How Is Strategy Developed and Where Does Market Research Fit In?

How Is Strategy Developed and Where Does Market Research Fit In?

Strategy has been defined in many different ways by many different people. For example, Michael Porter sees strategy as the way in which a company deliberately goes about differentiating itself from the competition. Meanwhile, Henry Mintzberg defined strategy as a pattern in a stream of decisions.

A simple definition of strategy is how a business plans to achieve its goals and gain a competitive advantage in the market in which it operates.

How Is Strategy Developed?

A company’s strategy can be developed in different ways. A strategy can be deliberate or emergent.

A deliberate strategy is the strategy that the organisation plans to follow. Ansoff believes that strategic decisions are “made through an organization-wide systematic strategic planning process” (Ansoff, 1987: 505)1.

An emergent strategy is an unplanned strategy that is created as a response to unexpected opportunities and challenges.

A company’s realized strategy is the strategy an organisation actually follows. This can be a combination of its deliberate strategy and the emergent strategy.

Deliberate strategies are more suitable when a company’s environment is stable and predictable and is created from planned strategic thinking. The advantages of having a deliberate strategy are: strategy can be planned for in advance meaning that resources and budget can be set aside to execute the strategy. It provides the company with a clear direction for all employees to follow, and promotes coordination within the organisation. The disadvantages of having a deliberate strategy are that it can be difficult to change quickly if the market changes and it relies on senior managers to set goals and develop plans.

Emergent strategies are developed when it is difficult for a company to control the different variables of decision making and the environment in which the company operates. The advantages of having an emergent strategy are: it allows for more flexibility giving the company an opportunity to be agile. Emergent strategy is also seen as a continuous process allowing for continuous learning and adaption for an organisation. The main disadvantage of an emergent strategy is that it cannot be planned for in advance.

Where Does Market Research Fit In?

Market research may be part of a company’s deliberate strategy to become more informed about its market and can be used to help inform a company’s strategy. However, it can be particularly useful in informing emergent strategy.

Market research into product testing can uncover new markets and uses for a product. For example: When NyQuil were testing their product, they realised that their cold medicine kept putting people to sleep. Therefore, they repositioned their product to be a night time cold remedy.

Market research could also help to uncover emergent strategies related to improving customer experience. For example, on carrying out a customer satisfaction study a company could discover that customers are really looking for a close partnership approach. This could lead the company down the path of developing a partnership strategy with customers, something which they may not have planned beforehand.

Today, markets are changing faster than ever before, meaning that strategy needs to be continuously reviewed and updated. Market research into future market trends may help to develop a company’s emergent strategy. For example, the research could uncover potential new markets or sectors to operate in. Or, it may uncover previously unknown customer needs which lead to the development of new products.

In Conclusion

Market research is extremely important as sticking to a deliberate strategy without listening to customer feedback and understanding market changes could mean that a company’s strategy is going in the wrong direction and is misaligned with customer and market needs.

It is also important for companies to employ both deliberate and emergent strategies. Companies often develop a combination of the two. Deliberate strategies give a company a sense of purpose and control, while emergent strategies help a company learn and adapt to changes. “Organisations may pursue umbrella strategies. The broad outlines are deliberate, while the details are allowed to emerge within them.” (Mintzberg, 1994, p. 23-25; Hax & Majluf, 1996, p. 17)2,3

 

References

  • 1Ansoff, H. Igor. “The Emerging Paradigm of Strategic Behavior,” Strategic Management Journal. John Wiley & Sons, Ltd. 1987.
  • 2Mintzberg, H. (1994). The Rise and Fall of Strategic Planning. New York, NY: The Free Press.
  • 3Hax, A. C. & Majluf, N. S. (1996). The Strategy Concept and Process, A Pragmatic Approach. Upper Saddle River, NJ: Prentice Hall.

Further reading

  • Neugebauer, F., Figge, F. & Hahn, T. (forthcoming): Planned or emergent strategy making? Exploring the formation of corporate sustainability strategies, accepted for publication, Business Strategy and the Environment, DOI: 10.1002/bse.1875.
  • Strategy: Process, Content, Context 4th (fourth) Edition by de Wit, Bob, Meyer, Ron published by Cengage Learning EMEA (2010)
 
Show me:
  • Filter by Industries

  • Filter by People

  • Filter by Research Type