Business Policy Concepts Essay Example | Topics and Well Written Essays - 2250 words

Business Policy Concepts - Essay Example A good corporate strategy should integrate an organization's goals, policies, and action sequences (tactics) into a cohesive whole. The success of Japanese companies revealed implementation policies which appeared to be unique but have now been shown to be valid in many business environments, for example management by walking around (MBWA) proved to be a successful technique for Honda. Senior management's contacts with key people resulted in appropriate choice of policies and to the success of the company philosophy. This shows that corporate choice of strategy and implementation of that strategy involves many different concepts, theories and frameworks. An understanding of major choices of corporate policies and their advantages and disadvantages is critical to the understanding of business policy process {Johnson et al, 2005]. In a perfect world a strategy planned by the management will proceed according to plan and be implemented. Unfortunately any belief that strategy can be formulated on the basis of intended and deliberate actions to result in commercial success is far from the truth. This concept rules out any opportunity to adapt to a changing market situation. In a number of cases a situation may develop where incremental changes in the strategy may result in a more advantageous position for the company. This is a positive example of strategic drift. A preplanned and formulated strategy also assumes an organization to be homogeneous where management decisions from the top can be implemented in full. In practice the decisions are effected by power behavior, cultural and political factors. Quinn [cited in Peppard et al, 1996] argued that strategy develops incrementally as a result of decision made due to developing market situations and other organizational experiences. This strategic drift results in a course which is often significantly different from formal planning. Drift in strategic planning is a fact of organizational strategy. It does not mean that strategic policy making is a useless process as it will eventually drift into something new. It only recognizes that changes often become necessary due to extraneous factors and require adjustments to the strategy to keep the broader strategy on course. Porter's 5 Forces Porter's five forces is a useful tool for analyzing the factors impacting on strategy formulation. [Porter, 1980] identified forces that impact every business. The objective of the strategy is to use these competing forces to result in a positive impact on the business. These forces identified by Porter are the driving forces of the industry. The strategy analysis thus analyses the impact of these forces on a particular business and how to minimize the impact of the negative forces and maximize the benefits of the positive forces. The five forces are: 1. The threat of new entrants 2. Bargaining power of suppliers 3. Bargaining power