The Role of the Competitive Context in the Business Strategy-Formulation Process

Abstract

This paper deals with the relationships that exist between the competitive context of the firm and the way it formulates itsThe characteristics of the competitive context are considered by some authors 1 to be the factor that most strongly influences the type of strategy a company pursues or can formulate, and the level of profitability.2 It is also accepted 110 Donatella Depperu is a professor of business administration at

The role of context in the transformation of planned strategy into implemented strategy

“…If the academic literature is meant to elucidate the relationship that may exist between deliberate strategic planning and organizational performance, a more realistic model is required which includes the many contextual variables that affect the performance of the firm during the implementation of a strategic plan. Scattered throughout the literature there is mention of contextual internal and external variables such as organizational factors and market conditions (Ashill, Frederikson, & Davies, 2003;Blythe & Zimmerman, 2004;Depperu & Gnan, 2006;Harrington, Lemak, Reed, & Kendall, 2004;Miller, Droge, & Toulouse, 1988). As noted above, an external contextual factor such as the general state of the economy may positively or negatively affect the performance of a firm during strategy implementation.…”

“…The explicit and implicit characteristics of the organization, as well as the characteristics of the individual actors, combine to impact the processes used to formulate and implement strategy. Numerous scholars have highlighted the impact on planning brought about by internal and external context (Ashill, Frederikson, & Davies, 2003;Blythe & Zimmerman, 2004;Depperu & Gnan, 2006;Harrington, Lemak, Reed, & Kendall, 2004;Miller, Droge, & Toulouse, 1988). The sections below briefly discuss these issues and suggest how they may impact strategy formation, and the evolution of intended strategy into realized strategy, in organizations.…”

“…The greater the level of competition, the greater the level of transformation. Depperu and Gnan (2006) tested five factors that may define the competitive context within which a firm formulates its strategy. These are pressure from competitors, demand trends, changes in customer needs, pressure on prices and trends toward sector concentration.…”

“…Numerous authors have noted that executives' and managers' characteristics such as personal philosophies, self-interest, personality traits and interpretations of events are linked to strategy formation and implementation (Guth & MacMillan, 1986;Hambrick & Fredrickson, 2001;Kotey & Meredith, 1997;Parnell & Lester, 2003;Smircich & Stubbart, 1985;Walsh & Fahey, 1986). These characteristics may also include the degree of opportunity taking with which leaders may be comfortable (Depperu & Gnan, 2006). The degree of opportunity taking refers to the readiness of decision makers to quickly exploit new opportunities as they present themselves.…”

“…Flexibility inherent in the planned strategy Rigidity of the strategic plan. Source Kukalis, 1991Kukalis, 1991 Kukalis, 1991 Daake, Dawley, & Anthony, 2004Beinhocker & Kaplan, 2002Depperu & Gnan, 2006Mintzberg, 1977Kaplan and Beinhocker, 2003Andersen, 2004 Boyd & Reuning-Elliott, 1998 Ketokivi & Castaner, 2004Ketokivi & Castaner, 2004Ketokivi & Castaner, 2004Schaffer and Willauer, 2003Schaffer and Willauer, 2003De Geus, 1988Schoemaker, 1995Grant, 2003Miller and Cardinal, 1994Rudd et al, 2008…”