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Discussion Reply to Shannon ( thread below): Setting Direction,…
Discussion Reply to Shannon ( thread below): Setting Direction, Advantages / Disadvantages, and Decision Models
You will reply to one of your classmate Shannon Minimum of 250 (words) in the body.
A minimum of 2 sources from the literature in addition to course texts.
Current (APA) format must be used.
Use the following Outline:
Summary – Summarize the author’s original thread – no less than 125 words
Critique – What you agreed with, did not agree with, and why – no less than 125 words
Support your factual assertions with citations.
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Setting Direction, Advantages/Disadvantages, and Decision Models
Shannon B Jo
Department of Business Administration, Liberty University
BUSI 770: Strategy Formulation and Strategic Thinking
Introduction
The initial development of any good strategy begins with setting the strategic direction of the goals and objectives of a viable plan for the organization. Next, there must be an assessment of the advantages and disadvantages that exist internally and externally within the organization’s environment. Finally, information gleaned from the identified information will potentially influence the decision models utilized for implementation. In the following discussion, each of the previous components will be addressed to understand their importance and their impact on an organization.
Process: Setting the Company’s Direction with Strategy
Building and actively managing strategy for an organization is a consistent process. Due to changes, an organization must exercise due diligence in ensuring that its goals and objectives align with the activities of the environment in which it performs. Gamble et al. (2020) describe the strategy formulation and execution process as having several elements: the development of a strategic vision that describes the mission and core values of the organization, the setting of objectives, the result of a methodology that helps the organization reach the objectives and goals, the actual implementation of the plan that has been developed and a constant assessment as referred to previously. The mission, when strategic, focuses on “where the company is going.” The mission institutes a specific statement of “what” the business does and “who” it serves, while the core values speak to “how” it will be accomplished. The strategic vision forms the groundwork for what goals are put into place with a roadmap to reach them. Though definitive, setting strategic direction is also dynamic and ever-changing. Research suggests that successful strategic leadership must include a balance of practical operations adjustments and adjustments geared to innovation in the marketplace. (Schoemaker et al., 2018). The ability to engage in disruptive change to secure and increase market share is dependent on strategic planning and development.
Strategic Thinking: Discussion of a Key Advantage or Disadvantage
A key advantage in strategy development is concentration. Rumlet (2017) defines concentration as a situation when efforts or activity is focused on a small number of objectives with the opportunity to produce higher returns than activity concentrates on many different purposes. The positive performance is due to limited objective focus and what is known as the “threshold effect.” The threshold effect results from applying the correct number of actions to produce an impact. There is an inefficient impact when measures are used below the needed amount of activity. The threshold effect is considered in diverse forms of decision-making, from advertising, finance and individual purchasing. Concentrating on limited objectives also aids in good stewardship of resources. Resources may be allocated efficiently without creating a disadvantage to the organization. Overproduction and mismanagement of resources may lead to low performance and, in some instances, stifle growth and development. Rumlet (2017) offers that concentrating on smaller segments may lead to increased buy-in and adaptation from the internal and external environments. This notion is essential for measuring and achieving outcomes. Adopting objectives by employees in a targeted area may aid in disseminating positive reactions to organizational change, vision, and goals. The same response may be gained from customers and lead to market-share gains.
Decision Model
The decision model I find most useful is the BCG Box. In this model, the value of objectives or actionable items is determined by four considerations. First, the Cash Cow views the goal as utilizing high resources and delivering low outcomes. Stars use high levels of resources and provide high outcomes. Question Marks are “problem children,” according to Krogerus et al. (2017). This is due to having high outcome potential and uncertainty in low resources. Lastly, Dogs have scarce resources in a highly competitive market. Therefore, the Dog may not be in a viable situation to produce positive outcomes. The BCG Box assesses the current state and how the results may be impacted.
Further research describes the Discrete Choice Model. Wang (2022) suggests that decisions may be made by considering the choice to select an objective or goal after all available alternatives have been reviewed. The other options are assessed by the most significant positive results available. Within the opportunity is another decision model of bounded rationality because of the ability to impact change or improvement to other environmental issues.
Conclusion
The four steps in setting direction with strategy provide a road map to positive performance. The ability to recognize any changes that may negatively impact performance or opportunities to grow the organization is essential for the strategic plan’s success. As with any form of decision-making, strategic thinking has advantages and disadvantages that determine how well a strategy is executed. Strategists should be fully aware of the process, opportunities, gaps, and alternatives to pursue the best course of action effectively.
References
Gamble, J. E. (2020). Essentials of strategic Management: The quest for competitive advantage (7th ed.). McGraw-Hill Higher Education (US). https://mbsdirect.vitalsource.com/books/9781260785791Links to an external site.
Krogerus, M., & Tschappeler, R. (2017). The decision book. W.W. Norton & Company. Printed.
Rumelt, R. (2017). Good strategy bad strategy: The difference and why it matters. Profile Books LTD. Printed.
Schoemaker, Heaton, S., & Teece, D. (2018). Innovation, Dynamic Capabilities, and Leadership. California Management Review., 61(1), 15-42. https://doi.org/10.1177/0008125618790246Links to an external site.
Wang, R. (2022). The threshold effects on consumer choice and pricing decisions. Manufacturing & Service Operations Management, 24(1), 448-466. https://doi.org/10.1287/msom.2020.0948Links to an external site.
