Why and How

What is st rat egy ?

I t is a plan for achieving purpose Concept of st rat egy in m ilit ary in t he t im e of ancient Greeks. Spread t o diplom at ic and business cont ext s. St rat egy result s from careful analysis St rat egies m ay change according t o environm ent al changes so I S developm ent s t hat support ed t hem m ay ended in such cases.

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The process of specifying an organizat ion's obj ect ives developing policies and plans t o achieve t hese obj ect ives allocat ing resources so as t o im plem ent t he plans I t is t he highest level of m anagerial act ivit y, usually perform ed by t he com pany's Chief Execut ive Officer ( CEO) and execut ive t eam .
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St rat egic planning is a way t o ident ify and m ove t oward desired fut ure st at es. I t is t he process of developing and im plem ent ing plans t o reach goals and obj ect ives.

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Cle a r goa ls: Helps m aking t o t act ical choices m ade during t he lifet im e of t he st rat egy. Su ppor t s in it ia t ive : Rewarding init iat ive behavior result s in bet t er com m it m ent and m ot ivat ion. Con ce n t r a t e d : Resources and energy is concent rat ed when and where it m at t ers m ost . Fle x ible : Taking advant age of chages. W e ll m a n a ge d : Good leadership is needed.
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When developing a st rat egy I nvest igat e t he sit uat ion Develop som e alt ernat ive courses of act ion Evaluat e t hese decisions Choose t he decision t o be im plem ent ed I m plem ent our decision and follow it By using t his process we can develop a m odel of st rat egic m anagm ent .
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There are m any analyt ical t ools t o help in t his process; m ost of which are concerned wit h offering ways of analysing t he current sit uat ion. Those we exam ine are; SWOT PESTEL Balanced Business Scorecard Bost on Group Mat rix

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A SWOT Analysis is a st rat egic planning t ool used t o evaluat e t he

St rengt hs W eaknesses Opport unit ies Threat s

involved in a proj ect or in a business vent ure.

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I t m easures a business unit , a proposit ion or idea. There are int ernal fact ors
st rengt hs and weaknesses from int ernal fact ors opport unit ies & t hreat s from ext ernal fact ors.

It helps in decision making how t he firm may use it s st rengt hs and opport unit ies t o overcome weaknesses and t hreat s.
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perform ed early in t he proj ect developm ent process helps organizat ions evaluat e t he
environm ent al fact ors int ernal sit uat ion

facing a proj ect .

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St rengt hs and w eaknesses are at t ribut es t hat m easure your int ernal capabilit y. Opport unit ies and t hreat s refer t o how t he ext ernal environm ent s effect s your t eam / business/ group.

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Ex a m ple s of Possible St r e n gt h s a n d W e a k n e sse s

Experience Resources Pat ent s Good reput at ion Originalit y Cust om er Service Efficiency Com pet it ive Advant ages
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Ex a m ple s of Possible Oppor t u n it ie s a n d Th r e a t s

Business Alliances New Product s and/ or Services I ncreasing Market Sat urat ion Target ing a New Market Segm ent Locat ing a New Source of Revenue Unfulfilled cust om er need

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SWOT analysis can help in t urning weaknesses and t hreat s int o opport unit ies, and ult im at ely int o st rengt hs.

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Figure 2.3 A SWOT matrix

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SWOT example
The scenario is based on a business-to-business manufacturing company, who historically rely on distributors to take their products to the end user market. The manufacturer tries to create a new company of its own to distribute its products direct to certain end-user sectors, which are not being covered or developed by its normal distributors. Weaknesses We would be a small player. No direct marketing experience. We cannot supply end-users abroad. Need more sales people. Limited budget. No pilot or trial done yet. Delivery-staff need training. Customer service staff need training.

Strengths End- user sales control and direction. Right products, quality and reliability. Better product life and durability. Spare manufacturing capacity. Some staff have experience of end- user sector. Have customer lists. Direct delivery capability. Product innovations ongoing.

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SWOT example (cont.)

Opportunities Could develop new products. Profit margins will be good. End-users respond to new ideas. Could extend to overseas. New specialist applications. Can surprise competitors.

Threats Environmental effects would favour larger competitors. Existing core business distribution risk. Market demand very seasonal. Retention of key staff critical. Possible negative publicity. Vulnerable to reactive attack by major competitors.

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1.

SO STRATEGIES
These strategies are based on institutional strengths to take advantage of market opportunities.

2.

WO STRATEGIES
These strategies are based on overcoming institutional weaknesses to take advantage of market opportunities.

3.

ST STRATEGIES
These strategies are based on institutional strengths to avoid market threats.

4.

WT STRATEGIES
These strategies are based on overcoming/minimizing institutional weaknesses to avoid market threats.
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I t is describing t he ext ernal fact ors of P olitical Economic S ocio- cultural T echnological Environmental and Legal that affect organization now or in the future. We need t o be aware of ext ernal fact ors affect ing our organizat ion and how t hey m ight change I S developm ent s.
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Governm ent at t it udes t owards

privat e and st at e- owned ent erprises int ernat ional polit ics ( price of oil, raw m at erial supply)

Econom ic : I nt erest rat es, currency exchange, inflat ion, m arket share et c. Socio- cult ural : Changes in dem ography, life st yle, working condit ions, educat ion et c.
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Technological : New ways of delivering a service t hrough t he use of t echnology, exploit m arket ing inform at ion and ext end choices by int ernet et c.

Environm ent al : Clim at e change, im pact of pollut ion, raw m at erial supplies, use of energy et c. Legal : Ant i- t rust and m onopoly legislat ion, laws against pollut ion, specific t axat ion legislat ions et c.
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Addresses int angible aspect s

cust om er perspect ive t he int ernal business perspect ive em ployee perspect ive

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Cust om er Perspect ive

How cust om ers see t he organizat ion? Measures
response and delivery t im es defect rat es Followup service

Cust om ers are surveyed t o find out what it is like t o be a cust om er of our organizat ion.

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How well our business is running ? What processes m ust work excellent ly if we are t o exceed our cust om ers expect at ions ?

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Oft en called t he learning and growt h or organizat ional growt h perspect ive . Const ant developm ent of em ployees Much m ore t han j ust t raining .
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Robson s analysis of I S opport unit ies

3 generic business st rat egies t o respond t o t he five com pet it ive forces by using IS to
reduce overall cost s different iat e product s and services from t he com pet it ion s offerings and add addit ional feat ures on t hem concent rat e on m arket segm ent s and support act ivit ies in t hem .
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Robson s analysis of I S opport unit ies

Figure 2.6 Robson s analysis of the five forces and IS opportunities

Source: W Robson, Strategic Management & Information Systems, 2nd edn, Prentice Hall, 1997

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Generic I S st rat egies for organizat ions

There are six st rat egies offered for t he developm ent of I S in organizat ions by Gregory Parsons. These are;
1.

Centrally planned where the planning cycles for businesses and IS are closely linked and IS strategy is embedded in business strategy. Leading edge where there is a belief that innovative technology can create organizational gains and that risky investment can generate big paybacks.

2.

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Generic I S st rat egies for organizat ions ( cont .)

3.

A free market users make decisions so IS department behaves as a competitive business unit. Monopoly the information is a corporate asset and st rat egy for I S developm ent is founded on it . There is a danger of slow m oving and unresponsive to customer. Scarce resource scope of the IS function is deliberately limited by budget constraints. Necessary evil where organizations see the developm ent of I S as a necessary evil and believe the information is not important to their SWE 523 business.

4.

5.

6.

How st rat egy and syst em s link wit h organizat ional cult ure, t he 7- S m odel I t proposes t hat t here are ot her fact ors in addit ion t o st rat egy t hat m ake an organizat ion effect ive.

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The 3Ss across the top of the model are described as 'Hard Ss': Strategy: the direction and scope of the company over the long term. Structure: the basic organization of the company, its departments, reporting lines, areas of expertise and responsibility (and how they inter- relate). Systems: formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call center systems, online systems, etc).

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The 4Ss across t he bot t om of t he m odel are less t angible, more cultural in nature, and were termed 'Soft Ss' by McKinsey: Skills: the capabilities and competencies that exist within the company. What it does best. Shared values: the values and beliefs of the company. Ultimately they guide employees towards 'valued' behavior. Staff: the company's people resources and how the are developed, trained and motivated. Style: the leadership approach of top management and the company's overall operating approach.

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Effective organizations achieve a fit between these seven elements. If one element changes then this will affect all the others. For example, a change in HR- systems like internal career plans and management training will have an impact on organizat ional cult ure ( m anagem ent st yle) and t hus will affect structures, processes, and finally characteristic competences of the organization. The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values.

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