see the environment as a factor, the environmental school sees it as an actor. This school views the organization as a Configuration School: and integrates the claims of other schools. A variation of this somewhat academic perspective is a more practitioner-oriented view which focuses on how an organization moves from one state to other, such as from start up to maturity. The approaches mentioned above need not be viewed as exclusive, watertight compartments. They can be combined in appropriate ways. The Economic Goals of an Organization Understanding the long term economic goals is the starting point firm’s in strategy formulation. As Pearce and Robinson rightly put it, three economic goals must drive the strategy of any organization survival, — profitability and growth. A firm has to first survive, if it is to serve the interests of its stakeholders. Survival is often taken for granted. But many companies do go bankrupt. Indeed, the average life of a Fortune 500 company is only 40 to 50 years, according to the research of a Shell executive Aries de Geus. Reckless or expedient short term oriented decision making, complacency and quick fixes to structural problems are some of the ways in which the survival of an organization is threatened. Profitability is the main goal of any business. Not only should a firm make profits but it must also ensure that these profits are sustainable in the long run. Moves aimed merely at improving short term profitability must be avoided. Equally important, profits should come from the core business, not through non operating income (such as sale of assets) or accounting manipulation. The third goal is growth or, more precisely, profitable growth. A profitable organization which is not growing is a cause for alarm. Lack of growth means the company is not able to identify opportunities to expand its market, compete with other players, develop new products, attract new customers, etc. Lack of growth also implies that competitors are probably moving ahead, thereby marginalizing the company’s position.
see the environment as a factor, the environmental school sees it as an actor. Configuration School: This school views the organization as a and integrates the claims of other schools. A variation of this somewhat academic perspective is a more practitioner-oriented view which focuses on how an organization moves from one state to such as from start up to maturity. The approaches mentioned above need not be viewed as exclusive, watertight compartments. They can be combined in appropriate ways. The Economic Goals of an Organization Understanding the firm’s long term economic goals is the starting point in strategy formulation. As Pearce and Robinson rightly put it, three economic goals must drive the strategy of any organization — survival, profitability and growth. A firm has to first survive, if it is to serve the interests of its stakeholders. Survival is often taken for granted. But many companies do go bankrupt. Indeed, the average life of a Fortune 500 company is only 40 to 50 years, according to the research of a Shell executive Aries de Geus. Reckless or expedient short term oriented decision making, complacency and quick fixes to structural problems are some of the ways in which the survival of an organization is threatened. Profitability is the main goal of any business. Not only should a firm make profits but it must also ensure that these profits are sustainable in the long run. Moves aimed merely at improving short term profitability must be avoided. Equally important, profits should come from the core business, not through non operating income (such as sale of assets) or accounting manipulation. The third goal is growth or, more precisely, profitable growth. A profitable organization which is not growing is a cause for alarm. Lack of growth means the company is not able to identify opportunities to expand its market, compete with other players, develop new products, attract new customers, etc. Lack of growth also implies that competitors are probably moving ahead, thereby marginalizing the company’s position. other,
A-Z%20of%20Business%20Strategy.docx