Organizational strategy

From CEOpedia | Management online

Organizational strategy combine various plans for changes in different areas of the company e.g. technical, production, employment, finance, marketing, etc. It can also be understood in terms of structural changes, restructuring, development programs, and company growth. Organizational strategies are primarily presented in the context of the broadly understood company strategy. The organizational strategy can also be defined as the concept of the company's operation in the long-term, supported and stabilized by the organizational culture, aimed at ensuring the effective implementation of goals. The organizational strategy integrates particular types of management strategies, fulfilling the role of the superior strategy.

Types of strategy

Strategy of business which brings profits has a basic goal. It is named by the person who own the company and who is a chief of the company. An example of a single strategy thinking may be to provide the market with the cheapest product. But the question is (even if the sales will rise) if this business will still earn money? Or just make cheap products of which huge sales will not cover expenses? That's why perfect strategy is an important thing as company's owner wants to make money and cover all expenses by the profits.

The key of this strategy is to provide the costumer with as low prices as possible and also for expenses of the company to be at the lowest level. It can be accomplished by finding the cheapest source of needed materials for poduction. Let's say we have the same profit but our expenses are decreasing. That is when the business is more profitable [1].

  • Differentation

The business that provides the market with different (those which can not be found) products. It is a differentiation of the available products. The key of this strategy is to discover new object that has not been discovered before or just simply update, improve the ones available on the market. One of the most important thing in this strategy is to sell new or different product. That is why the business need to focus on a good marketing. When presenting something innovative on a market company can play with the price - it is up to them [2].

  • Focus

The key of this strategy is to concentrate on one single bay of the market hence smaller number of costumer is a sure thing in this case. The company can focus on one single product and can make sure that it will be perfect. Costumer are willing to pay every price for the perfect product. This strategy is built with a low - cost production or differentiation. When it comes to low - cost production - most of the people wants to purchase a good quality product no matter what is the price of it. And about differentiation - company can deliver to the market fresh, totally new product. The other thing is competition. If the business provides the market with perfect product or the new one the market will be unapproachable for different companies producing the same product but at lower quality or looking like the original one [3].

  • Growth

In this strategy there is a possibility of adoption one of following option:

  • eliminate the competition by buying it out
  • increase number of product being sold
  • increase the
  • expand the area of selling
  • expand the types of product being sold

Before choosing growth strategy the company's situation must be verified as this strategy is extremely expsensive

  • Rationalization

This strategy Is based on two opposite situation. The company has ability to construct it organizations and operations which allow it to has a control over itself. But the same system is compound with the company so strong that there the possibility for it to develop or have any update in the future is endangered. Company's system is understood as dilatory but still leading to development.

Examples of Organizational strategy

  • Investing in Human Capital - Investing in human capital ensures the long-term success of the organization. It involves investing in employee development, training and education, as well as job enrichment, job rotation, and other strategies that improve the quality of work, increase morale, and boost productivity.
  • Process and System Improvement - Process and system improvements involve assessing current systems and making necessary changes that can increase efficiency and effectiveness. This could include streamlining processes, automating tasks, updating software and tools, and implementing new technologies.
  • Strategic Alliances and Collaboration - Strategic alliances and collaborations can help organizations leverage resources and skills to increase their competitive edge. This could involve partnering with other companies, forming joint ventures, and other strategic collaborations.
  • Digital Transformation - Digital transformation involves leveraging digital technologies to enhance customer experiences, improve operational efficiency, and create new business models. It can involve deploying new technologies, developing digital products and services, and creating digital platforms.
  • Mergers and Acquisitions - Mergers and acquisitions are a common strategy used to gain market share, eliminate competition, and increase profitability. It involves combining two organizations into one or acquiring another organization.

Advantages of Organizational strategy

Organizational strategy has numerous advantages that have been proven to be beneficial to the company. These include:

  • Improved long-term planning: By implementing an organizational strategy, the company can plan for long-term goals and objectives. This helps ensure that the company is able to meet its goals and objectives in the future. It also helps the company to identify potential risks and opportunities that may arise in the future.
  • Improved decision-making: An organizational strategy can help the company make better decisions. By taking a strategic approach, the company can make informed decisions that are in line with the company’s overall goals and objectives.
  • Improved resource management: An organizational strategy can help the company better manage its resources. This includes not only financial resources, but also human resources, physical assets, and technology. By understanding the resources that the company has and how they can be used to achieve its goals, the company can maximize its efficiency.
  • Improved performance: An organizational strategy can help the company improve its performance. By having a well-defined strategy, the company can focus on the areas that are most important and work towards meeting its goals and objectives. This can lead to increased profits, improved customer satisfaction, and increased efficiency.

Limitations of Organizational strategy

  • One limitation of organizational strategies is that they can be difficult to implement. This is because the strategies require a company to make changes in multiple departments, which can be complicated and time consuming.
  • Another limitation of organizational strategies is that they can be expensive. These strategies often require new technology, personnel, and other resources that can be costly.
  • A third limitation of organizational strategies is that they can be hard to adjust as the company’s environment changes. This is because the strategies are often created to address a specific set of conditions. As the environment changes, the strategies may no longer be effective and need to be adjusted or replaced.
  • A fourth limitation of organizational strategies is that they can be difficult to measure. This is because the strategies often involve long-term goals, making it hard to determine the success or failure of the strategy.
  • Finally, organizational strategies can be difficult to communicate. This is because the strategies often require changes in multiple departments and involve complex topics. It can be challenging to ensure that everyone in the organization understands and follows the strategy.

Other approaches related to Organizational strategy

An Organizational strategy employs a variety of approaches to ensure the organization’s success and growth. These include:

  • Strategic planning: This approach involves developing a long-term plan for the organization. It includes setting objectives, analyzing the internal and external environment, developing strategies to achieve the objectives, and monitoring progress.
  • Change management: This is the process of planning and implementing changes within the organization. It includes assessing the impact of potential changes, communicating changes to the relevant stakeholders, and training employees.
  • Continuous improvement: This approach involves developing processes to improve the efficiency and effectiveness of the organization. It includes benchmarking, measuring performance, and implementing initiatives to improve operations.
  • Talent management: This approach involves recruiting, developing, and retaining the best talent to ensure the organization’s success. It includes assessing skill gaps, providing training, and creating a supportive work environment.

In summary, organizational strategies employ a variety of approaches to ensure the organization’s success and growth. These include strategic planning, change management, continuous improvement, and talent management. These approaches work together to create an effective strategy that will help the organization achieve its goals.


Organizational strategy — recommended articles
Functional strategy — Development by restructurization — Importance of knowledge — Strategic decision — Benefits of strategic management — Chief innovation officer — Strategic driver — Organizational progress — Balanced scorecard perspectives

References

Footnotes

  1. ↑ Diaconu L. (2007). Low - cost strategies in the context of global market dynamics p. 121-125
  2. ↑ Dirisu, J. I. (2013). Product Differentation: a tool of competitive advantage and optimal organizational performance p. 259-272
  3. ↑ Tanwar, R. (2013). Generic Competitive Strategy. p.16-17

Author: Ewelina Kruszewska

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