In Search of Strategic Consistency - A Model for Evaluation of how Stategies Support Objectives

Abstract: Developments during recent years have brought a divergence between strategic management theory and practice. While practitioners perceive an undiminished need for identification and implementation of appropriate strategic directions of companies, theorists have stressed the limitations that apply to rational strategic analysis and decision-making. Accordingly, what seems to be an important mission for research is to reduce the gap between theory and practice, e.g. by providing means of strategic management practice that allow strategic foresight and ambition while taking the emergence and unforeseeable properties of strategy into account.

Strategic decision-makers are repeatedly confronted with situations of crucial choices. Hence, there is a need for knowledge about how to evaluate strategic alternatives. One important aspect of strategies is the degree to which they support the objectives of the firm. In this thesis, the match between objectives and strategies is referred to as strategic consistency. Further, different functional strategies that are applied simultaneously must be mutually supportive, or at least not counteractive, with respect to the objectives which they are intended to support. This match between different strategies is referred to as strategic consonance. The purpose of this thesis is to develop a model that indicates the degree of consistency between strategies and objectives, and the degree of consonance among strategies of a firm. The model is called the consistency model.

A literature review has revealed a need for models that support communication and sharing of individual views in multi-personal strategizing processes, and aim not at presenting "the answer" but rather to make different options and varying opinions obvious to stakeholders and decision-makers. Consequently, the consistency model is designed to cope with complex situations of multiple and sometimes conflicting objectives, and with individual and often disparate perceptions among people involved regarding the strategy-objective relation.

The model has been tested in the case of Volvo and its automotive business areas. The perceptions among the top managers regarding the supportive ability of different strategic alternatives, with respect to three strategic issues, have been gathered. The issues studied are sourcing, partnering and globalization. The corresponding perceptions of a group of distinguished strategy professors are used as a point of reference. According to the two groups, Volvo's strategic behavior, with respect to the studied issues, is principally consistent with the objectives that are prioritized.

The main conclusions regarding the merits of the model that can be drawn from the model's application to the case of Volvo are that (1) it provides a procedure for strategy evaluation that integrates multiple criteria, and (2) it provides an opportunity for self-reflection and display of inter- and intra-group diversity. In a similar way, it is concluded that the major improvement areas are concerned with (1) a reduction of the simplification that emerges from the use of archetype strategies and of aggregate-level issues and objectives, and (2) a need for shortening of the extended application time.