Collective Strategy

There is a trend in strategic management toward more collaborative efforts between people at different organizations. One variation on this theme is called collective strategy, which occurs when people at different organizations with common concerns collaborate to determine how they will approach certain issues. The idea here is that strategic managers have reason to worry not only about their own company strategy but also a sense of direction for some collection of companies that have common concerns.

Managers at WordPerfect Corporation have developed a new strategy partnering with an array of hardware manufacturers and software developers to encourage high quality integration with WordPerfect products. Managers at the company believe that such partnerships will combine a partner’s technology with in-house development, which will lead to better product solutions and, hence, better products for WordPerfect’s customers. If strategic managers at these other companies plan with the same ideas in mind, then a collective strategy can informally (or tacitly) emerge among the companies.

Collective strategies can also be explicit agreements. A vivid example involves the seven Regional Bell Holding Companies created at the AT&T divestiture – NYNEX, Bell Atlantic, Bell South, Ameritech, Southwestern Bell, US West, and Pacific Telesis. Mangers at all of these companies have a common interest in ensuring that the quality and pace of improvements in the nationwide telecommunications network be comparable across the United States. To meet this common need, Bellcore was formed as a vehicle for conducing research and development in the area of telecommunications technologies. Results can be used in each of the seven regions by these companies’ networks.

Collective strategy making has one significant constraint in the United States. Federal antitrust laws prohibit laws prohibit price fixing, combinations among rivals to restrain trade, and other acts that might be agreed upon by managers at a collective of companies. Here is one more example of how webs of relationships, and potential spillover effects from a given business relationship, can make a major difference in managers’ decisions and actions. The future course of collective strategy is an open question.

New Business Services at Federal Express:

Recently Federal Express managers have been able to employ the company’s worldwide distribution advantages along with its information management and technology strengths to enter another market: logistics planning for global companies. Logistics involves managing the movement and storage of materials, parts, and finished goods from suppliers through the firm, to the customer. Federal Express’ new Business Logistics Services unit offers customers an array of business services such as purchase ordering, receipt of goods, order entry and warehousing inventory accounting shipping accounts receivable and invoice reporting.

For instance, national Semiconductor management recently awarded Federal Express its finished goods delivery business from Southeast Asia to customers worldwide. Federal Express guarantees 2 day delivery, a reduction from the manufacturer’s previous 5-18 day. Under the new contract, Federal Express will use its own Singapore warehouse to store finished goods from National semiconductor’s Southeast Asia assembly points, ship the goods, clear them through customs, and deliver them to customers. National Semiconductor will enter orders directly into Federal Express’s database and will be able to track them as they moved from inventory, packed, shipped and signed for by the customer.

This new service is a culminating example of how strategic planning and strategy implementation – the components of strategic management are not only the products of what managers envision for a given company such as Federal Express but also a product of converging pursuits. Strategic management is moving into a hopeful future with others.

Planning at an organization involves setting goals and choosing the means for people to carry out those goals for the organization. Goals are important because (1) they provide a sense of direction, (2) they focus our efforts, (3) they guide our plans and decisions, and (4) they help us evaluate our progress. Although planning is normally shown as just one of the four management functions, it is more appropriate to think of planning as a locomotive that drives a train of organizing leading and controlling activities.

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