The Concept of Strategy

The top management of an organization is concerned with the selection of a course of action from among different alternatives to meet the organizational objectives. The process by which objectives are formulated and achieved is known as strategic management and strategy acts as the means to achieve the objective. Strategy is the grand design or an overall ‘plan’ which an organization chooses in order to move or react towards the set of objectives by using its resources. Strategies most often devote a general programme of action and an implied deployed of emphasis and resources to attain comprehensive objectives. An organization is considered efficient and operationally effective if it is characterized by coordination between objectives and strategies. There has to be integration of the parts into a complete structure. Strategy helps the organization to meet its uncertain situations with due diligence. Without a strategy, the organization is like a ship without a rudder. It is like a tramp, which has no particular destination to go to. Without an appropriate strategy effectively implemented, the future is always dark and hence, more are the chances of business failure.

Meaning of Strategy

The word ‘strategy’  has entered in the field of management from the military services where it refers to apply the forces against an enemy to win a war. The word “strategy” came from the two Greek words i.e. Stratus (Army) and Agein (to lead). The Greeks felt that the strategy making is one of the responsibilities of the Army General. This concept today adopted even in the business. Even around the same time, the Chinese General Sun Dzu who wrote about strategy also suggested that the strategy making is one of the responsibilities so the leader. One of the earliest definitions of Strategy is traced to the ancient Greek writer Xenophon who said “Strategy knows the business you proposed to carry out.” This definition implies that the knowledge of the business as strategy.

The dictionary meaning of strategy is “the art of so moving or disposing the instrument of warfare as to impose upon enemy, the place time and conditions for fighting by one self”

In management, the concept of strategy is taken in  more broader terms. In simple terms, strategy means looking at the long-term future to determine what the company wants to become, and putting in place a plan, how to get there.

Strategy is both art and science. Strategy is an art because it requires imagination, sensitive thinking, and an capability to visualize the future, and to encourage and connect those who will apply the strategy. Strategy is science because it requires analytical skills, the ability to organize and analyze information and take well knowledgeable decisions. Without a strategy, an organization is meaningless and weak to changes in the business environment. Strategy acts as some kind of a guidepost for a company’s ongoing development. Strategy provides a direction for the company and indicates what must be done to survive, grow and be profitable.

Definitions of Strategy

Kennth Andrews defined strategy as “the pattern of major objectives, purposes or goals and essential policies or plans for achieving the goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.” This definition of strategy emphasizes on purpose and the means by which purpose will be achieved. It also emphasizes on the values and the cultures that the company stand for.

Kenichi Ohmae defines strategy as “the way in which a corporation endeavors to different itself positively from its competitors, using its relative strengths to better satisfy customer needs.” Ohmae’s definition highlights the competitive aspect of strategy and the strengths required to satisfy customer needs. This definition thus aims at customer satisfaction as the driver of the strategy.

According to Glueck, “Strategy is the unified, comprehensive and integrated plan that relates the strategic advantage of the firm to the challenges of the environment and is designed to ensure that basic objectives of the enterprise are achieved  through  proper implementation process”

This definition of strategy lays stress on the following:

  1. Unified comprehensive and integrated plan.
  2. Strategic advantage related to challenges of environment.
  3. Proper implementation ensuring achievement of basic  objectives.

Another definition of strategy is given below which also relates strategy to its environment. “Strategy is organization’s pattern of response to its environment over a period of time to achieve its goals and mission”

This definition lays stress on the following:

  1. It is organization’s pattern of response to its environment.
  2. The objective is to achieve its goals and missions.

However, various experts do not agree about the precise scope of strategy. Lack of consensus has lead to two broad categories of definitions: strategy as action inclusive of objective setting and strategy as action exclusive of objective setting.

Strategy as Action, inclusive of Objective Setting

In 1960’s, Chandler made an attempt to define strategy as “the determination of basic long term goals and objective of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals”

This definition provides for three types of actions involved in strategy :

  1. Determination of long term goals and objectives
  2. Adoption of courses of action
  3. Allocation of resources

Strategy as Action, exclusive of Objective Setting 

This is another view in which strategy has been defined. It  states that strategy is a way in which the firm, reacting to its environment, deploys its principal resources and marshal’s its efforts in pursuit of its purpose. According to Johnson & Scholes strategy is “the direction and scope of an organisation over the long period, ideally which seeks to match its resources to its changing environment and in particular its markets, customers or clients so as to meet stakeholder’s expectations”. Michael Porter has defined strategy as “Creation of a unique and valued position involving a different set of activities. The company that is strategically positioned performs different activities from rivals or performs similar activities in different ways”

The people who believe this version of the definition call strategy a unified, comprehensive and integrated plan relating to the strategic advantages of the firm to the challenges of the environment

After considering both the views, strategy can  simply be put as management’s plan for achieving its objectives. It basically includes determination and evaluation of alternative paths to an already established mission or objective and eventually, choice of best alternative to be adopted

Nature of Strategy

Based on the above definitions, we can understand the nature of strategy. A few aspects regarding nature of strategy are as follows:

  • Strategy is a major course of action through which an organization relates itself to its environment particularly the external factors to facilitate all actions involved in meeting  the objectives of the organization.
  • Strategy is the blend of internal and external factors. To meet the opportunities and threats provided by the external factors, internal factors are matched with them.
  • Strategy is the combination of actions aimed to meet a particular condition, to solve certain problems or to achieve a desirable end. The actions are different for different situations.
  • Due to its dependence on environmental variables, strategy may involve a contradictory action. An organization may take contradictory actions either simultaneously or with a gap of time. For example, a firm is engaged in closing down of some of its business and at the same time expanding some.
  • Strategy is future oriented. Strategic actions are required for new situations which have not arisen before in the past.
  • Strategy requires some systems and norms for its efficient adoption in any organization.
  • Strategy provides overall  framework for guiding enterprise thinking and action.

The purpose of strategy is to determine and communicate a picture of enterprise through a system of major objectives and policies. Strategy is concerned with a unified direction and efficient allocation of an organization’s resources. A well made strategy guides managerial action and thought. It provides an integrated approach for the organization and aids in meeting the challenges posed by environment.

Essence of Strategy

Strategy, according to a survey conducted in 1974, includes the determination and evaluation of alternative paths to an already established mission or objective and eventually, choice of the alternative to be adopted. Strategy is characterized by four important aspects:

Process of Strategy

There are mainly two processes which are generally used in the strategy management.

1. Prescriptive Strategic Process

“A prescriptive strategy is one whose objective is defined in progress and whose main elements have been developed before the strategy commences.” Such an approach usually starts with an analysis of the outside environment and the resources of the company. The objectives of the organisation are then developed from this. There then follows the generation of strategic options to achieve the objectives, from which one (or more) may be chosen. The chosen option is then implemented.

Advantages of Prescriptive Strategic Process

  • Clear objectives provide focus on the Business.
  • Objectives can be Translated into Targets against which performance can be measured and monitored.
  • Resources can be allocated to specific objectives and efficiency can be judged.
  • The approach is logical and rational.
  • It structures complex information, defines and focuses business objectives, establishes controls, and sets targets that performance can be measured.

Criticisms of Prescriptive Strategic Process

  • There are commonly major Difference between designed and realized strategy.
  • Rigid Planning in a dynamic and turbulent business environment can be uncreative.
  • Rigid loyalty to plans may mean missed business opportunities.
  • It is possible and better to go without the short-term benefit in order to obtain the long-term good.
  • The chief executive has the information and authority to choose between options.
  • It is overly prescriptive because the business environment can be very disordered and complex.

2. Emergent Strategic Process

An emergent or Learning strategy does not have the similar set objective. The whole process is more experimental with various possible outcomes depending on how matters extend. “An emergent strategy is one whose final objective is undecided and whose elements are developed during the course of its life, as the strategy proceeds.” Thus the early stages of emergent strategy may be similar to prescriptive strategy – analysis of the environment and resources. But then the process becomes more round, knowledge and experimental.

Advantages of Emergent Strategic Process

  • Emergent strategy increases flexibility in a chaotic environment, allowing the business to respond to pressure and develop opportunities.
  • Changing Stakeholder connections can mean that strategy is often, of necessity, emergent.
  • Consistent with actual practice in organisations.
  • Motivation issue of customer is consider.
  • Experimentation is allow to take place of strategy.
  • Opportunity for inclusion of culture and politics of organisation.

Criticisms of Emergent Strategic Process

  • There is a danger of “strategic drift” as objectives is not clear.
  • It is more difficult to assess performance as targets are less well defined.
  • Impracticable to expect board members to allow business to function without objectives.
  • Group resources need to be allocated between demands of competing operating companies.
  • Abdicates responsibilities for final decisions by involving political groups and individuals.
  • Removes aspects of rational thinking from decision making.
  • Management control becomes unclear as actions to be undertaken are not planned in advance.
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