Analysis Of Strategic Persistence Or ReorientationThis print version free essay Analysis Of Strategic Persistence Or Reorientation.
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Autor: reviewessays 08 December 2010
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Analysis of Strategic Persistence or Reorientation
Analysis of Strategic Persistence or Reorientation
One of the problems managers face today is the challenge of making their company productive, profitable, and achieving long-term organizational goals. This requires the ability of the manager to maximize on their proficiency in current business practices, while maintaining a level of flexibility as it applies to changing the strategic direction of the organization. Strategic reorientation is defined as "a change in business strategy coupled with change in other key organizational dimensions" (Batra, Lant, Millike, 1992).
Strategic reorientation is required for an organization to change the direction of the company or to maximize the success of the organization. The decision to institute reorientation is determined by past performance of the company, managerial interpretations of experiences, and characteristics of top management. There are often structural, political, and psychological pressures to continue with past strategies. These factors influence the likelihood of strategic reorientation taking place. Also, organizational literature suggests that actions are historically linked to the process of trial-and-error learning. Positive outcomes are repeated, and negative outcomes are not. When organizations experience successful performance they will maintain status quo, even if change or reorientation would create a more successful company. When unsuccessful performance occurs, organizations tend to undergo a new learning process that leads to reorientation. Managers act on their interpretations of experience, and those interpretations are usually influenced by pressures towards persistence of past strategies. The importance of knowing when to institute strategic reorientation can save a company from financial disaster and prevent an industry leader from allowing others to take over their given market.
The significance of this problem is supported by research conducted in empirical studies discussing expectations regarding rates of persistence and reorientation and how the two are affected by environmental contexts. Studies can also examine past performance of companies, characteristics of top management, managerial interpretations of their environmental context, and how the outcomes of all of the aforementioned affected relative frequency of reorientation. Several hypotheses are constructed before a research model is implemented. Some of these hypotheses might include:
(1) Organizations are more likely to persist with status quo than to undergo reorientation.
(2) Organizations with volatile or unstable environments are more likely to exhibit reorientation.
(3) Past performance of an organization relative to its industry average is inversely related to its likelihood or reorientation.
(4) The more aware managers are of changes in their environment, the greater the chance of reorientation.
(5) Turnover in the ranks of upper management, including the CEO, is associated with an increased probability of reorientation.
Primary data about demographic/socioeconomic characteristics, attitudes/opinions/interests, awareness/knowledge, intentions, motivation, and behavior is extremely useful in determining how people will react in certain situations. Three basic means of obtaining primary data are observation, surveys, and experiments (ollie.dcccd.edu/mrkt2370/Chapt...). One primary study which will be used in our analysis is a survey of top managers answering clearly defined questions relating to the strategic vision of their organization, the past and current performance of the organization, and the organizational culture related to changing the strategic vision.
Secondary data is information gathered for purposes other than the completion of a research project. A variety of secondary information sources is available to the researcher gathering data on an industry, potential product applications and the market place. Secondary data is also used to gain initial insight into the research problem (www.steppingstones.ca/artman/p...). Secondary resources to be used in our study are both internal and external. The internal secondary resources will include sales and marketing reports, finance reports and other miscellaneous reports. These reports will provide information concerning the direction of the organization, the market results when a strategic reorientation was instituted, and the resistance of strategic reorientation. External secondary resources that can also be useful include general business publications, magazine and newspaper articles, academic publications, and library sources.
Information that might also be gathered could consist of the types of navigation strategies companies implement to compete in their particular product or market domain, such as pricing, quality of product, customer service, and delivery time. This specific information is researched through 10K reports, which provide detailed information about divisions and subdivisions of a company. In addition data illustrating return on assets can be collected for a 5-year period.
Creating an atmosphere within an organization to ensure success and high profitability is a problem that upper management faces everyday. To do so data and statistics are needed to produce a representation of what position the organization is in at its current state and how to enhance the position. To assemble that data primary and secondary resources are used. Various sources will be utilized from both primary and secondary resources in our analysis.
Batra, Bipin. Lant, Theresa K. Milliken, Frances J. (1992). The role of managerial learning and interpretation in strategic persistence and reorientation: an empirical exploration. Strategic Management Journal, 13(8), 585-608. Retrieved September 6, 2005, from ProQuest database.
Lind, et. al. (2002). Statistical Techniques in Business & Economics, Eleventh Edition. New York: McGraw-Hill.