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Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.4, No.

8, 2013

www.iiste.org

Brief of the Dimensionality of Business Strategy among the Manufacturing Organization


AL MUTAIRI ALYA O School of Mathematical Sciences, Universiti Sains Malaysia, 11800 Penang, Malaysia * E-mail of the corresponding author: etifaq66@hotmail.com Abstract Strategic thinking and leadership directs to the ability of the leaders of an organization to look into its prospect and to think creatively about its potential development. Researchers have recognized general categories of business-level competitive strategies based on overall patterns of propose, practice, and performance in different businesses. In broader view these categories can be seen as overall cost-leadership, building customer perception of superior quality products or services and focus in which business avoids direct confrontation with the major competitors (Mullins). The purpose of this study is to discuss from literature and empirically tests the dimensionality of the integrated business strategy in the Malaysian context. The effectiveness of strategies was tasted with a sample of 113 manufacturing organizations. Results of exploratory and confirmatory factor analyses showed that the 4-subscale structure of integrated business strategy was valid. The results established that the integrated business strategy scale has high internal reliability. These results specify that the incorporated business strategy scale can be used in research connected to manufacturing organizations in Malaysia. Keywords:Manufacturing Organizations, Strategic management, Direct Mailing, Managers in manufacturing organizations, Business Strategy, Strategy Typology Introduction Mintzburg suggested that the term Strategy can legitimately be used in many ways; a word strategy can be a plan, a pattern of behavior, a perspective, a ploy or a position in respect to others (George Stonehouse, 1999,2002). Chandler considered strategy in three important aspects; the determination of the basic long-term objectives that concerns the attainable strategic goals, the adoption of courses of action refers to the actions to achieve previously set goals and the allocation of resources reflects the cost associated with the required actions (George Stonehouse, 1999,2002). An enthused and noticeably considered strategy provides the impetus for commercial achievement, where a fragile or misunderstood strategy may lead to a corporation going out of business. Understanding what composes 'strategy' is therefore crucial in increasing a successful business, as is avoiding the inclination to label every plan and decision 'strategic' when the majorities are about implementation strategy rather than setting it. Strategy development an implementation enables the managers to better understand their customers and competitors. A sound strategy is required to understand customers of any business for companies to develop products in line with customer preferences. Development of strategy strengthens business also in a way that it makes sure the resources are devoted to the most important customers in order to retain their loyalty and get them buy more products of their choices. Strategies also provide managers need of business skills to be added or subtracted from the processes, productivity, operations and many other functions inside the organization can be improved via development of successful strategies (Kourdi, 2003,2009). Strategic management and planning are necessary to achieve clear sense of direction of business enterprise to establish clear set of goals, provide an integrated function for organization to diversify the operations by offering framework of action and to respond successfully to complex business environment encountered by firms of increasingly global scope (Gilles, 1997). Literature Review Strategic management is a set of theories, tools and frameworks that are designed to explain the factors underlying performance of organizations and to assist managers in planning and acting strategically. Much strategic decision-making takes place at the level of the business. Core competencies in marketing, sourcing, finance, and distribution can be communicated across the organization but each organization is likely to involve certain characteristic competences particular to its own logical geographic, competitive or industry condition (George Stonehouse, 1999,2002). Very often companies find themselves between the decision to buy or make without the being the original intension. Vendors and suppliers issue created the debate for company

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Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.4, No.8, 2013

www.iiste.org

that where they should really concentrate and to make the most of all competencies of an organization there has to be an evaluation of internal strategies and process (Probert, 1997). Business strategy of a company is the plan management uses to stake out a market position, attract and please customers, perform operations and successfully complete organization objectives (Lenox, 2013). Strategy of a company states as amongst all the possible plans and action, we will move in such direction focus on these markets and customers needs and compete in such direction by allocating our resources and energies in such and such ways while relying on particular business approaches. Business strategy is closely related with business model which is any companys plan for profits. it estimates the revenue, cash flows, profit margins and erring that will be generated by a company's service and product offerings and approaches to compete. A well established company has proven business model while a new company that is losing or making money randomly has not fixed their business model Competitive strategy of a company is a subset of its business strategy. While business strategy address all strategic issues facing a company, competitive strategy focuses on a company' plan for competing successfully against competitors. A competitive strategy that wins has an edge over competitors in attracting customers or either way. Competitive strategy also develops understanding the level of competition the particular industry has. Five forces that determine the level of competition are; threat of new competitors, Threat of substitute products, bargaining power of suppliers, bargaining power of customers and rivalry among competitors (Miltenburg, 2005). However, it is very tricky for any business unit, despite of its competitive strategy, to concurrently accomplish outstanding performance on even this limited number of dimensions, because they engross considerable trade-offs. Good performance on one dimension often refers to giving up performance on another. For example, increasing successful new products or achieving share growth repeatedly involves large marketing budgets, extensive up-front investment, high operating costs, and a splinter of profit marginsall of which reduce the firms ROI. This provides that managers should choose a competitive strategy with a view toward taking full advantage of performance on one or two dimensions, while hoping to sacrifice some level of performance on the others, at least in the short term. Over the longer term, off course, the selected strategy should assure discounted cash flows that exceed the businesss charge of capital and thereby amplify shareholder value (Mullins). The numbers of explicit strategic configurations that can be engaged by a firm are almost limitless. This can make the task of choosing a firm's strategy appear rather daunting (Tan, 2006). This task can be simplified, however, by considering the four basic types of strategies by Miles and snows Strategy Typology (Knoll, 2008) used in strategic management. From the study of business strategies by Raymond miles and Charles Slow given rise to another business strategy typology. The miles and Snow's typology is based on the concept that managers look for formulating strategies that will be matching with the external environment (Daft, 2010). Prospector or Quality based: this is based on innovation, taking risks, seeking new opportunities and growth. This strategy is well suited on a dynamic, growing environment were efficiency is of less importance than innovation. Prospective strategies can be exemplified by the success of apple and Cisco by their innovations to serve user requirements. Defender: it is in contrast with prospector, rather than taking risks and seeking new opportunities, the defender strategy is concerned with stability or even retrenchment. It emphasis on holding to old customers rather making new customers, it focuses on development of high quality products for steady customers. This can be successful when organizations are in declining industry or stable environment. This strengths company for highly profitable status while others have low return and lose money. Analyzer: the analyzer tries to maintain a stable business while innovating on the periphery; it lies between prospector and defender. Some products will aim to target current customers via efficiency while others target dynamic environments for possible growth. SONY's strategy is to safe its position in traditional electronics market and also to build business in integrated home entertainment market. business that have developed and enjoying the market domination find it difficult to balance retention of market share in the face of more agile competitors while also attempting to exploit opportunities for innovative products. Reactor: Reactors respond to environmental threats and opportunities in an ad-hoc fashion. In this strategy organization does not define goals or plans instead it takes action for occurring events. It may remains successful or failed like Kodak has failed to move along with customer choices (Daft, 2010). Choices of strategy have implementations for internal organization characteristics to determine firm's competitive approach. For an example its is likely that a company wanting to grow and invent new products will look and feel different from a company aimed on maintaining market share for long reputable products in stable business (Ulwick, 1999).

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Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.4, No.8, 2013

www.iiste.org

The overall flow of business plan is really concerned with the establishment of an organizational direction. Therefore, an organization which encourages strategic planning can be conceptually represented as a focused organization. By permitting everyone in the organization to be familiar with the aim of the strategic plan, organizational direction and motivation are supported (Harinder Singh Jagdev, 2004). Research on Examination of the dimensionality of Business Strategy Overview Examination of the dimensionality of business strategy among the manufacturing organizations by 'Dr. Hasliza Abdul-Halim, PhD' and 'Dr. Norbani Che-Ha, PhD' provided the research paper to test the dimensionality of the incorporated business strategy in the Malaysian perspective. For investigating the business strategies a sample of 113 manufacturing organizations has been chosen. Methodology This study used survey questioner via direct marketing mail, targeting to the general managers of Malaysian manufacturing organizations. Federation of Malaysian Manufacturers Directory (FMM) acts as the source of mailing list. The survey provided 12 percent response rate resulting in 113 respondents useable reaction from a suitable sample of 900 organizations. The data was restrictedly collected from large and established manufacturing organizations only with 150 employees and above and those that have been in operation for at least five years were selected. Because these organizations are assumed to have firmly developed and recognized business strategies (School, 2013). T-tests were carried out to inspect potential non-response bias. Respondents were separated into two groups based on whether they responded to the first mailing and the follow-up. The results exposed that there was no significant difference between the two groups on business strategies, organizations establishment period and size and thus there was no evident of systematic non response bias. In addition, all variables were tested for normality and linearity in order to be used for following analysis (Dr. Hasliza Abdul-Halim, 2009). Measurement: The measurement items were produced from recognized researchers. Business strategies are made up of four strategies including proactive, breadth, quality-based and reactive. In an effort to Inspect this viewpoint; the measuring items were accumulated from works of various scholars (e.g. Huang 2001; Lee and Chee 1996; Covin and Selvin 1989; Parnell and Hershey (2005) who have analyzed their trade strategies based on the typologies of Miles and Snow (1978), Porter(1980), Miller (1988) and Schuler and Jackson (1987). The feedback adopted from pre-testing was made minor changes were made to suit the language, business and cultural environment of respondents but not changing the content of the constructs. On six points semantic differential-likert scale 32 questions were made to measure business strategy. For the purpose of data construal, the descriptive phrases for the main side of the six-point scale are (1) Strongly Agree, (2) Moderately Agree, (3) Slightly Agree, (4) Slightly Disagree, (5)Moderately disagree and (6) strongly disagree. Many respondents used natural response to not chose what they prefer. Results and Conclusion: Study has been conducted to test the dimensionality of integrated business strategy scale that has been mainly used in the Western society to the Malaysian context. Results showed that, by getting a 26 items of business strategy which is capable of explaining enough variation in the construct being calculated. It is proven that the instrument is valid in content, convergent, construct and discriminate and reliable (Dr. Hasliza Abdul-Halim, 2009). Manufacturing organizations Managers can make the most of this scale in numerous conducts. Integrated business strategies were developed and functionalized based on the recognized business strategy typologies (Porter, 1980; Miles and Snow, 1978; Schuler and Jackson, 1987a; Miller, 1988). Exploratory factor analysis provided that the four-factor model was used within this model of manufacturing organizations, providing support for the construct validity of this scale. This scale allows the researcher to explore into both directions as well as the concentration of the respondents absolute observation. Moreover, it also specifies more accurately the dimension rather than allowing one pole of the scale to be understood idiosyncratically .The range of factor loadings was experimental changing from 0.445 to 0.828 and four factors explained 53.48% of total variance. Moreover, the results of the affirmative factor analysis indicated that the fit index for the four factors of integrated business strategies provided a fine fit to the statistics (Dr. Hasliza Abdul-Halim, 2009). Resulted validated planned dimensions can be utilized as an option to create strategic typologies for the manufacturing organizations. Prominently, this outcome could be used as reference and as an origin for

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Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.4, No.8, 2013

www.iiste.org

managers for a further in-depth thoughtful of the concept of business strategies in manufacturing organizations in Malaysia. There are various factors that can be measured to identify weak areas in the manufacturing organizations strategies. Upon identifying the problematic situation (e.g. managers low scored in the dimension of reactive strategy), it is worthwhile for the organizations to investigate the causes of issues leading to decision making for fixing those problems for future aspects. Evaluations using the scale can be conducted on the adoption of different types of business strategy amongst the manufacturing organizations in Malaysia from time-to-time to keep a close tab (busines, 2013). Empirical findings of the business strategy scales provide organization better understanding for rising global competition and development of competencies inside the organization. Moreover, the organizations are also aware on the various types of business strategies to adopt particularly in the hyper competitive environment Conclusion In conclusion the integrated business strategy has been presented as a reliable, valid and extremely versatile instrument for the measurement of business strategies espoused by the manufacturing organizations in Malaysia. This instrument can help with the research and development of strategic management theory and applications. The integrated business strategy scale is assumed to achieve a useful role in creating theory, perform, and research on business strategy. References busines, S. (2013, April 11). Language Means Business. Retrieved from http://www.strategy-business.com/advertorial/Rosetta-Stone-Language-Means-Business Daft. (2010). Organizational Theory and Design. Singapore: Thomas Rennie. Dr. Hasliza Abdul-Halim, P. a.-H. (2009). Examination of the dimensionality of business strategy among the manufacturing organizations. INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS , 1 (6). George Stonehouse, B. H. (1999,2002). Business Strategy (2nd Edition ed.). David Campbell, George Stonehouse and Bill Houston. Gilles, G. L. (1997). Global business strategy. International Thomson Business Plan. Harinder Singh Jagdev, A. B. (2004). Strategic decision making in modern manufacturing. Kluwer Academic Publishers. Knoll, S. (2008). Cross-Business Synergies. Germany: Gabler-Verlag. Kourdi, J. (2003,2009). Business Strategy: A Guide to Taking Your Business Forward (2nd Edition ed.). Londong: Profile Books Ltd. Lenox, M. J. (2013, March 4). Foundations of Business Strategy. Retrieved from https://www.coursera.org/course/strategy101 Miltenburg, J. (2005). Manufacturing Strategy: How To Formulate And Implement A Winning Plan (2nd Edition ed.). Productivity Press. Mullins. (n.d.). Business Strategies and Marketing Decisions. Retrieved from McGrewHill: http://answers.mheducation.com/marketing/marketing-strategy/business-strategies-and-marketing-decisions Probert, D. (1997). Developing a Make Or Buy: Strategy for Manufacturing Business. United Kingdom: The Institute of Electrical Engineers. School, I. B. (2013, April 15). How To Shepherd A Big Idea In A Big Company. Retrieved from Forbes: http://www.forbes.com/sites/iese/2013/04/15/stealthstorming-how-to-navigate-the-politics-of-innovation/?ss=str ategies-solutions Tan, H. (2006). Applying the Miles and Snow's business strategy. Pacific Rim Real Estate Society Conference (12th : 2006) (22 - 25 January 2006 : Auckland) (pp. 1-21). Auckland, New Zealand: Macquarie University. Macquarie Graduate School of Management. Ulwick, A. W. (1999). Business Strategy Formulation: Theory, Process and the Intellectual Revolution. USA: Qurourm Books.

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