Chapter Six provides the fundamental tools for better hypothesis creation and testing. It assesses why market research and consultants are normally misfits and what business managers should do about it.
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The method by which a company drafts and creates a smart, very competitive and testable hypothesis (the term which Dudik gives for corporate strategy) requires the highest thinking order, creativity. Based on experience, companies assume or disregard their market research data and consultants and they take their words and their supporting documents as biblical. This should not be the case. Business managers must not rely too much on market data but they must consult the strong facts about their product or services. They must learn that:
In this chapter, the author heeds for scientific accuracy in the way that business strategies are built. It recommends the particular instruments, tools, approaches and techniques and the best attitudes which are required to create the best ever strategies. Hence, it supports the scientific approach to hypothesis testing. It is better to falsify theories than to confirm them. The statistical patterns shown by mathematical analyses are poor strategic indicators. One of the methods for challenging outliers is by through the pursuit of the essence of a strategy.
This chapter maps out the management's options for making the best strategy in the real contexts. It sets out the risks and the benefits for various methods of building strategic breakthroughs and exploiting those breakthroughs. A corporate strategy is said to be excellent and efficient if this has been tested in the real market environment and if this has made a breakthrough. Also, if the discovered breakthrough is further extended or revealed. Business managers have two very significant choices to evaluate these breakthroughs. They must acknowledge its excellence right at the very beginning and this is the most crucial part of breakthrough selection. It spells out their competitive edge against their competitors.
The process of strategic breakthrough starts with a good environment where the forces of innovations are enhanced. A company fulfills its strategic breakthrough if they parallel their strategy and operational capabilities with the challenges of the environment. Also, a strategic breakthrough needs an open communications centered on the development and maintenance of a high quality competitive position in an ever changing environment.
The evaluation process should indicate the Critical Success Factors (CSFs) of the industry where the company belongs. These critical factors stem from the industry’s competitive environment and they vary from one industry to another. These factors are inherent to one industry or company. Breakdowns happen if the parties are committed. It becomes a company’s heed for action. One must remember that the bigger the commitment, the bigger the expectations and breakdown. This, in turn, will lead to a bigger breakthrough through creativity and innovation.
Chapter Eight shows how the concept of opportunity creation and exploitation needs a radical new way of thinking in its allocation, accounting and budgeting of resources. Dudik said that a single or two of these ideas will disorient the Wall Street but this will give managers more control and flexibility.
The eighth chapter indicates that timing and the right directions to allocate resources for a chosen breakthrough is one of the most crucial parts of the process of strategizing in one organization. According to the author, this is a great time for opportunity and it is also a time for wild optimism, danger and crisis. In the spirit of opportunity creation and exploitation, this is the great time for the organization to be highly reflexive in terms of financial and other organizational resources.
One common tool is the environmental scanning. This is commonly called “competitive intelligence.” It is a rigid approach to the collection, analysis and communication of information about one’s competitors’ performances, the market developments, the changes relating to the flow of raw materials, and other concerns which could affect strategic directions.
Another tool is the scenario planning and forecasting. These aid planners in dealing with an ambiguous future by giving a mechanism for seeing a range of future scenarios, evaluating the possible effects of these scenarios, developing a shared view of the dynamic world, and preparing for it.
A company’s strategy and its corporate culture must work together in order for the company to be effective and successful. However, at one instance, they grow apart. Then, the organizational culture becomes the subtle enemy of the corporate strategies which a company is applying or introducing into the organization.
Corporate culture often becomes the center of attention when an organization introduces an organizational strategy or nay change, for that matter. Sometimes, strategies or change may mean the inappropriateness of certain corporate culture. In the same manner, corporate culture hinders the growth of the company. Cultural issues have a direct effect on organizational morale and performance and it is crucial that corporate strategy addresses the issues and concerns of corporate culture whenever necessary. Corporate culture can have a great influence on an organization's work contexts and outputs. There must be a best approach by which corporate strategy merges with the company’s corporate culture. Such approaches can have a major role in conceiving strategy or planning change.
Executives need to invest more on corporate culture, especially on values, ethos, and the abstract aspects of culture. Sometimes, corporate culture subverts the new strategies. Hence, management must take the initiative to take into account the significance of corporate culture.
Dudik also emphasizes the adaptiveness of culture, it can be changed or manipulated. To introduce a new strategy, a manager must work with the overall system, all the factors that shape the values, perceptions, beliefs and instincts of those who are part of implementing the new strategy.
It is tough challenge for any organization to enculturate the whole organization in order to implement new or modified corporate strategies. The combination of psychology and history helps us to effectively merge strategies and corporate culture through eight practical tools for creating executive management team integration to maximize the chances for strategic success.
Harmonizing corporate cultures and strategies are difficult especially in the areas of: organizational values; leadership styles; management culture; organizational legends and stories; organizational taboos, rituals; and other cultural imageries. Cultural problems can unexpectedly emerge when the organization experience the following: identification of the differences; stress and evaluation of differences; mutual stereotyping; pinpointing; and battle for cultural dominance.
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One of the tools described is the cultural analysis which is a tool for determining and overcoming cultural differences among members of the organization. The chapter presented a detailed analysis which shows the differences and similarities between the people from the organization who are against or in favor of the underlying changes enveloped within the new strategy. This tool allows the improvement in the interaction and communications of the members. Cultural analysis transpires when the members perceive the various features of the corporate culture. The difference in perceptions of specific definitions of cultures shows the potential problems.
The author also stresses that it is necessary to harmonize and to communicate all other influential factors affecting culture such as reward systems, systems for performance measurement, etc. Harmonizing cultures are a great challenge to organizations but in the long run, it promises much better outcomes.
This chapter concludes the book through Dudik’s brilliant arguments in the framework of strategy formulation. These can be summarized through the following:
This is a short list of the 81 Do’s and Don’ts on the Road to a Great Corporate Strategy:
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