Discuss about the Business Level Strategies for Generic Strategies.
Richard Rumelt’s journal article, “The Perils of Bad Strategy” demarcates the fine line between bad strategy and good strategy.
The paper is focused on evaluating the journal article written by Richard Rumelt- “The Perils of Bad Strategy.” The author has demarcated the signs of bad strategies with the strength of his experience of being a professor of business and society at the UCLA Anderson School of Management. Rumelt is a renowned name in the field of strategic thinking. The journal article clearly suggests that bad strategies are abundant in today’s world of business. Companies and their strategic heads do not focus on issues rather ponder upon the conflict of interests. Rumelt has identified four signs of bad strategies- the failure to face the challenges, mistaking goals for strategy, bad strategic objectives and fluff. He has concentrated on these four points throughout the journal article to highlight the failure of the strategic heads to formulate a substantial strategy for the company. This failure is instrumental in the losing the business interests of the company (Visperas Anderson, and Larkin 2015). Rumelt also mentioned three goo strategies that would help the strategist to analyze the current situation and formulate a plan of action for the company. The three good strategies are- diagnosis, guiding policy, and coherent action. Rumelt thus suggests that strategist should completely avoid the hallmarks of bad strategy and blindly follow the good strategies. However, completely neglecting the role of ‘vision and mission’ and ‘objectives and goals’ of the company, would not be wise. The article is crucial for the strategists to be able to avoid the pitfall of bad strategies but to ignore to set the direction of the company might also cost as a failure.
The main purpose of Rumelt to write this article is highlight the importance of identifies the pitfalls of the bad strategies. He intended to provide the difference between bad and good strategies. Thus, he provided a three-point template on good strategies. Rumelt points the fact that governments and business companies are paying more attention on the slogans rather than actual plans and focus on the issues prevalent (Chen et al. 2012). He suggests that the leaders should invest more time in the formulation of a good strategy rather than simply possessing ‘charisma and vision.’ He clearly points out the bad strategies that need to be avoided. He also mentions the two main reasons that trigger the failure of recognizing the bad strategies. First being the inability to choose and other the template-style planning. He states that companies fail to set the priorities for the company. According to Rumelt, some goals are o be prioritized in comparison to others. This would help the company to concentrate one thing at a time. It would also ensure that the company and its employee do not get confused with the other goals. Second, he mentions the template-style planning (Leih, Linden and Teece 2014). According to Rumelt, the template-style planning confuses the company, and weak strategies are the result of such planning. He states that these statements are good for motivational speech but the ground reality differs. He states that this template confuses the strategies of the company and it should be avoided (Hoffman and Woody 2013).
Rumelt in his article clearly describes the importance of identifying bad strategies and implementation of good strategies, be it in the government policies or any business. He cites individual examples for every hallmark of the bad strategies he propagated. In my opinion, the strength the article lies in the fact that Rumelt was able to identify each of the fallacy that the strategists succumb to when surrounded in a sticky situation (Hung 2015). The most significant factor that he pointed at that before starting to build plans for any company, one needs need to understand the issues that are prevalent in the company (Bharadwaj et al. 2013). The strategists need to identify the market issues that might threaten the company and its performance in the future. Rumelt cited the example of International Harvester while he was elaborating his “failure to face the problem” point. His explanation of the situation and the result that followed were an absolute fit for the point he aimed at. I agree with Rumelt that identification of the challenges and working on them is the first step to success in any field (Bentley, Omer and Sharp 2013).
I second Rumelt as he suggested that strategist should know the stark difference between strategies and objectives (Grant 2016). Rumelt explains that a list of objectives should not be mistaken as a strategy. Pushing the limits is one thing and harping on unrealistic visions is different. The leader should have a clear focus of the objective and then try to chalk out the action plan according. Goals and objectives are very important, but the one need to comprehend the importance of working on the glitch present in the company. I believe without eradicating the issues; one cannot materialize the vision (Rothaermel 2015).
However, I oppose the criticism on the template Style Strategy made by Rumelt. Without a clear mission-vision statement, a company would not be able to establish a direction in which the company should move to achieve the vision. The mission-vision statement would help them identify the possibility they can achieve over a long-term period. A company needs an anchor in the form of mission and vision statements; as it would guide them and help them formulate the strategies accordingly (Verbeke 2013).
Rumelt’s good strategies are apt and can be used as stepping stone for the success of the company. I opine that the successful implementation of the three-point good strategies propagated by Rumelt is helpful in formulating custom-made strategies for any company. The example of the start-up company stated by Rumelt aptly testifies the successful outcomes of this three-point strategy (Basili et al. 2013).
However, I oppose the concluding note of the article, which states that leadership skills are not important for strategies. I opine that an effective leader is capable of changing the course of the company. A leader knows when and how to formulate the strategies which Rumelt has been discussing all through the article. A leader is a person who has the capability to judge a certain situation and come up with ideas to combat to overcome obstacles. For example, A. G. Lafley, former CEO of P&G changed the course of his company during his tenure of leadership. The company brand name was well established when he joined, but serious issues like the decline in sales were lingering. Lafley with his leadership qualities was able to formulate strategies and keep the employees motivated. He was instrumental in bringing back the company on tracks and doubled the sales of the company to approximately $84 billion. According to the Business Insider Magazine, he is one of the most successful executives in the history of the company (“P&G’s Legendary Ex-CEO Explains Why Everyone Gets Strategy Wrong”). On that note, I would like to mention that strategies are important but a leader is the one who can formulate the correct strategies for the company who will be able to change the course of the company.
To conclude my analysis, I would state that the journal article written by Rumelt was inspiring and comprehensive. However, there are points with which I completely disagree. I support the fact the bad strategies should be identified and avoided completely. Even the good strategies mentioned in the article are good enough to benefit a company. However to completely negate the input and importance of a leader is not wise according to me. As the leader is the one who can identify the issues and formulates accurate strategies for the company. Strategies alone would not work if the leadership of the company was crumbling. Thus the strategies and leadership should work together to get the optimum result for the company. Without the leader, formulation of the strategies would be “fluffy” and the without the strategies the leader would not be able to help the company visualizes his vision.
Reference List
“P&G’s Legendary Ex-CEO Explains Why Everyone Gets Strategy Wrong”. Business Insider. N.p., 2016. Web. 5 Aug. 2016.
Basili, V.R., Heidrich, J., Lindvall, M., Münch, J., Regardie, M., Rombach, D., Seaman, C. and Trendowicz, A., 2013. Linking software development and business strategy through measurement. arXiv preprint arXiv:1311.6224.
Bentley, K.A., Omer, T.C. and Sharp, N.Y., 2013. Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30(2), pp.780-817.
Bharadwaj, A., El Sawy, O.A., Pavlou, P.A. and Venkatraman, N.V., 2013. Visions and voices on emerging challenges in digital business strategy. MIS quarterly, 37(2), pp.14-001.
Chen, C.C., Shih, H.S., Shyur, H.J. and Wu, K.S., 2012. A business strategy selection of green supply chain management via an analytic network process. Computers & Mathematics with Applications, 64(8), pp.2544-2557.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hoffman, A.J. and Woody, J.G., 2013. Climate change: what’s your business strategy?. Harvard Business Press.
Hung, J.L., 2015. International Market Business Strategy Analysis-A case study of G company.
Leih, S., Linden, G. and Teece, D., 2014. Business model innovation and organizational design: a dynamic capabilities perspective.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
Visperas, J., Anderson, E. and Larkin, C., 2015. Business Strategy: Implementing Low Cost.
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