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Assignment

D39BB Business Management for Built Environment Professionals

By:
Mufseer Mansoor

TABLE OF CONTENTS
Description Page

a. Introduction 3

b. Strategy concept 3

c. Strategic Approaches 3

d. Organization’s Vision and Mission 5

e. Strategic Management Process 6

f. Strategic Process in Construction 7

f. Conclusion 9

References 10

a. Introduction
Present construction as an economic action is becoming exposed to a more and more competitive set
of environmental circumstances. In order to meet the competitiveness and dynamic change in the
industry, there is an increasing need for construction organization to plan strategically and implement
effective strategic management practice to secure their healthy growth as effectiveness of strategic
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management can critically impact organization’s viability. Therefore, strategic management practice is
now becoming more popular within the construction sector than it was which is evidenced by the
volume of literature dedicated to the subject.

This paper critically analyses contemporary thinking and theories on strategy in which examine
academic thinking and strategic practice and the process of strategic development and explain how
strategist within an organization competing in the industry, could draw upon such theories and thinking
in shaping the practice of strategic development.

b. Strategy concept
Literature on strategic management is awash with definition but one of the early definition of strategy
was according to Chandler (1962) is determination of the long term objectives and goals of an
organization and the implementation of course of action and the allocation of required resources for
executing those goals (Chandler, 1962). Johnson & Scholes (1997) argued that as strategy is about the
long-term direction of a firm, it is typically consideration of key decision about the future.
According to Pettigrew (1997) strategy is “the pattern of decision in a company that determines and
reveals its objectives, purpose or goals, produce the principal policies and plan for achieving those
goals, and defines the range of business the company pursue, the kind of economic and human
organization it is or intends to be, and the nature of the economic and non-economic contribution it
intends to make to its shareholders, employees, customers and communities” (Pettigrew, 1997,
p.52).Cole (1997) argued that strategic management is setting the key aim of an organization and
selecting the most suitable goals for such aim and fulfilling both over the time. But according to
Mintzberg, Ahlstrand and Lampel, (1998) Strategy has no easy simple definition instead they argued
that it requires number of definitions (Mintzberg, Ahlstrand and Lampel, 1998).

Whittington (2001) identifies four perspectives on strategic approaches where every perspective has its
own view on strategic process, although Mintzberg, (1998) distinguish ten schools of thoughts in
strategic approaches. Thus it is obvious that difference of perspective on the creation of strategy
implies a wide variation of the definitions. Although these all definitions have there are some general
areas of agreement about the character and aim of strategy which is to maximize the performance of
organization in a competitive business environment.

c. Strategic approaches
Different strategic theories have emerged with varied view on how strategy process should be
developed and formulated. Whittington (2001) identified four generic approaches to strategy and all
these approaches fundamentally differ alone dimensions, the outcome of strategy and the process
which is it made. These theories are important and it contains the basic assumptions about key
relationships in the organization’s business life and it tells what to expect, what organization’s first
steps should be and what to look out for as a result of strategist’s action.

The classical planning approach according to Whittington (2001) profitability is the highest aim of
business and rational planning is the way to attain it. This approach is the oldest and the most
influential which is based on the military tradition in which the world is a rigid hierarchy and it place
great confidence in the readiness and ability of manager to adopt profit maximizing strategy through
rational long-term planning. This approach can be used to predict outcome based on interactive
models. Although many professional in the current industry argued that this approach no more
applicable and it does not suit to the dynamic business environment as it has no mechanism for
strategy creation. This theory can be applied only for analyzing future market conditions, preparing
business negotiations, evaluating the viability of a business and strategic decision making. This
approach is best suiting for organizations that competing in the same segment or for those
organizations that the strategies are similar.

Unlike classical planning theory evolutionary theory do not rely on top management’s skills to plan
and act; instead it believes the market will determined the profit maximization and no matter what
methods the managers adopt, ultimate best performance will be the one that survive. Whittington
(2001) argued that this approach is less relying on manager’s capability to plan and act rationally
instead they expect market to secure profit maximization which eventually downgrade managerial
strategy and give emphasis to environmental fit (Whittington, 2001). According to this theory, best
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performing strategies only emerge as the process of selection delivers its judgment. Cuizon (2009)
argued that competition cannot be overcome by detached calculation and analysis instead it overcome
by constant struggle for survival (Cuizon, 2009) which is contradict with the Cyert & March (1963)
argument in which they argued that the top management team of a firm is the ‘dominant coalition’ of
individuals who are responsible for setting firm’s direction (Cyert & March,1963).

According to Richard Cyert, James March and Herbert Simon, rational economic man is not possible
as they cannot overlook factors at the same time. Processual approach do not subscribe to rational
strategy making forwarded by classical process. They do not either agree with evolution approach of
leaving the profit-maximizing outcomes to the market. But Processual believes that it is in
compromise and adjustment; both external and internal are the important factors and not the
environment and the calculated rationally. It considers that long-term planning is largely futile but
less pessimistic about the fate of business which does not optimize environmental fit. As per this
approach, organization and market are formed with mess and confusion (Cuizon, 2009); the best
Processual approach is not to strive for the ideal but to work with that the reality offer. Whittington
(2001) argued that this approach downgrades the importance of rational analysis and it limit and
reduce the search for strategic flexibility and expectation of success (Whittington, 2001).

Theorists from systemic approach believe that the organization is capable of planning and acting
effectively. And also they believe economic activity cannot be separated from social such as family,
religion or state and these factors are controlled the means and ends of the systemic approach. In this
approach they consider organization is made-up of social group with interest and not of individuals.
Therefore organizations from different countries will differ in their characteristic approach to the
strategy and transfer of strategic thinking and techniques from different country or even industries is
not easy. This approach takes into consideration of the social environment that the organization is
revolving in and ends and means of the organization depends mainly on what is prevailing social
system. Whittington (2001) argued that in this approach the norms that direct the strategy derive from
the cultural rule of the society. He further stated that “The internal contests of organizations involve
not just the micro-politics of individuals and department but the social groups, interests and resources
of the surrounding context” (Whittington, 2001, p27)

Contrary to Whittington’s (2001) four different approaches to strategy, Mintzberg (1998) has
identified ten schools of thoughts that provide a framework which can be used to categorize the
strategic approaches. These approaches have varied relationship with each other.
The Design School sees strategy as process of conception although the Planning School sees it as a
formal process that undertakes careful set of steps to execute the strategy. The Position School
considered strategy as analytical process but the Entrepreneurial School perceives strategy as a
visionary process which takes place within the mind of the leader of an organization. In contrast to
the said four schools the Power School introduced process of negotiation between key holders within
or between companies and its outside stakeholders to the strategic process. According to the Cognitive
School strategist are mainly self-taught; they develop their thinking process and knowledge structure
largely through experience. Thus they considered strategy as a mental process and it analyze how
people process information and perceive patterns. However Learning School sees strategy as an
emergent process in which the management implements the lessons that learned over time into their
overall plan of action. In the Cultural School various group within the organization involved in the
strategic process therefore they sees this as a collective process which is contrast to the theory of the
Environmental School in which they sees strategy as a response to the challenges imposed by the
outside environment and not the internal groups of the organization. But the Configuration School sees
strategic formation as a process of transformation (Mintzberg, 1998).

Under all the above strategic approaches, organization needs to establish a strategic framework for
their success that consists of analysis, choice, implementation and feedback. However in the first place
organization must have a clear vision and mission statement.

d. Organization’s Vision and Mission


A vision is a public statement about what firm wants to become. Vision of a firm should resonate all in
the firm and help them feel excited and proud. It should stretch the firm’s image and capabilities of itself
and provide shape and direction to the firm’s future. Length of the vision statement range from a couple
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of words to several paragraph but shorter vision statement is better as people will tend to remember it
(Gregory, 2009).According to Johnson & Scholes (1997) vision is desired future state of the firm
(Johnson & Scholes,1997).Cole (1997) argued that the vision is intended to motivate managers and
stakeholders and to be sufficiently focused in its message (Cole, 1997).
The mission is a precise description of what a firm does and it describes the business the firm is in
(Gregory, 2009).According to Cole (1997) mission statement sets out its reason for being in term of the
customer needs and how it aims to satisfy and the manner in which the organization will meet them.
Johnson & Scholes (1997) defined mission as to overriding purpose of the firm that in line with the
expectation and value of key stakeholders (Johnson & Scholes, 1997).
The definition of Peter (1987) for the vision is to be the more suitable one for the construction industry in
which he argued that the leaders in the organization should develop a specific, challenging, inspiring and
empowering vision for their business success (Fellows et al.,2002).

Formulation of vision statement leads to the statement of mission. In the objective statement the firm
announces how they convert the mission into performance. Following vision and mission statements of
M/s Arabtec provides what is and what will be the business and it establishes long-term direction of the
organization.

Vision
“To be the leading provider of quality construction and engineering services in the Middle East,
North Africa and across the globe”.
Mission
“To form long-term relationships of value with our clients and partners by using quality
construction and engineering solutions and employing the best resources and latest techniques”
Objectives
“To provide the highest possible standard of quality and service in the construction industry,
giving Clients the best satisfaction the Company can offer”.

(Source; Arabtec Construction LLC’s web site, http://www.arabtecuae.com)

In the Vision and mission statements M/s Arabtec Construction LLC, is announcing to the public that
their main intentions and aspiration and the reasons why the firm exists. Their powerful strategic
intend expressed the logic of the strategic direction of the organization which motivate the employees
and managers alike throughout the firm.

According to the organization’s vision and mission statements, the strategist works on strategic
management process.

e. Strategic Management Process


Strategic management is concerned with making a decision on strategy and planning how the decided
strategy is to be put in to effect. Developing a successful strategy requires capability of a firm, creativity
and through understanding of the resources and comprehensive analysis of the competitive market. Thus
clear strategic process is a need for organizations to have stability and avoid crises brought about by
surprises.

During strategic management process firstly strategist seeks to understand the strategic position of the
business by analyzing and scanning the external and internal environment. Then in the strategic
choice/formation stage, strategist formulates of possible courses of action and evaluates and chooses
between them. The final element is strategic implementation in which strategist concern with planning
how the choice of strategy can be put in to effect. These three elements are not sequential but they
overlap and interact.

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Strategic management process is takes place in a dynamic and complex business environment. Therefore
it is crucial to understand the external business environment and any assessment of an organization’s
internal environment for the process of strategic management. External influence such as social,
economic, political and technological on the project can be analyzed using PEST analysis. The dominant
groups in the external business environment who influence the organization are usually the organization’s
shareholders, customers, competitors, the representative of the community at large and suppliers. In
addition technological advancement, nature of the labour market, government and the law of the country
and state of the industry are the most important other factors which influence the external business
environment (Cole, 1997).
Other important element in assessing firm’s overall position is identification of the strength and weakness
of the organization’s internal environment in which strategist can analyze the nature of internal condition
and internal performance. These can be analyzed from number of different perspective such as financial,
cultural, organizational, marketing, production, research and development and resourcing perspective
(Cole, 1997). Verification of organization’s existing resources is also a main course of work during the
strategic analysis stage and it will provide the base for the further course of action.

Pettigrew, Thomas and Whittington (2001) argued that organization that unable to fit with dynamic
situation and changes, will not succeed and incur substantial loess. Therefore it needs to keep an eye on
their business environment for internal vulnerabilities as well as external threats and focus and exploit
new ways faster than their competitors. Thus, organization can use SWOT analysis as a strategic
development tool to match their internal strength and weakness with external threats and opportunity
which helps organization to balance idealism and pragmatism. And it also helps to develop an effective
strategy by obtaining a balance perspective of the organization’s internal strength and weakness and
external threats and opportunities (Pettigrew, Thomas and Whittington, 2001).

Once strategic analysis is completed, the strategic choice will be made. According to the Johnson &
Scholes (1997) strategic choice is the central part of strategic management. There are many strategic
options are available to an organization and these can be evaluated and selected using deferent type of
techniques. According to Johnson & Scholes (1997) there are three type of evaluation criteria that can be
used for selecting a strategy namely suitability, acceptability and feasibility (Johnson & Scholes, 1997).
They further argued that the strategic choice is concerned with decision about firm’s future and the way
in which the organization needs to respond to the influences and pressure identified in strategic analysis.
And also organization’s continuous adjustment to their business environment is a vital part and firm does
not tend to remain bound by their pattern and resistant to change. Thus strategic choice stage firm must
have variety of strategic option open to the organization (Johnson & Scholes, 1997). Due to dynamic and
complex nature of the current construction industry their argument on continuous adjustment and
variety of strategic choice more fit with the industry. During the strategic choice stage strategist must
choose the strategy, which meets organization’s targets, efficiently utilize its impressive strength and the
one that correct all its major weakness of the organization. And also it must reduce the impact of threats
and make use of all potential opportunities (Fellows et al., 2002).

Most important stage of the process is implementation phase in which organization’s aim and objective
will be communicate to all its members and demonstrate the application of system to achieve
organizational objectives. Implementation of strategy is carried out within the frame work of actions
plan. Most challenging part of this stage is to planning the implementation, finding the type of change
required and finding the effective methods of managing the strategic change (Johnson & Scholes, 1997).
Changes will be initiated by the management and detail working system will be developed by the team
leaders that in line with the organizations aim. Implementation phase strategists also look for possibility
of outsource non core activities or to executing by in-house team which will depend on organization’s
existing resources and capability. In case of a change it is preferable to focus on revising the existing
strategy in a suitable way without generating a new strategy from scratch. Johnson & Scholes,(2001)
identified organization’s tendency towards ‘momentum of strategy’ (during the strategic implementation
stage) in which organizations do not fundamentally changing their direction rather develop from and
within the strategy which they have already adopted ( Johnson & Scholes,2001).

In the feedback and control stage, the strategists continuously monitor performance of the strategy which
is in place against the set objective. If it does not meet objectives corrective action and decision are made.
In order to measure the strategic performance, strategist must carry out the strategic audit in which it
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evaluate all facets of the process or focus on single part of the process. Feedback and control stage is
carried out at the three levels of the organization; corporate level, business level and operational level.

f. Strategic process in construction


The requirement for strategic management to the Construction Industry is becoming more and more
important as rapidly changing market condition requires greater corporate awareness of changes and its
implications. Although, due to dynamic, complex and unpredictable market condition, strategic
management in the current business environment becomes extremely difficult and strategist today is
aware of the chaos they have to navigate. Thus, strategists in the industry must have skills and tools to
formulate and implement the strategies that enhance performance of the organization. Having a clear
strategy, enhance the corporate harmony of the business and it provide the employees clear indication
where the organization is going. Thus Strategists who are in the sector should constantly review their
market where they operate, keep sharp eye on the most current trend and what competitors are up to and
evaluate strengths and weakness of the organization.

However some successful leading organizations in the construction industry are adapting their strategy
development methods to match the market competitive reality but many firms in the industry are failed
to practice effective strategy process which is evidence from Mintzberg (1994) findings that ‘there is very
little evidence of implementation of strategic management process effectively’ (Mintzberg,1994).
Most of Strategic plans are failing because strategist fails to:
• Think creatively about the probable affect of plans and predict market reaction
• Plan and Execute the strategy appropriately
• Make right decisions
• Co-ordinate and control resources and poor management awareness
• Obtain external and internal participation
• Follow the plan
• Ignore the cultural and organizational requirements
• Take advantage of new opportunities offered by the business environment which are not part of
the original strategy
• Identify the strategic alternative.

During strategic planning process they need to consider the complex, embedded and dynamic nature
of the construction industry and also need to identify the resources and capabilities of the organization
in order to develop to maximize competitive advantage and measure the value created by the strategy
and identifies attractive market and understands how it can be influenced to improve industry
profitability. The timing of the strategic management is also vital to its success, if the organization’s
activities are systematic with realistic forecast; the consistent financial performance is likely.
The Strategists must also focus on return on capital of a business and if the return in the long-term is
not satisfactory the deficiency should be corrected or the activity abandoned by the Strategist. During
the planning stage, in order to develop a proper response accordingly, strategist must anticipate
changes much earlier as in the event of crises the complex and large organizations in the industry are
more difficult to change quickly.
Many innovative changes to the construction industry must be adapted to the industry such as strategic
alliances, partnering and supply chain management as the organization which adopt ossified and
bureaucratic process rather than insightful and those focused on extrapolating historical trends rather
than capturing future competitive advantage are not yield the best result of the strategic management
process.

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Study and research shows that mostly strategic plan fail during the execution stage and because
strategies are exported without being created from organization’s culture and the heart of the dynamic
environment. Due to these and variety of reasons organization in the industry do not realize the
anticipated strategy. Mintzberg has realized this and has proposed an alternative model of strategy
development as intended strategy of an organization rarely survives in its original form. Gregory,
Lumpkin, & Taylor, (2005) argued that unanticipated resource constrains, changes in the managerial
preferences and unforeseen environment development may result in at least some element of the
anticipated strategy remaining unrealized. In the same time good strategist in the industry need to take
advantage of new opportunities offered by the business environment even though it was not part of
original intentions (Gregory, Lumpkin, & Taylor,2005).
Hamann (2006) argued that strategy process are interconnected thus optimal strategic analysis leads to
better formulation and best formulation to better planning. Strategy implementation and execution is
the final but crucial stage as unsuccessful execution of strategy will fall short of its potential
(Hamann, 2006). This argument reinforced by a research which conducted by consulting company
Marakon (2002) in which they have surveyed 197 senior executive from large companies worldwide
and they found that companies that they surveyed deliver only 63% (average) of the promised
financial performance in their strategies due to breakdown in planning and execution. In 1999 Fortune
Magazine reported 70% of fail strategies are due to bad execution and not the high-concept boners to
the CEOs. Alexander (1990) identified some of reason for lack of focus on strategy implementations.
• Only few strategic implementation conceptual modules are available.
• Researchers are not certain where and how strategy execution starts and stop
• Most in the organization believe that anyone can execute once the strategy has been
formulated
• Many professional in the industry believe that every organization is able of implementing
strategy therefore they focus more on formulation.

Bonoma (1984) suggested that lack of focus on implementation stem from the fact that the persons
those who are implementing are not trained in strategy execution as the syllabus at most business
schools is basically focus on strategic formulation and analysis (Bonoma,1984). In order to avoid
implication problems Noble (1999) developed a practical framework for strategic implementation in
which he developed a model of the key stages in strategy implementation.

g. Conclusion

Different strategic schools provide varied view on how strategy process should be developed and
formulated but the implementation of the stagey is an area where many organization experience
problem although it is the vital part of the organization success. All researches and literatures suggest
that strategy implementation is important to organization success therefore strategist in the industry
must identify how implementation is important and how and which factors affect that process.
However strategy implication is a not easy process but complex, in order to overcome implementation
problem strategist need a successful frame work for implementing strategies.

Therefore the strategist in the current instruction industry must focus not only on strategic formulation
and analysis but also strategy implementation as strategy alone cannot make the organization success
but effective implementation is the key for success.

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Brown, P (2005) The evolving role of strategic management development .Journal of management
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