Strategy is the choice of direction and scope that a firm takes on a long term and involves the configuration of the firm status with a view to enjoy the advantages that come with the changes; however this requires the changing of the present environment in order to fit the needs of the new environment (Wilson, 2002).
Types of strategic changes
Converging (fine tuning): this type of change involves trying to enhance the status of a situation; it is mainly done at departmental level and involves reorganization in order to ensure that the resources available and an introduced process fit each other (Lawler, 2004).
Converging (increment adaptation): The changes done are small; they aim at adjusting the organization to small changes in a business environment (Lawler, 2004). The changes are done in bits and the process is therefore slow.
Discontinuous/ frame-breaking: the changes are major and heavy in that they take time to plan and for full implementation to be realized, they take over 18-24 months. Examples of frame-breaking changes include changes in power shift, workflow procedures, and a complete reorganization of a firm. The changes are either modular or corporate transformations (French & Bell, 2008). They are the major changes; modular transformation involves reorganizing several departments, or downsizing. Corporate transformation is also major and affects every department in the organization (French & Bell, 2008).
Organizations that make changes in their strategies are bound to benefit from the action in several ways including opening of more business opportunities, higher performance, and increased ability to compete. Those which do not take the risk of changing their strategies do not enjoy these advantages but they fail to increase their chances of increasing their revenues; moreover, due to the existence of a dynamic market they may be left behind and their returns are constantly low or they may even go down drastically.
For strategic change to be effective there are factors that control it, one, and the external environment must favor the change in order for the organization to adapt to the changes, secondly, the performance of the organization should be good and stable to allow changes. Strategic changes have significant and long term effect on the performance of an organization; the changes many be in the strategy content, the process of carrying out a strategy, the whole structure of the organization, resources such as human and technical resources, and on the status of competitive status (Lawler, 2004).
Strategic changes are sometimes planned and at times they may be due to forces from the nature of the external environment; there are changes that are realized to have taken place after they have their effects.
Fine tuning changes and increment changes are usually unplanned (emergent); the changes are natural since the changes take place due to forces from a changing environment. Emergent changes are risky to a business since they may lead an organization into a strategic drift if such an organization fails to identify warning signs. Nevertheless, planned changes such as corporate transformation may help rescue a strategic drift.
There are certain aspects of strategic changes that an organization should be aware of in order to be able to deal with the changes; first is that the changes are not only risky but they are also expensive. For the change to have a long term effect, variations in the previous operations should be expected. The process requires routinization and short term exploitation forces should be expected too.
The timing of when to start effecting a change is not easy and use of technology or market may frustrate the idea, therefore it is important to know that the process of change is an independent path which is locked in making it unpredictable, the outcome of a change is the only way to determine its effectiveness.
When making strategic change decisions major challenge is when choosing the best ways to ensure a successful process. The challenges are therefore both emotional and cognitive; when there is failure, there is a tendency to reduce the emotional attachment that existed with the previous strategies and when there is success, there is tendency of reducing overconfidence and new strategic beliefs are developed.
When a strategic change fails to be effective, many organizations spend time trying to improve the processes that were involved in the change in bid to justify the initial choice. The results of such action are investment which are not beneficial and are expensive. It is thus important for an organization to understand that strategic persistence and strategic inertia may slow down or even prevent a strategic change from taking place. This understanding will come with the studying of structural and psychological aspects that are involved in a strategic change.
Military commander, Dwight, said that “A finished plan is generally worthless, but careful planning is absolutely essential (Wilson, 2002). This is true even when carrying out business activities; taking time to plan on how to carry out an activity is important in that it allows one to identify any challenges that are likely to be faced and also identify the best way to carry out an activity (Wilson, 2002).
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- Billy George (Author), 2012, International business strategy, Munich, GRIN Verlag, https://www.grin.com/document/270201