Organizational strategy is the creation, implementation and evaluation of decisions within an organization that enables it to achieve its long-term objectives. Organizational strategy specifies the organization's mission, vision and objectives and develops policies and plans, often in terms of projects and programs, created to achieve the organization's objectives. It also allocates resources to implement them.
Processes of Strategy
Organizational strategy is related to organizational studies, an academic field that analyzes organizations and what makes them succeed or fail. It provides overall direction for the organization. Formulating a strategy combines the following three main processes. The first process is performing an analysis of the organization's situation--internal and external, micro- and macro-environmental. This means asking both what's going on with its competitors and with each part of the organization. The second process involves setting objectives--both short-term and long-term. This means creating vision and mission statements. The final process is developing a strategic plan that provides details about how to achieve the organization's objectives.
The Johnson, Scholes and Whittington model of corporate strategy contrasts an organization's strategic options with three criteria, or questions the organization's leaders must ask themselves. The first of these criteria include suitability: "Would it work?" and "What is the overall rationale of the strategy?" The organization needs to determine whether its strategy is economically possible and if the environment fits. It would not be suitable, for example, to establish a new restaurant in an area that already has too many.
The second criteria is feasibility, as in "Can it be made to work?" Feasibility asks if the resources -- funding, staff, time and information -- needed to implement the strategy are available or if they can be developed. An organization also must determine if has adequate cash flow or if the outcomes they desire can be forecast, a business term having to do with the process of making statements about events whose actual outcomes have not yet been observed.
The third criteria is acceptability, usually meaning "Will the stakeholders work it?" An organization's leaders must know if its stakeholders will accept its strategy. Stakeholders consist of shareholders, employees, and customers. This is done by analyzing the stakeholders' expectations of the organization's expected outcomes, which include return, risk, and reactions. Return refers to the benefits they expect, and risk has to do with the strategy's probability and consequences of failure. The stakeholders' reactions to the strategy often are the most difficult to anticipate.
It is certain that we live in an age of accelerating change. In his 1970 book, titled "Future Shock," Alvin Toffler opined that each succeeding generation experiences sweeping social and technological norms more and more quickly. These changes cause a great deal of psychological stress, making the need for organizational strategy more important than ever. These changing norms also cause great conflict and opportunity in the business world, something that organizations can utilize to their benefit if they have an organizational strategy in place.
- businessman and chart image by Kit Wai Chan from Fotolia.com