This essay critically examines the contemporary theories & thinking of strategy that are being implemented in various industries. A Business Plan can be made by the strategists in any industry by using tools and techniques developed by theorists and thinkers after making analysis, going though the choices, implementation creating techniques & constant feedback. The majority of work done in the field of strategic management is either Production or Marketing sector, so the developed theories need to be modified based on the nature of construction industry.
“The construction industry encompasses a broad range of sectors (residential, industrial, environment, infrastructural construction and involves multiple parties who are bound by specific contractual arrangement in any given project procurement”. [Charles, Cheah, David, 2005]. Only few international and local companies in UAE have separate department for strategy. It indicates that higher management is not giving enough significance to strategy within their organization. Many strategic decisions are taken in contracting companies by higher management based on experience and understanding of Built Environment rather than Theories & Practices.
AN OVERVIEW OF STRATEGY: The names that have contributed in a big way to the historical development of strategy are Alfred D. Chandler, Peter Drucker, Philip Selznick and Igor Ansoff. According to Alfred Chandler (1962) Strategies can be properly implemented by effective use of practice of Co-ordination Management under one roof. Philip Selznick plays important role in development of SWOT Analysis and Peter Drucker propagates the theory that work should be carried out in team with a team leader. This is very popular in most of organization nowadays.
[www. strategichub. com]. “Strategy is the determination of basic long term goals and objectives of an enterprise and adoption of courses of action and allocation of resources necessary for carrying out these goals”. [Alfred D. Chandler, 1962]. The idea of Strategy was adapted in business from the military and it is the common tactics used everywhere nowadays, example- in share market, production, marketing and wars. The Strategy is an essential tool for any organization, its effective deployment being very crucial for getting the desired results.
Good framework, along with the efficient strategist, provides organization effectively with the right tool to deploy strategy. Using them, Managers can promote in their organization a culture that focused on the firms’ objectives, incorporates all critical activities, identifying targets and responsibilities and involving everybody’s efforts. The strategies that build on the good framework priorities for sustainable development setout better quality of life by achieving higher growth whilst reducing pollution and more investment in people and equipment for a competitive economy.
STRATEGIC MANAGEMENT: It is not possible to come to a fuller definition of Strategic Management. Based on the theories and practices Strategic Management is proposed as follows: “Strategic Management is an organizational process designed to sustain, invigorate and direct the organizations hums and other resources in the profitable fulfillment of need of customers and other principal stake holders”. [G. A. Cole, 1997] Strategic Analysis Strategic Choice Strategic Implementation
Figure (1) [Gerry Johnson & Kevan Scholes, 2001] A Basic Model of Strategic Management Process. This figure could have been shown in linear form – strategic analysis preceding strategic choice, which in turn precedes strategy implementation. However, in practice the stages do not take this linear form. It is very likely that the elements are interlinked. One way of evaluating a strategy would be to begin to implement it, so strategic choice and strategy implementation may overlap.
Since strategic analysis should be an on going activity, it will overlap with implementation of strategy. It is only for structure convenience only that the process has been divided into section, it is not that process of Strategic Management must follow neat and tidy path. According to Brinkerhoff (1994) “Strategic Management is looking out, looking in and looking ahead”. “Looking out” means exploring beyond the boundaries of your organization to set feasible objectives, identify key stakeholders and build constituencies for change.
“Looking in” implies critically and strengthening your system and assessing structure for managing personnel, finances, “looking ahead” entails melding your strategy with structures and resources to reach your policy goals, while monitoring your progress and adjusting your approaches needed mentality”. Strategic Manager Schould identifies long range targets, scans their operating environments, evaluates their organization structures and resources, match these to challenge they face, identifies stakeholders and builds alliances, prioritize and plan actions, and make adjustments to fulfill performance objective overtime.
CONTEMPORARY THEORIES: The study of strategy and development of strategic thinking was started in the year 1921. However, the Golden period of strategy was started from 1960. There is no best way to develop and manage the strategy in an organization. In order to gain competitive advantage in the market, the strategists are throwing out the old strategies and looking out for more effective guidance in the business environment. Construction companies require proper strategy in order to compete in market to achieve company’s goal and objective.
According to stoner (2001) there are different types of theories such as early view theory, equity theory, expectancy theory, goal setting theory ; need theoryRESOURCE THEORY: As per Foss and Man he (2000) the resources viewpoint draws on economics, in particular on equilibrium theory much importance to more dynamic and managerial aspect of competitive advantage. The control and effectiveness of Human and Capital resources plays a very important role in the success of business in today’s world. For any organization if the resources are properly utilized the project can be completed within the budget.
INNOVATION THEORY: According to Joseph J. Gilbert (1994), Innovation strategy determines to what degree and in what way a firm attempts to use innovation to execute its business strategy and improve its performance. The companies can not make profit for a long period in today’s business environment unless they innovate their products or services. GAME THEORY: Gerry Johnson and Keven Scholes (2001) focuses that there is an approach to decision analysis which assumes that company are likely to react any moves which the competitor make or the vice versa.
The technique layout and quantities the cost and benefit of various combinations of company moves and competitors. This theory is only applicable for companies competing in same business environment or companies whose strategies are similar. Example: Al Habtoor Engineering and Khan Sahib Contracting are the arch rivals in construction sector in Dubai. COMPETITIVE THEORY AND EQUITY THEORY: According to James Stoner (2001) the theory of competitive strategy developed by Michael Porter, focuses on how managers can influence conditions an industry when they interact as rivals, buyers and suppliers.
In order to beat the competitors, the organization must analyze the competition and establish a clearly defined marketing strategy in order to provide superior customer satisfaction. The equity theory is based on the assumptions that major factor in job motivation is individuals evaluation o the equity or fairness of reward received. In today’s business environment, the individuals are motivated when they experience satisfaction with what they receive from an effort in proportion to the effort they apply.