Strategy’s Role in Performance of an Organization
In the article “What is Strategy” by Michael Porter, the author defines strategy as plans by managers to benchmark in their organizations for achievement of best practices in order to stay ahead of their rivals in the market. Strategy is a long-term plan of an organization that helps it achieve its missions, visions and set goals. In organizations, strategy is about the competitive market that the business will contend when it ventures into a particular business. Strategy also entails the direction that the business intends to take in its operations. In addition, strategy entails obstacles the business will encounter in achieving its objectives and the required resources available within the market to achieve expectations of shareholders. Strategy involves marshalling resources most efficiently and effectively. This paper will discuss the effectiveness of strategy within organizations.
Porter highlights myths and truths about strategy (Porter 61). The author argues that myths have led to failure of many organizations that later engage in destructive competition in order to stay relevant in the market. An organization needs to understand the competition as it ventures into the market. This reduces the chances of the company to engage in questioning activities. Strategy involves goals which are defined by the mission and vision of an organization. Internal capability of the business and the external environmental factors contribute to an organization’s set goals.
Operational effectiveness involves maximizing the input of the firm for a better output without compromising on quality. Porter defines operational effectiveness as giving better results compared to an organization’s rival basing on the same activities (Porter 62). Porter further explains that the origin of strategic positions emerged from three distinct sources that include service variety to clients, positioning based on the need of the organization’s clients and segmentation of clients (Porter 66). Porter admits that to keep clients, the organization have to offer a variety of products because clients have different needs.
In the article Porter also argues that organizations should engage in competitive strategy (Porter 64). This entails being different by choosing to do things differently from potential competitors for a unique output. Strategy should be a daily practice of the organization. Managers should at all time concentrate on ways with the help of which the company can outdo the others and come up with strategic ideas on how to achieve set targets to enable the organization accomplish its objectives.
Many companies fail under bad leadership because they fail to have clear strategies for the organization and to make strategic choices. Threat to strategy emerges both internally and externally (Porter 75). One of the greatest factors that hinder strategy within organizations is lack of cooperation by organization leaders to embrace change. Organization leaders mandate is to make strategic choices and oversee the implementation and results (Porter 75). Managers should always consider the strengths, weaknesses, opportunities and threats the business faces when making strategic decisions of the business. Profitable growth of the business should always be a priority through maximization of available resources.
In conclusion, a clear strategy for an organization leads to better performance. Managers should put more effort on ways to be ahead of its competitors by engaging in reasonable activities. Client satisfaction should always be a priority of the organization, even as managers use the available resources to achieve the organization’s set goals. Concentrating majorly on a potential group of clients at the expense of others limits revenue growth of the business. Poor leadership leads to uninformed strategies for the organization an in return the organization’s failure.
Porter, Michael. “What is Strategy?.” Harvard Business Review 74.6 (1996): 61-78. Print.