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 …show more content…
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 …show more content…
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
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...
Ted Baker is a public for Profit Company that is in that deals with apparel. The company is a multinational company with various branches in different countries and its headquarters in the United Kingdom. The industry the company operates in is the apparel industry. Ted has various stores that have an international presence. There are 185 stores in Europe, Canada, and the USA has 97, Asia and Middle East have 64 and Australasia have nine concessions and stores. Strategic planning is essential in the efficient running and direction of activities to meet set objectives. Strategies that company uses are mostly the “means by which the” company “achieves its objectives” (Morden, 2007). The strategy was further defined by Mintzberg (1987) as consisting of five Ps, which are perspective, plan, pattern, and positioning. Perspective, in this case, is the basic idea or concept and how it is executed, plan directs or guides the activities in an organization strategically; the pattern is the way decision-making is done in a consistent manner and position entails the company’s placement in a competitive environment. Economists have used game theory, which was used by the Chinese in battle planning, strategically. They have developed economic principles using the game theory. Strategic management follows the same technique that is used in
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.
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.
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.
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).
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).
Shiao-Yen Wu, L. 1988. Business Planning Under Uncertainty: Quantifying Variability. Journal of the Royal Statistical Society. Series D (The Statistician) Special Issue: Statistical Forecasting and Decision-Making. Vol.37,Iss.2;p.141
There are three level in strategic planning: corporate level, strategic business unit (SBU) level and functional level (Kotler et al.
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.
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.
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.