Definition: Organizational strategy is a plan to evolve from a current situation to a future desired status through actions in different business dimensions. This term applies to actions defined and implemented by the organization to achieve key objectives.
What Does Organizational Strategy Mean?
Every business must have an organizational strategy. This means formulation, implementation, monitoring and control of actions required to reach specific goals. Companies tend to define, review or adjust their strategies yearly or every two years.
Normally, some analysis of internal and external elements is made to properly assess the process of strategic review. Although there are many versions of an organizational strategy, certain key elements are usually included. These are: the organization’s mission and vision; a narrow range of objectives and timeline to achieve them; description of steps and methods that will drive the organization from the current to the future position; responsible individuals and accountability systems that will allow top management to monitor and control how the strategy is being implemented.
In general, organizational objectives are related to hard data such as sales, market share, profit margins, cost reduction, expansion to new markets and introduction of new products. However, the organization’s strategy might also be linked to softer goals such as a better work climate or improvement of institutional relations.
Example
Phill Industries is a medium-sized manufacturing company. It produces automotive parts and currently exports an approximate of 5% of its sales. The top management decided to review the organizational strategy with the aim of increasing exports substantially over the medium term. The firm firstly outlined the goal of reaching 30% income from exports in three years. Secondly, they identified the main processes that should be improved and structural adjustments that should be performed to achieve the desired goal.
Several project teams were created and specific deadlines were defined within a roadmap to check periodical advances. The company had the challenge of maintaining excellent performance in the domestic country while new markets were added. The strategy was successfully implemented and Phill Industries was able to surpass the goal initially set.
