In today's fast-paced and competitive business world, having a clear and effective organizational strategy is essential for success. It's like having a roadmap that guides the actions and decisions of your organization. It helps align resources, processes, and the efforts of employees toward common goals. This ultimately leads to improved performance and competitive advantage.
In this article, we'll explore what an organizational strategy is, why it's important, and how it can contribute to the long-term goals of your company.
What is organizational strategy?
Organizational strategy refers to an organization’s well-defined plan and approach to achieving its overarching goals and objectives. It encompasses various aspects, such as the organization's mission, vision, core values, and the strategic initiatives it undertakes to stay ahead in the market. Therefore, different types of organizational strategies work in different situations.
What are the three components of an organizational strategy?
An organizational strategy is made up of three categories. These categories help keep employees across the entire organization on the same page. Let's go over them in more detail below.
Corporate level strategy
The corporate strategy involves decisions at the highest level. Business leaders determine goals such as growth or diversification. They identify actions the company needs to take to be profitable or recover from setbacks. From here, key initiatives trickle down to the rest of the team.
Some common corporate strategies include:
- Stability strategy
- With this corporate strategy, a company focuses on maintaining its current market position. This can include offering the same products to the same customers, not introducing new products, or maintaining market share.
- Expansion strategy
- An expansion strategy focuses on growth. This can include growing a brand, achieving higher profits, having a greater impact, or gaining a larger market share.
Key ideas surrounding a corporate level strategy may include:
- Revenue/sales outcomes
- Forward integration
- Backward integration
- Merging with another company
- Improving the effectiveness of existing products/product innovation
- Improving employee retention rates
Business level strategy
At this level, leadership teams break down corporate strategies into meaningful goals for each department. They determine specific steps that lead to achieving the primary purpose or goal. For example, if the corporate strategy is to increase profits, the business strategy could involve boosting the marketing team's budget to drive more sales.
Business strategies may include:
- Targeting new markets
- Changing marketing strategies
- Implementing new employee benefits to better attract and retain top talent
Functional level strategy
The functional strategy defines the action plan. It involves specified tasks for day-to-day business activities. This consistency in daily operations brings you closer to achieving your strategic goals.
What are the key elements of an organizational strategy?
Developing an organizational strategy can be overwhelming. There are many factors to keep in mind. Plus, you don't want to create a plan that's too far out of reach for your team.
To make things easier, use the five SMART goals1 as building blocks for your business plan:
- Specific goals. Don't be vague. Make your goals as detailed as possible.
- Measurable goals. Your goal should be quantifiable. This way, you'll know when you hit a benchmark.
- Achievable goals. Make sure what you're asking for from your employees is doable. You want to set realistic goals.
- Relevant goals. Think about the big picture. The actions you take in the short term should align with long-term plans.
- Time-based goals. Set defined start and end times for your specific objectives.
How do you develop an organizational strategy?
Developing an organizational strategy involves carefully analyzing internal and external audits. It’s important to know what resources are available to you and where they can be allocated. From there, you can set your priorities and determine which tasks you should accomplish first.
Profit.co2 breaks it down into the following steps:
- Perform a SWOT analysis. Assess your company's strengths, weaknesses, opportunities, and threats. This helps you identify areas where it can excel and the potential challenges it may face.
- Conduct a PEST analysis. Analyze your business’s political, economic, social, and technological (PEST) environment. This can help you prepare for any turmoil that may threaten your organization's success.
- Complete a competitor analysis. Get to know your competition in the industry. Convert their weaknesses and challenges into strengths for your company. This can give you a competitive edge.
- Establish accountability. Decide which team member is responsible for specific goals or tasks.
- Determine your company culture. Teamwork makes the dream work. Choose the right team for the job and create a positive workplace that encourages engagement.
- Review your progress regularly. Keep in mind this isn't a one-and-done type of project. An organizational strategy requires continuous monitoring and evaluation to ensure its effectiveness.
How does an organizational strategy benefit your company?
One of the primary purposes of an organizational strategy is to create alignment and coherence within the company. It ensures that everyone within the organization is working toward the same business goals, which helps to minimize conflict and increase overall efficiency.
By having a clear strategic plan in place, employees understand their roles and responsibilities, which helps them make decisions that align with the company's objectives. Plus, it shows your employees that their work makes a difference. When employees feel valued, they form a better connection with your company. Happy employees tend to stick around.
An organizational strategy is a vital component of any successful business. It provides a clear direction for the company, promotes alignment, and enables adaptation to changes in the external environment. By developing and implementing an effective organizational plan, companies can position themselves for long-term success in today's ever-changing business world.
Holly is a content marketing specialist for PeopleKeep. Before joining the team in 2023, Holly worked in television news as a broadcast journalist. As an anchor and reporter, she communicated complex stories to the vast communities she served on a daily basis. Her background has given her a greater understanding of people and the issues that affect our lives. When Holly isn’t writing, she enjoys reading, exercising, and spending time at the beach.