Strategy in Non Competitive Situation
INTRODUCTION
In this exercise it is supposed to analyze a claim that is sometimes suggested (implicitly or explicitly) in strategic management’s literature, which says that “an organization does not need any strategy if it is not in a competitive situation”. The first impression that came to me when I looked to it was that it was true, because I thought strategy demanded some kind of competition. However, to analyze more carefully the claim it is necessary to clarify the definitions of “strategy” and “not in a competitive situation”. Companies that are the only player, in a monopoly control over the market, are the closest example of companies that do not encounter any competition, so I admitted that “not in a competitive situation” could be considered as Monopoly. I will start by defining those concepts first, and then discuss whether it is necessary to have a strategy in a monopoly situation, and finally I will talk about whether that no-competition situation really exists in anyway or not.
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STRATEGY
A strategy, in the business world, is a concept related with how the company will act and perform in order to achieve its goals or objectives in the long term. It is supposed to guide the organization in the way of fulfilling its stakeholders’ expectations, taking advantage of its resources. The importance of a strategy is therefore undeniable. That’s why many companies have a welldefined one deliberated with time between the senior managers. There are other companies which are Figure 1 - Definition of strategy more reactive ones, which have to adapt their strategies according to the market evolution instead of trying to control that evolution. And there are still other companies which don’t have a precise strategy, but they have it implicit in their actions. In these cases it is called an emergent or realizes strategy.
2.1
Five Elements
According to Hambrick, Donald C. & Fredrickson, James W. (2001), a strategy can be divided five parts,
In this exercise it is supposed to analyze a claim that is sometimes suggested (implicitly or explicitly) in strategic management’s literature, which says that “an organization does not need any strategy if it is not in a competitive situation”. The first impression that came to me when I looked to it was that it was true, because I thought strategy demanded some kind of competition. However, to analyze more carefully the claim it is necessary to clarify the definitions of “strategy” and “not in a competitive situation”. Companies that are the only player, in a monopoly control over the market, are the closest example of companies that do not encounter any competition, so I admitted that “not in a competitive situation” could be considered as Monopoly. I will start by defining those concepts first, and then discuss whether it is necessary to have a strategy in a monopoly situation, and finally I will talk about whether that no-competition situation really exists in anyway or not.
4
2
STRATEGY
A strategy, in the business world, is a concept related with how the company will act and perform in order to achieve its goals or objectives in the long term. It is supposed to guide the organization in the way of fulfilling its stakeholders’ expectations, taking advantage of its resources. The importance of a strategy is therefore undeniable. That’s why many companies have a welldefined one deliberated with time between the senior managers. There are other companies which are Figure 1 - Definition of strategy more reactive ones, which have to adapt their strategies according to the market evolution instead of trying to control that evolution. And there are still other companies which don’t have a precise strategy, but they have it implicit in their actions. In these cases it is called an emergent or realizes strategy.
2.1
Five Elements
According to Hambrick, Donald C. & Fredrickson, James W. (2001), a strategy can be divided five parts,
Bibliography: Haberber, Adrian & Rieple, Alison. 2008. Strategic Management: Theory and Application. New York, Oxford University Press. Hambrick, Donald C. & Fredrickson, James W. (2001). Are you sure you have a strategy. Academy of Management Executive, vol. 19, no. 4, pp. 51-62. Johson, Gerry & Sholes, Kevan (2002). Exploring Corporate Strategy, pp. 3-10. Harlow: Pearson Education Limited. Monopoly, Wikipedia http://en.wikipedia.org/wiki/Monopoly Accessed in: 5 of September, 2012.