Strategy Under Uncertainty: by Hugh Courtney
The article addresses the issue of being successful in a highly uncertain business environment. Some managers prefer to play it safe by adopting a wait-and-see strategy while others may invest in flexibility that allows their companies to adapt quickly as the market evolves. The companies sometimes neglect the fact that having a successful strategy depends on several factors, including their industry position, assets, or their willingness to take a risk in investing in such strategies. The paper introduced some of the tips and terminologies that could help managers facing uncertainty decide on whether to play safe or bet big. The traditional practice is to put a vision of predicted future events
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Answering this question depends on knowing specific definitions, concepts, and terminologies, including the four levels of Uncertainty, Postures and Moves, Portfolio of action, and the four-level framework.
Starting with the four levels of Uncertainty, to determine the level where your industry is at, there are few factors to consider, including current clear trends, such as market demographics, and there are other factors that are currently unknown but managers can figure them out by conducting the right analysis. The uncertainty that remains after the best possible analysis has been done is called residual uncertainty. It has been
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Executives who view uncertainty in a binary way usually tend to treat all strategy problems as if they fell into either level 1 or level 4.
The second concept that was mentioned in the article was the difference between Postures and Moves. To formulate a strategy at each level of uncertainty, some definitions should be recognized. First, there are three strategic postures a company can use vis-à-vis uncertainty, including adapting, shaping, or reserving the right to play. Second, there are also three types of moves in the portfolio of actions that can be used to carry out that strategy, including options, big bets, and no-regrets moves.
Any good strategy requires choosing a strategic posture which can be defined as the intent of a strategy related to the future and current state of an industry. Shapers tend to lead their industries toward a new structure of their own devising. On the other hand, adapters use the current industry structure and its future evolution as givens. The reserving the right to play posture is a special form of adapting as it’s only relevant in levels 2 through 4. It involves making steady investments today that let the company be in a privileged position, through either cost structures, superior information, or relationships between suppliers and
This game was an important tool on showing how a business must adapt to new situations and react to market changes. We learned how difficult it is to pick a strategy and implement it into the dynamic market.
Porter’s generic strategy typology and the Miles and Snow strategy typology are both examples of generic strategic models that a decision maker may find useful (Parnell, 2014). Both generic strategy frameworks explain generic business strategies by utilizing four different strategy types. A few of the strategies may share some common traits, however the frameworks are different in the approach they take to view and describe strategies (Parnell, 2014).
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
The six specific strategies that a firm has chosen to support its strategic decisions are;
A formal strategy must be followed in order to accomplish company goals. Managers are required to be experienced, educated, flexible, and informative in their capacity to undertake meaningful ventures. The success of companies depend on current, and creditable information which allows for a formidabl...
In the book, “Good Strategy/Bad Strategy the Difference and Why it Matters,” by Richard P. Rumelt describes the difference between the two strategies by providing different examples. The book is divided in three different parts the first part consists of “Good and Bad Strategy,” followed by the “sources of power,” and the last part consists of “Thinking like a Strategist.” In the introduction chapter Rumelt describes how good strategy looks simple and obvious not requiring much to explain. He furthermore says that such strategies do not come from some tool or chart it is however identified by a talented leader who highlights one or two critical situations. The author says the most important responsibility of a leader is to identify the biggest challenges in order to progress further and find ways to overcoming those challenges. The book is driven by lifetime experience as consultant of organizations, personal adviser, teacher and a researcher. Good strategy is concentrates on solving the problem. However, bad strategies skip problems and focus on multiple conflict demands and interest.
By looking at the unfavourable market condition, the stability strategy applied to the company which risk averse, satisfied with own performance which maintaining regular business operation. In other word to be safe they refused to change and they find that it is fine with stability strategy and does not look for other alternative.
Initially, the author lays out the definition of the Uncertainty Theory, and details two different types of uncertainty and their phases of development. McCormick (2002) uses Mishel’s direct definition of the Uncertainty Theory and states the theory is, “a cognitive state created when the person cannot adequately structure or categorize an event because of the lack of sufficient cues. Uncertainty occurs in a situation in which the decision maker is unable to assign definitive value to object or events and/or events and/or is unable to predict outcomes accurately.” (p.127).
From 1971 to 1980, the author worked as an ‘Economic Hitman’ (EHM) for the consulting firm Chas. T. Main, Inc. (MAIN). His role was “to cheat countries around the globe out of billions of dollars... to encourage world leaders to become part of a vast network that promotes U.S. commercial interests. In the end, those leaders become ensnared in a web of debt that ensures their loyalty” (p17). This was accomplished by the production of economic projections that would persuade the World Bank and other international organisations to lend money to these countries. After this money was spent on developing infrastructure in the countries in question – the contracts for which went to U.S. companies – they were left with large amounts of debts which they could not hope to repay. This in turn left these countries beholden to the United States’ economic and political interests, creating a ‘global empire’ controlled by “corporations, banks and governments” (Preface, p xiii). Perkins refers to this collusion of interests as the ‘corporatocracy’, and it is they who devised and carry out this strategy. The goal is not only to increase economic growth, both for the U.S. and the corporations themselves, but “to perpetuate and continually expand the system” (Preface, p xiii).
Business level strategies are also referred to as Generic Strategies. Identify and discuss these Generic Strategies and how firms can use these to create a competitive advantage.
Managerial decisions are an important component in achieving the objectives of the organization. The success or failure of a business depend upon the decisions made by managers. Today’s increasing complexity in the world of business brought forth greater challenges for both the firm and its managers. The rapid rate of technological and digital advance as well as greater focus product innovation and processes that influence marketing and sales techniques have contributed to the increasing complexity in the business environment.
That reminded me from the case study the director how to plays round of the company to succeed this Colombian Memorial Hospital. External control view of leadership, situations in which external forces where the leader has limited influence determine the organization 's success. Strategy, the ideas, decisions, and actions that enable a firm to succeed. competitive advantage firm 's resources and capabilities that enable it to overcome the competitive forces in its industries. Operational effectiveness, Performing similar activities better than rivals. Intend strategy, strategy in which organizational decisions are determined only by analysis. Realize strategy, strategy in which organizational decisions are determined by both analysis and unforeseen environmental developments, unanticipated resource limitations, and changes from managerial preferences. Strategy analysis studies of firms ' external and internal environments, and there with organizational vision and goals. Strategy formulation, decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage.
Uncertainty is an aspect of life that cannot be ignored, and with that uncertainty comes a level of risk. Risk can result in a horribly undesired event or it could produce unimaginable success. Which will happen is a question that can be analyzed and answered to the best of their knowledge by actuaries. They “are the analytical backbone of our society's financial security programs… and the brains behind the financial safeguards in our personal lives” (Beanactuary), so that individuals can live without worrying too much about what the future may hold.
Another form of uncertainty is self-uncertainty. It refers to an individual's insecurities as seen when trying to describe, clarify, or predict his own behavioural actions, thoughts, and feelings. This according to (Berger & Bradac, 1982) could arise as a result of an absence of significant self-knowledge.
The concept of portfolio derives from the fact that when several investments are combined – rather than putting all the eggs in the same basket. Portfolio management is art of making decisions about investment policy and collections of something’s in anticipation balancing the risk and maximize the returns. We cannot talk about portfolio returns without talking about risk because investment decisions invariably involve a trade-off between the two. Risk refers to the possibility that the actual outcome of an investment will differ from its expected outcome. The major sources of risk are: business risk and market risk.