they know better. This may be so, for example, where their salary, or even their position, largely depends on relatively short-term operating results from their division or function. Where competition between operating units is formalized and encouraged, great care is needed to ensure that this does not destroy corporate integration and co-ordination, to the detriment of the firm as a whole. In practice, tactical trade-offs and compromises to reconcile conflicting objectives of each function or division may be essential in order to obtain corporate co-ordination as part of tactics. Ideally, corporate strategy and integration should provide the criteria against which tactical trade-offs are made.
Summary
and Conclusions
It is open to every strategic manager to have his or her own concept of strategic management, and its associated performance criteria, depending on that manager’s personal world-view. It is a paradox that there are few general rules concerning the process of strategic management, although strategic management is about the formulation of decision rules for the guidance of the organization into the future. It is reasonable to assume that strategic managers, as individuals and as a group, wish to improve their performance and that of their organization. It has been implicit in this discussion that performance criteria for management are effectiveness, efficiency and flexibility. Achievement of improved performance, in line with these criteria, could be assisted by an explicitly defined, procedurally systematic process of strategic management. Hence, one normative, procedural framework for strategic management has been offered in this paper, with the intention of contributing to the improvement of strategic managers’ performance in practice. A strategic management process has been described. The time dimension largely prescribes the procedural operations and steps within the suggested process of strategic management. The frame of reference of individual strategic managers, or the strategic management group, determines the substantive character of each of the operations constituting strategic management. Matrices
for the representation
of policy/aims
and
Managers
to Develop
Strategies
65
mission/purpose have been suggested, to facilitate the explicit formulation of a frame of reference during strategic planning. The frame of reference defines a continuum of corporate strategic and integrative thinking. Corporate strategy has been discussed as the means for closing a perceived, future strategic gap, and a matrix for describing business strategies within corporate strategy has been developed. Formulation of corporate strategy involves choices and these bring an inherent for disagreements to the strategic potential management group. The business strategy matrix could assist in the making of appropriate choices, and help bring about positive resolution of conflicts. Corporate integration follows corporate strategy during any strategic planning, and is also central to and characteristic of strategic management. Hence, a suggested representational matrix of business integrative characteristics within corporate integration is thought to offer benefits to the strategic management group. These benefits would be similar to those of the business strategy matrix, but, in this case, they should assist the strategic management group in formulating an appropriate integration. The characteristics of corporate strategic management, at any time, are given by combining corporate strategy and corporate integration. This may be achieved by combining the business strategy matrix and the matrix of business integrative characteristics. In theory, corporate strategy, corporate integration and the frame of reference of strategic management would determine corporate tactics. However, the dynamics of the strategic management group, and’ in the previous steps within its performance strategic analysis and planning, would decide whether corporate tactics were the basis for coordination or further conflict. An explicit conceptual and procedural framework for strategic analysis and planning is thought to offer the potential for improved performance to individual strategic managers, and to strategic management groups, especially in business organizations. This paper has presented one such framework as -a -possible tbol for management practice.
Glossary of Terms Policy/Aims
and tnisrion/pctrl,ost’ arc used here as composite phrases. All objective is something that -. strategic management wishes (the orgamzatlon) to achieve in the future. The word godI is not used. A mwu is a future course ofaction through which an objective is to be achieved. Stratqy is given a special in the phrase corporate strategy.‘3.‘4 rneaning Corporate strategy is seen as central to and
66
Long Range
Planning
Vol. 18
April
characteristic of the strategic management process. Corporate integration is defined below and is also characteristic of the strategic management process and central to it. Statements of policy/aims and mission/purpose which reflect what strategic management wants for the future are always subjective even if they contain objectives, so-called by management writers. For the strategic management group it may be more correct to call them strbjectives since they are selfimposed and guides to thinking rather than action. They may become managerial objectives when passed on to other members of the organization as targets for action, but their origin or acceptance in the minds of strategic managers is still subjective. With this qualification the term objectives is used in this paper. Policy/aims, mission/purpose, corporate strategy, etc. describe steps in the strategic planning operation, as well as statements within the strategic plan, which is the output of planning. These terms are defined below. Policy/Aims
At any one time, policy/aims is strategic managers’ answer to the question, ‘What do we want to be?’ This answer will include specification of the planning horizon. Mission/Purpose
is strategic At any one time, mission/purpose managers’ answer to the question, ‘What do we want to do?’ This answer will include specification of the planning horizon. Corporate
Strategy
At any one time, corporate strategy is strategic managers’ objective specification for the future of the relationship between their primary objectives, as specified in their policy/aims, and their chosen environmental opportunities, as specified in their This objective specification inmission/purpose. cludes the formulation of courses of action and the planned allocation of the organization’s human and other resources as the means to ensure that the organization appropriately obtains resources from its environment for its own maintenance and further discretionary use, so that policy/aims and mission/purpose are achieved. is the primary planning Corporate strategy means through which strategic managers intend to achieve their policy/aims and mission/purpose. (For the business firm, corporate strategy will be mainly concerned with the relationships between customers and the technological offerings of the firm, i.e. its products and/or services. However, other stakeholder relationships, i.e. with shareholders, suppliers, bankers, Government and employees,10
1985 will be considered activity.)
in the
light
of competitive
Integration
Corporate
At any one time, corporate integration is strategic managers’ objective specification for the future, in the light of their corporate strategy, of the relationship between the nature of their organization, as specified in their policy/aims, and the total technology of their organization, as specified in their mission/purpose. This objective specification includes the planned structuring of the organization’s human and other resources as the means to ensure that corporate strategy, policy/aims and mission/purpose are achieved. Corporate integration is the planning means, secondary to corporate strategy, through which strategic managers intend to achieve their policy/aims and mission/purpose. (Total technology is the sum of the scientific, technical and professional knowledge, skills and expertise of individual members of the organization, multiplied by management. Total technology underlies the products or services that a company is able to offer, and it is, therefore, the source of strategic competitiveness.) Corporate
Tactics
At any one time, corporate tactics is strategic managers’ objective specification, for the future, of organizational activities and individual actions, as a result of corporate strategy and integration. This objective specification of co-ordinated, functional or divisional programmes and projects of corporate significance, together with the budgets and schedules they require, is the means to ensure that policy/aims, mission/purpose, corporate strategy and corporate integration are achieved. Corporate tactics are specific in cost, time and performance, and assign management authority, responsibility and accountability to strategic and operational managers. Corporate tactics is the planning means through which strategic managers intend to achieve their corporate strategy and corporate integration. It is the activities and actions specified in corporate tactics that are implemented during Strategic Implementation which follows Strategic Planning.
Example:
An Electronics
Subcontractor of This company is small, with a turnover approximately A:0.4m, and all of its current business is derived from the subcontracting of It is and manufacturing. electronics design dependent on a relatively small number of larger customers. Figures
3 and 4 were used to facilitate
discussions
Helping and to explore the company’s strategic thinking. The objective was to obtain an analysis of strategic thinking, accepting that strategic thinking itself is always concerned with planning for the future. Using Figure 3, relative to its environment the company had not achieved its existing ambitions. For it to do so, the managers felt that they and the other members must be motivated to achieve in new directions. This was interpreted as a desire for New Organizational Motivations. The kind of organization that the company wanted to be was not explicit, although the Managing Director had his own implicit concept. It was recognized that there was a great deal of commitment to the firm by its staff, and that this could largely be due to the relatively small size of the company. The exact nature of the inducements to commitment that the firm offered, and the resultant perceptions of its members, had not been explicitly determined. There was, therefore, uncertainty whether existing inducements could utilized relative to New Organizational be Motivations, or whether new inducements would be necessary in the future. Figure 3 was used primarily to pose questions concerning strategic thinking. In the Figure 3 matrix, the company could be described as ideally wanting Motivation Development or Organization-Motivation Development. Relative to Figure 4, the business that the company wanted was to maintain their subcontracting activities, and to develop some products of their own in order to reduce their dependence on their existing customers and give greater margins than subcontracting allows. This was interpreted as involving a new visualization of customer needs/wants that would necessarily involve new markets. In discussion of total technology the company acknowledged that they had no products as such. Second, while its existing task technology could be used to produce new products, the overall task technology required would be very different to that appropriate for subcontracting. Again, the main use of the matrix was to pose questions. However, the company could be identified as ideally wanting Technology-Need Diversification in the future. The visualization in Figure 4 of the great distance between Market Penetration and Technology-Need Diversification has stimulated the company to incorporate new dimensions into its strategic thinking.
Example: An Electronic Manufacturer This company,
with a turnover
to Develop
is marketing electronic L7m, measurement and monitoring industry and elsewhere.
Strategies
67
instruments of processes
for in
Figures 3-7 were used to facilitate discussions and to explore strategic thinking. Again, the objective was to obtain an analysis of strategic thinking, accepting that strategic thinking itself is always to do with planning for the future. Regarding Figure 3, the company is clear that they want Organization-Motivation Development for the future. With respect to Figure 4, they wish to penetrate existing markets to a greater extent, using existing and new total technologies and new products. They are categorized as wanting Product Development and Technology Development. The firm has a number of different product ranges aimed at different customers. In terms of Figure 6, these products were seen as different businesses, with Positive Consolidation, Explorative and Indifferent business strategies desired for the future. Using Figure 7, the company recognized that they wanted to maintain particular integrative characteristics for each of their businesses; a No Choice form of integration being appropriate for their Indifferent business, and Positive Intensification and Experiential integrative characteristics for their Positive Consolidation and Explorative businesses, respectively. The avoidance of Negative Intensification and Optimistic integrative characteristics was seen as particularly important. This prompted the recognition that, since they would always be taking initiatives, they should not cease to monitor and develop their total technology; and that decisions regarding their total technology are crucial. The company had long been aware that its corporate strategy consisted of the separate business strategies described above. However, they had not explicitly recognized that their corporate integration should combine the desired integrative characteristics of each of the separate businesses.
References
(1)
M. D. Skipton, A strategic-operational approach to management, Management Research News, 6 (4). 7-l 5 (1983).
(2)
B. Hedley, Strategy and the business portfolio, Planning. 10 (1). 9-15, February (1977).
(3)
General Electric’s Stoplight Strategy, Business Week, 28 April (1975); reprinted in J. M. Higgins, Organisational Policy and Strategic Management-Text and Cases, The Dryden Press, Hinsdale, III (1979).
(4)
S. J. Q. Robinson, R. Hichens and D. P. Wade, policy matrix-Tool for strategic planning, Planning. 11 (3). 8-15, June (1978).
(5)
T. Levitt, Marketing myopia, Harvard Business Review, 38 (4). 4556. July-August (1960); reprinted 53 (5). 26-44 and 173-l 80. September-October (1975).
Instruments of approximately
Managers
Long
Range
The directional Long Range
Long
68
Range
Planning
Vol.
18
April
(10)
R. M. Cyert and J. G. Marsh, A Behavioural Theory of the Firm, Prentice-Hall, Englewood Cliffs, NJ (1963).
(11)
W. G. Ouchi, Theory Z-How American Business Can Meet the Japanese Challenge, Addison-Wesley, Reading, Mass. (1981).
(12)
D. J. Hall and M. A. Saias. Strategy follows structure, Strategic Management Journal, 1, 149-l 63, April-June (1980).
6. R. Scott, The industrial state: Old myths and new realities, Business Review, 51 (2), 133-148. March-April
(13)
J. Bracker, The historical development of the strategic management concept, Academy of Management Review, 5 (2). 219-224 I1 980).
C. R. Christensen, K. R. Andrews Policy-Text and Cases (Fourth Homewood, ill. (1978).
(14)
C. W. Hofer and D. Schendel, Strategy Formulation: Analytical Concepts, West Publishing Company, St. Paul, Minn. (1978).
(6)
T. Levitt, innovation in Marketing, McGraw-Hill, New York (1962); reprinted Pan Books, London (1968); see Chapter 2, Management Myopia.
(7)
A. D. Chandler, Strategy and Structure: Chapters in the History of American Industrial Enterprise, MIT Press, Cambridge, Mass. (1962).
(8)
Harvard (1973). (9)
1985
and J. L. Bower, Business Edition), R. D. Irwin Inc.,