adminAlbert Dhafana
The business environment the world over has increasingly become uncertain, hence the high risk premium. This is attributed to the trade relationships among countries, the geo-politics of our times, increased cases of terrorism, social dynamics and changes which result in increased expectations from consumers and other reasons.
Here in Zimbabwe, there are considerable changes which have come as a result of historical overhangs, emergence of various political discourses and shift in foreign policy. All these developments, have in more than one way affected business.
Most businesses are finding it difficult to navigate through this sea of problems, which is characterised by prohibitive finance costs, tough labour laws which are not in sync with economic realities, lack of clear policies in certain instances, obsolete machinery, which in turn results in less competitive goods and services on the export market.
However, not all hope is lost. There is a ‘silver lining’ called Strategy, which companies can exploit to their advantage in these times.
The Management Study Guide (MSG) offers a simplified description of what Strategy is.
It describes it as a process of integrating organisational activities, utilisation and allocation of limited resources in line with the business environment to satisfy present objectives.
In other words, a company is strategic if it maximises on the assets and resources at its disposal for maximum benefit.
A number of Zimbabwean businesses are unnecessarily spread and ‘over involved’ beyond their individual and collective capacity.
The obsession with ‘branches’ and ‘subsidiaries’ has seen companies wasting resources which could otherwise have been concentrated in one area or town for maximum benefit. Strategy is derived from the military – ‘staratagos’ (meaning army), and ‘ago’ (meaning leading/moving).
Army generals decide on the most cost effective and quickest way to subdue the enemy. In the process, they strive to limit as far as possible man and equipment losses.
They are guided by a set of goals, the uncertainty of events and invest in wanting to know the likely or actual behaviour of the enemy.
In the business world, the strategy shows the organisation’s objectives and goals, how the goals will be achieved, defines the business the company is to carry on and how best it will respond to the dynamics in the operating environment.
There is often the mistake of thinking of strategy through workshops and one day events and seminars.
Whilst it is good to come up with five year or ten year strategic plans, this is not adequate.
Strategy is a lifelong commitment, which has to guide the day to day activities of an organisation. The Board of Directors have the responsibility of putting in place the strategy for the organisation.
They will need the support of a competent management team for the animation of the strategy.
Strategy is significant because it prepares the organisation to deal with uncertain events which are characteristic of the business environment.
Granted, strategy deals with long term developments rather than routine operations. It focuses on new products, new methods of production or new markets to be developed in future and even the pillars or thematic areas consistent with results from research.
However, for the Zimbabwean business environment which is uncertain and largely volatile, the strategy should be constantly monitored and reviewed in line with changes.
Directors, who are sluggish in responding to the changing environment, will find themselves out of a job, sooner than later. Decisions have to be made in the shortest possible of time and should be an outcome of a deliberate research process.
The Board of Directors and Management need to have an appreciable level of strategy literacy if they are to govern organisations effectively. An understanding of strategy and subsequent planning should be followed by the formulation phase.
This is the process of choosing the most appropriate course of action for the realisation of organisational goals and objectives.
This may involve human resources strategy – how much, short time, permanent, finance option – debt or equity? market concentration – regional? National ? international ? Product mix etc.
Business should be proactive and should lead in the change process. It might be true, that a number of corporate failures in Zimbabwe are as a result of poor or lack of strategy.
Businesses realise too late that they have to lay off part of their staff, discontinue certain lines, close certain branches, restructure their loan books, even trim their management etc.
In such situations, even judicial management will have little curative effect.
The Strategy formulation process involves six main steps:
1. Setting organisation’s objectives – Every organisation should have long term objectives, which in the ideal should outlive the founders.
Objectives stress the state of being there , whereas Strategy stresses upon the process of reaching there
2. Evaluating the Organisational Environment – The purpose of this evaluation is to establish or discover the factors for competitive success
3. Setting Quantitative Targets – This is to ensure measurement of performance in the long term
4. Aiming in context with the divisional plans – Each department or unit or product category contribution is identified, to enable particular strategic planning.
5. Performance Analysis – This is analysis of the gap between the planned or desired performance and the actual performance.
Corrective action can then be taken or the organisation can build on the registered positive performance.
6. Choice of Strategy – The best course of action is chosen after considering organisational goals , organisational strengths , opportunities and threats in the environment.
The article tried to advocate for an appreciation of Strategy in the business world. Businesses should not think of Strategy as an event or some prescription from a consultant.
The Board of Directors and Management should own and direct Strategy in their organisations.
This , hopefully should assist in stemming the tide of company closures , which has become characteristic of the Zimbabwean economy.
◆ Albert Dhafana – Organisational Development Practitioner , 0772 661 271. [email protected], albertdhafana.blogspot.com
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