A Strategy To Align Organization And Environment Essay

This paper analyzes the marches strategic conk out exactly means, types of strategic fit, necessities to focus on strategic fit, and most importantly how well an organization eject align its visions & capabilities with the opportunities that exist in the external environment so as to achieve beak performance in the business. Strategy of hold close as an example to discuss how far it is true that effective strategic fit ensures organizations resources & capabilities and what the environment exactly necessitate from it.Key Words strategical, Fit, Strategy, Resource, Capabilities, Opportunities, Environment, Business Introduction It should be recognized that any(prenominal) strategy or management style is appropriate only in a particular coif of circumstances. Strategic fit enables an organization to operate in its particular competitive situation at peak effectiveness. It expresses the form to which an organization is matching its resources and capabilities with the opportu nities in the external environment.The matching takes place through strategy and it is consequently vital that the company hand the actual resources and capabilities to execute and support the strategy. Meaning of Strategic Fit The contingency theorists argument that performance outcomes ar maximized when a stiff achieves an alignment or fit between a firms external environment, its internal factors and its strategy has been well established in the literature (Burns & Stalker 1967 Lawrence & Lorsch 1967 Keats & Hitt, 1988).Nadler and Tushman (1979) theorized that the greater the total degree of congruence or fit between the different components, the more effective will be the organization, leading to higher levels of goal attainment, utilization of resources, and adaptation. Need for Strategic Fit Strategic fit is a quest to align the organizations operation with the needs of the market. It also involves identification of the opportunities and the action to capitalize on the o pportunities. Strategic fit can be apply actively to evaluate the current strategic situation of a company as well as opportunities such as M&A and divestitures of organizational divisions.Strategic fit is related to the Resource-based view of the firm which suggests that the key to profitability is not only through positioning and industry selection but quite an through an internal focus which seeks to utilize the unparalleled characteristics of the companys portfolio of resources and capabilities. Resources s Capabilities A unique combination of resources and capabilities can eventually be developed into a competitive advantage which the company can profit from. However, it is important to differentiate between resources and capabilities.Resources relate to the inputs to production owned by the company, whereas capabilities describe the collecting of learning the company possesses. Types of Resources Resources can be classified as tangible resources and intangible resources. T angible Resources The term tangible means capable of being touched, real or actual, rather than imaginary or visionary, explicit not vague or elusive, having actual physical existence, as real estate or chattels, and whence capable of being assigned a prize in monetary terms. Financial (Cash, securities) Physical (Location, plant, machinery) are some of the tangible resources Intangible Resources Resources that are not physical in nature are utter to be Intangible resources. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and inciter recognition are all common intangible resources in business point of view. An intangible resource can be classified as either indefinite or definite depending on the specifics of that resource.A company brand name is considered to be an indefinite resource, as it stays with the company as ache as the company continues operations. However, if a company enters a legal agreement to op erate under other companys patent, with no plans of extending the agreement, it would have a limited life and would be classified as a definite resource. Technology (Patents, copyrights) Human resources Reputation (Brands) Culture, are some of the intangible resources. CapabilitiesCapabilities are what a firm does, and represents the firms capacity to deploy resources that have been purposely integrated to achieve the desire end state. Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage. Capabilities needed for strategic fit are 1. Coordination 2. shipment 3. Competence (technology, management and leadership) 4. Communication 5. Creativity 6. Capacity management (allocation of resources)Benefits of Strategic Fit The extent to which the activities of a single organization or of organizations working in partnership complement each other in such a way as to con tribute to competitive advantage. The benefits of good strategic fit let in cost reduction, due to economies of scale, and the transfer of knowledge and skills (technological expertise, managerial know how), use of common brand name. The victory of a merger, joint venture, or strategic alliance may be affected by the degree of strategic fit between the organizations involved.Similarly, the strategic fit of one organization with another is often a factor in decisions about acquisitions, mergers, diversification, or divestment. Types of Strategic Fit 1. Market related fit 2. operate fit 3. Management fit Market Related Fit Market related fit arises when value chains of different businesses overlap so that the products can be used by same customers, marketed and promoted in similar ways, distributed through common dealers and retailers.