Module 05

Introduction
• Strategic Responses
Strategic responses are the decisions that are made by a firm in
order to align the firm to environmental changes.
• According to Pearce and Robinson (1988) strategic responses are
a set of decisions and actions that result into formulation and
implementation of plans designed to achieve a firm’s objectives.
• In achieving the firm’s objectives, management is faced by a
complex and changing environment which impacts heavily on the
firm.
• To ensure continued survival, management has to come up with a
game plan in response to environmental changes which is the
firm’s strategy.
• According to Byars (1991), strategic responses are
different from operational responses. Operational
responses are concerned with efficiency of operations.
• Strategic responses on the other hand affect several
areas of operation, require top management decisions
and large amounts of money, are future-oriented and
affect long-term prosperity of the firm and most
importantly are dependent on the environment.
Therefore each firm adopts strategies that match its
environment and that are supported by the firm’s internal
capability
 Strategic Response and Environmental
Changes
• Since the turn of the millennium, the general trade environment has become more volatile,
unpredictable and very economical.
• Organizations operate in an atmosphere that is very vibrant, an environment that is always
changing with dissimilar factors inducing the decisions an organization has to make.
• To survive in a vibrant and extremely competitive business environment, different
organizations have had to engage various strategies to survive. One such strategy is the
corporate turnaround strategy.
• The starting point is identification of the root cause or causes of the crisis. Turnaround
strategies are used when a business worth resuming goes into corporate crisis (Pearce &
Robinson, 2005). While these concerns are global in nature, they manifest themselves
differently based on firm context.
• Environmental concerns are now quite prevalent in developed countries while poverty and
disease have remained prominent in developing nations. Surviving with the gradually
competitive environment has called on organizations to rethink their marketing strategies
(Pearce & Robinson, 2005).
• Environment has been 5 categorized as complex, vibrant, multi-facet and having far reaching
impact (Kazmi, 2008). As a result, of these features, the environs is composed of various
factors, events, conditions and influence, which interact with each other to make an
exclusively new set of impacts leading to continual environmental change in its shape and
charisma.
• Organizations have no option but to create an interface between
the internal and the external environment in order to succeed
and survive.
• External environment provides input for the organization which is
processed through the internal activities and the output is
channelled to the environment in form of goods and services to
satisfy specific needs.
• Organizations use their strength to exploit opportunities in the
environment to be successful.
• Within organizations exist weaknesses that inhibit the full
exploitation of the opportunities and similarly environment has
threats that equally hinder exploitation of the opportunities.
• Aosa (1992) noted that industries are responding to customer‟s demand
by becoming more innovative in their new ways of approaching the
changing environment.
• The innovation provide source of sustainable competitive edge to be afloat
and also outperform rivals. Strategies adopted are improved customer
services, credit facilities, post-paid cards and provision of convenience
goods and services.
• Increased competition coupled with technological changes has provided
organizations with new challenges when relating to external environment.
Innovation thus has become a way of attaining competitive edge in face of
the turbulent environment.
• According to Ansoff and McDonnell (1990), increased competition has
created a shift in the economic 6 environment where every organization to
remain afloat require proper strategic responses. Ansoff and McDonnell
(1990) observed that strategic responses involve changes in firms‟ strategic
behaviours to assure success in transforming future environment.
• Organizations wholly depend on environment
hence need to conduct environmental scan in
order to identify opportunities and match them
with the strength for success and survival.
• According to Pennings (2002) organizations face
significant constraints and contingencies from their
external environment and their competitiveness
depends on their ability to monitor the
environment and adapt their strategies accordingly