Analysis of Strategic Persistence or Reorientation

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