How do we define the management strategy? The most common definition of management strategy can be: “Management strategy is a future oriented conception in which the relationship between the industry and the environment is described and it forms the guiding principles for the people in the industry for decision making.” It is obvious that the state of affairs with regard to the management strategy like the number of years for which the strategy has been planned, how minutely it has been described and for what level of people it forms the guiding principles etc., varies from industry to industry. However, it plays a fixed role towards the behaviour of each industry.
The problem of management strategy cannot be divided into formulation of strategy and the implementation of strategy. In the present day industry, particularly in the large industry, the formulation of strategy is no more the job of the strategy making staff only. As the diversification of jobs progresses and the operations also becomes more complicated. It can be considered that the formulation of strategy takes birth from the cooperative and joint working of all the members which constitute the organization in the industry.
The concept of management strategy
The concept of management strategy is being used at least with two meanings. One is the strategy which results from the concrete behaviour. It points out to the chain of behaviours which are actually implemented. The people outside the organization can normally understand the strategy of this type. Another type of strategy is the conception for the future. This concern the broader plan related to the future of the industry as well as its operations.These two types of strategies may not necessarily always match. However, it is also true that the two types of strategies are mutually linked to each other. There is always some sort of conception in the background of any behavioural action. Further, various unforeseen matters and the new ideas also come into existence in natural manner and are linked to the behavoiur.The worthiness of management strategy is ultimately evaluated on the basis of result of a chain of actions. Therefore, it may, probably not be proper to evaluate the conceptual strategy on the face of it alone. However, the conceptual strategy plays a very important role in the organization. The concept provides a chance to guide the behaviour. Because of the existence of the concept, the behaviours change or new behaviours come into existence. Further, when all the people in an organization believe in the common concept, the behaviour as decided by different departments and the behaviour as decided at the time of any difference of opinion has a multiplying effect. In fact, it may be appreciated that the conceptual strategy is basically responsible for introducing, coordinating and synchronising the behaviour in the organization. The term management strategy can refer to the conceptual strategy.
In today’s society, various organisations like industry, hospitals and Government offices etc. are performing the activities with specific purposes. One has to adapt to the surrounding environment for the continuous sustenance of the organisational set up. However, the change in the present day social environment is very severe and is full of uncertainly.The long existence of the organisation itself as well as their further expansion cannot be accomplished just through the daily routine type decision making. In fact, it has become important to detect the opportunities and the threats from the changes and develop the capability to handle these opportunities and threats. Management strategy forms the key for such capabilities.Management strategy is applicable not only to the industry. It has become equally important for the Government offices, hospitals and schools. However, most of the study which has been carried out with regard to the management strategy deals with analysis of industry. Industry has to face very severe competition on day-to-day basis and the standards regarding the evaluation of its results are also very clearly defined.
Contents of Management Strategy
The management strategy deals with relationship between industry and the environment. What types of decisions are required to decide this relationship? It is necessary to decide regarding the 4 areas mentioned below in order to determine the management strategy: [1] Definition of Domain[2] Operation Portfolio [3] Resource Development[4] Competitive Strategy
Definition of the Domain :
First of all it is very important to decide what importance the future operations of an enterprise in order to decide the relationship between industry and environment. This also amount to drawing the long term composition of how the industry shall adapt itself to the environment. This is the definition of domain. Zone of survival as the definition of domain is the base for deciding the other definitions.It is said that the failure of Railways Industry in America was because of mistaken definition of domain. The American Railways Industry can be called as pilot representative of large industry. However, the Railway Industry thought that its work is only that of the railway operation rather that the transportation works. As a result, it failed to match the rapidly increasingly demand from the transportation sector.
Domain specifies the work area in which the operational activities of an enterprise are carried out or it is expressed as a concept covering all such operations. On the other hand, the definition of domain for the American industry relatively market oriented and it includes many elements which are close to the successful factors in the market. “IBM means Services” can be called as domain of IBM (the IBM operation is not to sell the machines but to sell the functions of the products).
Operation Portfolio :
The operation portfolio is a table of operations or the overall structure while carrying out the operational activity in the industry. Normally, it is necessary to decide about the following two selections to determine the operation portfolio.[1] Which fields are to be included in the portfolio (deciding the composition of the portfolio).[2] How to handle the patterns given by the multiple numbers of operations (deciding the structure of portfolio).While deciding the operation portfolio, the attention of individual operation fields are important, but it is more important to consider how much total effect can generated through all the combinations of various operations.
Resource Development :
Once the operation fields, which constitute the domain, have been decided, next it becomes important to decide about the necessary accumulation and distribution of resources required to meet the composition in each field. This composition is the resource development strategy.The management resource can be divided into substantive resources (human beings, articles, money) and the informative resources (technology, know-how, and brand image). In the case of substantive resources, it is the distribution which is more important than the accumulation of resources. A proper distribution matching the discriminate preferential order for every operational field is the key factor. On the other hand, it is the accumulation rather than the distribution which is more important in the case of information resources and its key factor is the organizational learning.
Competitive Strategy :
Competitive strategy is the decision for establishing the competitive preferential order in each operational field. The basic topics in this connection are to understand the actual state of competition in the industry and market segment and the segment position of one’s own company as well as to come into competitive preferential order through the combination of management resources through this understanding. The competitive strategy is basically of three types, viz. cost leadership, discrimination and concentration.The above discussed four aspects are closely related to each other. Therefore, the coordination of four decisions becomes an important topic management strategy.