Role of Strategy in Business

Strategies are developed by strategic management teams. The process for large organizations is very complex and it cannot effectively take place unless people at various levels are made to participate to arrive at meaningful conclusions.

The five benefits of working in a team: The team consists of managers from all the levels viz. corporate, business, and functional level. In addition to the data from external sources, the data from within the organization is generated through participation of company planning staff and lower levels viz. Junior managers, supervisors, and workers as the data generated for implementation of strategies is very vital for any company. The CEO of the company has to be essentially present including his team of other directors, business unit heads and heads, of functional groups.

The strategic decisions taken by the company are key to its survival and progress, and make a tremendous impact on the company and need widespread and large commitments of resources of the company; hence the presence of top managers in these teams is necessary.

These persons are often designated as General Manager, Managing Directors, Presidents, Vice Presidents, and Executive Vice President etc. The traditional view of the General Manager is that he is a reflective thinker who maps strategy, creates design of an organization and roles for people through the tactical plans to achieve the goals, using his vast experience, knowledge and insight, and sets goals. He is considered to be a strategist, planner, leader, and is aware of various human, technical, economic, and political needs of the environment of the organization. He has to fit various units into a jigsaw puzzle through ever-changing circumstances. The experience shows that CEOs have to simultaneously handle several factors, activities etc., on a schedule that rarely give him time to contemplate.

Mintzberg’s list of roles gives us an example of different roles that the CEO plays in an organization and these are termed as interpersonal, informational, and decisional roles. As the head of the organization the CEO has to perform numerous functions that are legal and social in nature. While performing these functions the CEO has to keep the strategies of his organization in mind. While staffing, training, motivating, directing, and performing several other functions, he has to keep the strategic directions of the company in focus.

The CEO has to essentially keep himself well-informed about the internal and the external environment and therefore has to create channels where from information will come to him. For this, he may have to travel, read periodicals, business magazines, conduct meetings within and outside the organization, and also exchange information through writing letters, phone calls; faxes etc. The CEO has to ensure processing and classification of information such that it may be useful as and when required. He also has to give the information in proper perspective of the strategic management to create the desired impact within the organization. While performing his informational role, the CEO has to keep the strategic focus.

The decisional roles that the CEO has to perform are vital for the company. The CEO perceives and interprets the information to draw conclusions based on which strategic directions are evolved. He has to take important decisions on resource allocation, like manpower and funds etc. and exercise control so that the resources are most optimally used for the growth of the organization.

The CEO of a company has to play pivotal role in negotiating with unions, major suppliers, and customers etc. with strategic directions of growth in focus. He has to communicate with stake holders, outside and within company. The formulation of strategies, plans, and their implementations are an important realm of CEOs. CEOs are often helped by the planning staff in formulating the strategies. Even task groups are created that may visit various other companies and gather information, process it, and present it to CEOs that may help them to decide on the strategies.

Strategic management thrives in a congenial environment within the organization. In case the CEO is autocratic in nature, the advantages of team work get diminished. The CEO has to play a very positive role in ensuring participation and team orientation in his organization for strategic management to prosper. The degree to the CEO plays his role in this regard determines the success of strategic management in the organization.

The role of carefully formulated strategies is quite significant in all types of business or non-business, public sector or private sector, large or small, in developed countries or underdeveloped countries. The systems approach of management suggests interaction of an organization with its environment on continuous basis. This interaction can better be maintained through formulation of suitable strategies. In fact, the function of formulation of strategies has become so important that it is equated with total top management function because it is the top management which is primarily responsible for organizational adaptation to the needs of environment.

Careful strategies play significant role in the success of an organization. If we look at the Indian industrial scene over the last generation or so, we find that great names like Martin Bum, Jessop, Andrews have touched the rock bottom, while total unknowns few years ago like Reliance, Larsen and Toubro, etc., have touched gigantic heights. Similarly, companies like Hindustan Lever, ITC Limited, TISCO, TELCO, have maintained their high profile. There are numerous such examples of good companies in the Indian scene as well as the world over which have been successful because they have adopted suitable strategies. This happens because strategies con-tribute in several ways in managing an organization; the more important of them-are as follows:

Framework for Operational Planning: Strategies provide the framework for plans by channeling operating decisions and often predefining them. If strategies are developed carefully and understood properly by managers, they provide more consistent framework for operational planning. If this consistency exists and applied, there would be deployment of organizational resources in those areas where they find better use. Strategies define the business area both in terms of customers and geographical areas served. Better the definition of these areas better will be the deployment of resources. For example, if an organization has set that it will introduce new products in the market, it will allocate more resources to research and development activities which are reflected in budget preparation.

Clarity in Direction of Activities: Strategies focus on direction of activities by specifying what activities are to be undertaken for achieving organizational objectives. They make the organizational objectives more clear and specific. For example, a business organization may define its objective as profit earning or a non-business organization may define its objective as social objective. But these definitions are too broad and even vague for putting them into operation. They are better spelled by strategies, which focus on operational objectives and make them more practical. For example, strategies will provide how profit objective can be sharply defined in terms of how much profits is to be earned and what resources Of how much profit is to be earned and what resources will be required for that. When objectives are spelled out in these terms, they provide clear direction to persons in the organization responsible for implementing various courses of action. Most people perform better if they know clearly what they are expected to do and where their organization is going.

Increase Organizational Effectiveness: Strategies ensure organizational effectiveness in several ways. The concept of effectiveness is that the organization is able to achieve its objectives within the given resources. Thus, for effectiveness, it is not only necessary that resources are put to the best of their efficiency but also that they are put in a way which ensures their maximum contribution to organizational objectives. In fact, this can be done by taking strategic management which states the objective of the organization in the context of given resources. Therefore, each resource of the organization has a specific use at a particular time. Thus, strategies ensure that resources are put in action in a way in which these have been specified. If this is done, organization will achieve effectiveness.

Personnel Satisfaction: Strategies contribute towards organization effectiveness by providing satisfaction to the personnel of the organization. In organization where formal strategic management process is followed, people are more satisfied by definite prescription of their roles thereby reducing role conflict and role ambiguity. If the decisions are systematized in the organization, everyone knows how to proceed, how to contribute towards organizational objectives, where the information may be available, who can make decisions, and so on. Such clarity will bring effectiveness at the individual level and consequently at organisational level. Strategies provide all these things in the organization through which everything is made crystal clear.