Strategy formulation and implementation at AAR group of companies

Abstract

For a firm to survive and prosper, a strategy is important. Strategy helps a firm create a fit between the organization and its environment in an effort to enable the organization adapt to its turbulent environment. How the strategy is planned, formulated and implemented is therefore important. Strategy is the direction and scope of the organization over the long term, which enables it to achieve advantage through configuration of its resources within the changing environment, to meet the needs of markets and fulfill the expectations of the stakeholders. An organization's strategy deals with the game plan for moving the company into an attractive business position and building a sustainable competitive advantage. A company's actual strategy usually turns out to be more or less than the planned strategy as new strategy features are added and others are deleted in response to newly emerging environmental conditions. This study was about the strategy formulation and implementation process at AAR group of companies. The group was started in the year 1984 and operated in a relatively stable environment for 15 years up to year 1999 when adverse environmental challenges started emerging. By year 2003, the environmental factors had become severe and the group realized that it had to review its strategy if it was to survive. The objective of the study was to document the process that AAR group undertook in formulating and implementing the strategy. The study further sought to interrogate any challenges encountered in that process. The study was conducted as a case study by carrying out in-depth interviews with the Chief Executive Officer, The Managing director, five (5) Senior Managers, five (5) middle level managers and ten (10) employees at lower support level. The findings confirmed that the group formulated strategy and has continued to implement those strategies. This study established that key to strategy formulation at AAR Group was a clear identification and formulation of the organizations Vision, Mission, Core Values and strategic objectives. The organization used participatory approach where all staff were involved in this process. This was particularly key in ensuring buy in by all staff. The organization further successfully analyzed and understood both the external and internal environment that it was operating in as a basis of determining proper fits between the group's capabilities and the environment. The product of this exercise was a clearly spelt out understanding of what the organization needed to do to prosper in that environment having considered both the internal capabilities and the external conditions. The next step was then to implement the plans that had been formulated. Key to successful strategy implementation at AAR Group were nine (9) components; rules and policies consistent to the strategic objectives, goals and measurements were created, organization core values were embedded, there was consistent training, products offering was enriched, there was change in both the physical structure and organization structure. There were three major challenges of strategy formulation and implementation at AAR Group. Firstly, the participatory approach was challenging especially in having the lower level staff participate fully in the process. The other challenge was in achieving successful embedment of the new core values. The biggest challenge though was in setting up and implementing performance measure and reward system that was understood by everyone and that would drive performance to predetermined objectives. To date, this remains a challenge to successful strategy implementation. This study was limited by scarcity of resources. It would have been desirable to interview a larger number of lower level employees. Furthermore, because the topic under research was broad since it incorporated both strategy formulation process and implementation process, the research was not adequately detailed. Further detailed study should be conducted on specific aspects of strategy formulation and implementation at AAR Group separately to give a more detailed account of each process. In addition, studies should be 'carried out to establish whether other Health Management Organizations have formulated and implemented strategies and how this was done.