TYPES OF ORGANIZATIONAL STRATEGIES PDF

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Class notes on the implementation of the organization's strategy, organizational performance, organizational effectiveness, and societal evaluation methods to organizations...

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TYPES OF ORGANIZATIONAL STRATEGIES

Thompson says that to manage the interdependence between elements of the work environment, each organization uses different strategies. As this environment is determined by dependence on the organization and because dependence involves coercion and contingencies, the fundamental problem is not being subject to the vagaries of the environmental elements. The strategy serves to increase the power of the organization and reduce its dependence on environmental factors. To do this, the organization can develop cooperative strategies (such as adaptation, co-optation and coalition) or competition. 1. Adaptation or negotiation. It is the strategy that the organization uses to reach an agreement or a commitment with other organizations on the exchange of goods and services. Adaptation involves a direct interaction with other organizations in the working environment. Because the organization cannot assume that commitments to other organizations will be lasting, it should periodically review its relationships with suppliers through contracts, purchase orders, and quotations; with distributors, through agreements, agreements and periodic adjustments to sales quotas and guaranteed quality contracts; with regulatory bodies, through collective bargaining or trade union agreements renewed annually, and with supervisory bodies, through patent letters and price lists of their products. Adjustment is almost always a negotiation on decisions that affect the relationships between two or more organizations with respect to a given objective. It is an exchange of commitments and therefore reduces uncertainty between the parties involved. It may be a contract or a simple agreement, but it is always based on faith and confidence that the other party will fulfill what is promised. With adjustment, one organization allows others to influence their decision-making processes, limiting their freedom of action and choice. 2. Cooptation. It consists of placing individuals from outside in an organization's leadership positions or political decision structures to prevent threats or pressures to the stability or existence of the organization. The organization conquers and absorbs enemy or threatening groups through co-optation. In this way, the leaders of these groups are integrated into the decision-making process to inhibit actions contrary to the interests of the organization. The term co-optation indicates a merger, conjunction or union, i.e. acceptance in the group of directors, to representatives of organizations with which there is interdependence, such as banks, financial institutions, suppliers, creditors and investors to reduce threats or to secure support or dominance through consensus. Co-optation involves an invasion of the

organization's decision-making processes and limits its freedom to define its objectives arbitrarily and unilaterally. 3. Coalition. It refers to a combination of two or more organisations to achieve a common objective, especially when a single organisation is not in a position to obtain sufficient help or support by its own means. The coalition requires a commitment to decide activities together and is an extreme form of environmental conditioning of an organization's objectives. This is the case with partnerships between companies seeking to unify pricing policies, consortia that partner to form a common company (e.g. companies that come together to build hydroelectric plants and other major works of infrastructure). 4. Competition. It is a form of rivalry between two or more organizations with the mediation of a third group. In the case of two competing undertakings, the third group may be the buyer, supplier, workforce or other. Competition involves a complex system of relationships and includes competition both in the search for resources (capital markets, machinery and equipment, raw materials or human resources) and in the search for customers (consumer market) or participants Potential. Competition is a strategy by which the objective of the organization is partially determined by the environment, which subtracts from the organization much of its freedom of action and choice. Miles and Snow classify organizational strategies into four broad categories: 1. The defensive strategy is adopted by organizations that dominate certain products or markets and seek to protect themselves from competitors. It is based on defense and stability, i.e. isolating a fraction of the market to create a stable domain, a limited set of products aimed at a segment of the total market. To keep competitors away, the organization offers competitive pricing or focuses on quality. Technological efficiency is important, as is strict control of the organization. With this narrow and conservative approach, organizations rarely make major modifications to the organization's structure, technology, or operating methods. Instead, they seek to focus their attention on maintaining or increasing the efficiency of their current operations (non-diversification strategy). Since operations are not significantly altered, the experience that the organization acquires becomes quite profound. 2. The Scout strategy is adopted by organizations that almost always seek new market opportunities and often experiment with emerging trends. It is a bold strategy that seeks opportunities with new products and markets, even

if it affects their profitability. These organizations often generate changes and uncertainty in the environment. Uncertainty particularly affects competitors, who see their trading scenario altered. Concern about changes and innovations means that these organizations do not make enough efforts to get the maximum possible performance and this makes them inefficient. From the point of view of this strategy, every product or market is always transient and subject to being replaced. It is important to maintain flexibility, both in technology and organizational design, to face new situations and activities. 3. The analytical strategy is dual and hybrid and is located between the defensive and the scout. Try to minimize risk while making the most of profit in a balanced way. It is a shared strategy adopted by organizations operating in two types of product/market domain: one relatively stable and one changing. Because your organization maintains and defends a product or market domain that is guaranteed, it seeks to take advantage of opportunities in new domains. The analytical strategy causes part of the organization to work with one defensive strategy, while another one works with a scouting strategy. Thus, in the most turbulent areas, executives look closely at competitors for new ideas and quickly adopt those that seem most promising to them. 4. The reactive strategy, contrary to the previous three, which are proactive, is used by organizations that do not have a properly formulated strategy, but react untimely to what is happening in the environment. It is an inconsistent and unstable, residual behavior that arises when one of the other three strategies is not well developed. The reactive strategy indicates that the organization reacts late to events in the environment and is usually unprepared and improvised. It's almost always a sign of failure. Implementation of the organization's strategy The implementation of the strategy is the sum total of the activities and decisions needed to implement a strategic plan. It is the process used to implement strategies and policy through the development of programs, budgets and procedures. Implementation is usually defined after formulating the strategy, but it is a critical part of strategic management. The strategy implementation process should answer the following questions: •

Who is in charge of the strategic plan?

• •

What should be done to align the organization's operations with the new strategic direction? How should each person work with others to do what is required?

The strategy is implemented using the following techniques: 1. The programmes: they aim to orient the strategy towards action. Each program defines a series of joint activities. 2. Budgets: they are used to allocate funds. 3. Procedures: deal with the details of the day-to-day operations of the programs. Evaluation of the organization's strategy It is the phase of the strategic administration process in which senior executives assess whether the strategy they have chosen and how it was implemented meet the organization's objectives. It is the process by which the objectives (means) are compared with the results achieved by the strategy. When formulating the strategy, attention is almost always paid to the criteria and measures that will be used to evaluate its results. There are three types of criteria for evaluating organizational strategy: 1. Internal consistency. The organization's strategy must be consistent with the organization's objectives. The strategy must be identified with the internal norms of the organization, its values and culture, and its global objectives. 2. Congruence with the environment. Your organization's strategy must be consistent with the conditions of the environment. The discrepancy in the strategy and the environment can cost the organization a very expensive or fail. 3. Adequacy to available resources. Your organization's strategy must be consistent with the resources and competencies you have at your disposal or can obtain. Resources are everything an organization has to achieve its goals. In addition, the acquisition of organizational agility is an important aspect to evaluate the strategy of the organization. It involves several aspects of behavior, whether it's designing processes and structures, redefining and reassigning resources, or seeking selective integration of processes and organizations. An organization fails to be agile unless its staff has a huge readiness to: 1. 2. 3. 4. 5. 6.

Read and interpret the environment. Anticipate changes in the environment. Work in uncertain conditions. React favorably to changes. Be flexible and adaptive. Be able to learn and adapt.

Organization performance Your organization's strategy influences your behavior in several ways: 1. Strategic decisions determine the tasks of the organization. Strategic decisions determine the objectives, allocation of resources, and critical tasks of the organization, as well as its products, services, and markets. The strategy is used to identify what is critical to the organization. 2. Strategic decisions influence organizational design. In reality, organizational design serves as a strategy, which means that the design depends on the strategy and fits it. Strategic changes involve changes in organizational structure. 3. Strategic decisions influence and influence power relations in the organization. Organizational strategy is linked to power relations, policy, and conflicts between individuals and groups in the organization. The relationship between strategy and power is circular, because as a group becomes more powerful, it can influence the definition of the strategy more. 4. The effectiveness of the organization is determined by decisions on organizational strategy and design. Individual, group, or systemic decisions are interdependent and combine to determine the effectiveness of an organization. A strategy with high potential for success could fail if the organization's design is poor, if the groups don't work well, or if people aren't motivated. Similarly, if an organization applies an incorrect strategy, it might not be effective even if it has motivated people and groups with powers. The organization's performance reflects its strategy, both in terms of formulation and application. Balanced scorecard Often, an organization's goals collide with each other. For example, cost reduction clashes with better product quality, while price increases clash with competitiveness. In general, one target interferes with another. Some organizations rank their goals. However, how do you prioritize customers, shareholders, staff, the future, strategy, service, internal processes, technological leadership, learning and innovation at the same time? Each goal points in a different direction. The problem is in getting the organization's goals to work together to avoid conflict. Synergy is sought, i.e. the positive action of one objective on others to multiply its effects rather than add them. The balanced scorecard (BSC), also known as a comprehensive dashboard (CMI), is a methodology based on the balance of four organizational perspectives: 1. Financial perspective. It refers to the way shareholders or owners view the company. Indicators should show whether the implementation and execution

of the strategy contributes to improving results. Examples: profitability, return on investment, cash flow, return on capital. 2. Customer perspective. It refers to how the customer sees the company and how the company can serve you in the best way possible. Indicators should show whether the services provided fulfill the mission of the organization. Examples: customer satisfaction, timeliness of delivery, market share, trends, customer retention and lead acquisition. 3. Perspective of internal processes. It refers to the business processes in which the organization should be excellent. Indicators should show whether processes and operation are aligned and generate value. Examples: quality, productivity, logistics, internal communication and interfaces. 4. Perspective of innovation and learning. It has to do with the organization's ability to continually improve and prepare. Indicators should show how the organization can learn and develop to ensure its growth. Examples: product renewal index, internal process development, innovation, skills and staff motivation. The BSC method seeks balanced and balanced strategies and actions in all areas affecting the organization and allows to direct efforts towards the areas of greatest competition and detects and points out those where incompetences should be eliminated. It's a behavior-oriented system, not control. Their indicators point to the future and towards organizational strategy, in a continuous surveillance system. The perspectives used can be as many as the organization needs, depending on the nature of your business, its purpose, its style of operation, etc. The important thing is to translate the strategy map into objectives and indicators to measure results, as well as define individual goals and actions. Alignment and focus are basic words. Alignment means congruence in the organization. Focus means concentration. The BSC enables the organization to align and focus its executive teams, business units, human resources, information technologies and financial resources into its strategy. The creation of the BSC goes through the following stages: 1. Definition of the strategy. The organization's mission doesn't work if it hangs on a wall in the lobby. If the strategy is not clear, all of the BSC's effort can be lost in actions that have nothing to do with the actual objectives of the organization. To be successful, the organization's strategy must be described and communicated via a strategic map that clearly shows how intangible assets can be transformed into tangible or financial assets. 2. Preparation of the strategy map. It consists in developing the strategy according to the basic perspectives (financial, client, internal processes, innovation). For each perspective, business goals need to be pinned and indicators that measure whether those goals are being met. For total organizational performance to be greater than the sum of its parts, individual

strategies must be interrelated and integrated. Synergy is the goal of organizational design. Organizations focused on strategy must overcome departmental barriers. New organization charts are needed to replace the traditional organization. 3. Preparation of the BSC. Transmit and communicate to people, in a consistent and clear way, the strategic objectives and their development, indicators, goals and actions. It is about translating the strategy in terms of operations so that it is implemented correctly. Some organizations include additional elements for each perspective used, defining critical factors, critical dimensions, goals, and actions needed. Three aspects are essential for the BSC: 1. Make the strategy a daily task for each person. Organizations that focus on the strategy require everyone to understand the strategy and that their activities contribute to it. 2. Make strategy an ongoing process. The strategy must be linked to a continuous process of learning and adaptation. In many organizations, the administrative process is built around the operations plan and budget, and monthly meetings are held to review performance relative to what was planned and analyze variations to implement corrective measures. That's not bad, but it's insufficient. A continuous process is needed to manage the strategy and enable learning and adaptation through a feedback system. 3. Accelerate change through executive leadership. It's about engaging the executive team with the success of the strategy. Team spirit is required to coordinate changes, and their implementation requires ongoing attention and a focus on change initiatives. The mobilization of all people through teams is an indispensable factor. The BSC creates a context in which decisions related to day-to-day operations can be aligned with the strategy and organizational vision, allowing the strategy to be disseminated, to promote consensus and team spirit, to integrate the parties of the to create a system that involves all business programs, catalyzes efforts and motivates people, as well as measuring and evaluating performance through indicators. Efficiency of the organization Organizations are complex and intricate entities that have individuals and groups performing tasks, assisted by various organizational schemes. Behavior patterns that develop and emerge over time affect the effectiveness of organizations. The behavior of individuals and groups has a profound impact as the organization achieves its goals and achieves success. People are at the center of it. Fitz-Enz identified eight exceptional organization practices:

1. 2. 3. 4. 5. 6. 7. 8.

Balanced value fixation. Commitment to a basic strategy. Intense linkage of the strategy with the cultural system. Mass double-track communication. Partnership with stakeholders. Functional collaboration. Innovation and risk. Never be satisfied.

How society evaluates organizations Organizations have a profound effect on society; therefore they are constantly evaluated by different sectors of society. There are several segments that analyze each year the financial results and other indicators of success of the organizations (for example, the list of the best companies of Exame magazine), their work environment (such as the annual research on the best companies to work), the most admired companies in the world or the country, or those most focused on community and social support. However, one of the most comprehensive assessments of organizational performance is that made by the Fundacao Nacional da Qualidade (FPNQ), a non-governmental organization with offices in Sao Paulo, which is awarded by the Qualidade National Award (PNQ), inspired by Deming and Baldrige Awards. The main values and concepts of the PnQ are: • • • • • • • • • • • • •

Customer-focused quality Leadership Continuous improvement of work processes and methods Worker participation and development Rapid response to market demands Preventive approach and project quality Long-term vision Fact-based management Partnership development Public responsibility and corporate citizenship Focus on results Innovation and creativity Behaviour and transparency

The evaluation and award cycle lasts year-round; begins with the publication of the contest's bases and ends with the award ceremony. This recognition has several objectives: • •

Improve the quality of products and services through management to achieve performance excellence. Focus the management of organizations in the satisfaction of the needs and expectations of cus...