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Concept of Strategy

Concept of Strategy

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Published by Neetu Sharma

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Published by: Neetu Sharma on Oct 21, 2010
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07/04/2014

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 UNIT 1 CONCEPT OF STRATEGYOBJECTIVES
After reading this unit you should be able to:
 
Define strategy and understand its meaning
 
Understand the essence of strategy.
 
Distinguish b/w strategy, policy, tactics, programmes, procedures and rules.
 
Understand strategic decisions and its difference with operational decisions.
 
Understand different levels of strategy.
 
Know the importance of strategy.
STRUCTURE
1.1
 
Introduction1.2
 
Meaning of Strategy1.3
 
Nature of Strategy1.4
 
Essence of Strategy1.5
 
Strategy v/s Policy and Tactics1.6
 
Strategy v/s Programmes, Procedure, Rules1.7
 
Levels of Strategy1.8
 
Importance of Strategy1.9
 
Summary1.10
 
Key Words1.11
 
Self Assessments Questions1.12
 
Further Readings
1.1
 
INTRODUCTION
The top management of an organization is concerned with selection of a course of actionfrom among different alternatives to meet the organizational objectives. The process bywhich objectives are formulated and achieved is known as strategic management andstrategy act as the means to achieve the objective.
Strategy is the grand design or anoverall ‘plan’ which an organization chooses in order to move or react towards theset objectives by using its resources.
Strategies most often devote a general programmeof action and an implied deployment of emphasis and resources to attain comprehensiveobjectives. An organization is considered efficient and operationally effective if it ischaracterized by coordination between objectives and strategies. There has to beintegration of the parts into a whole. Strategy helps the organization to meet its uncertainsituations with due diligence. Without a strategy, the organization is like a ship without arudder. It is like a tramp, which has no particular destination to go to. Without anappropriate strategy effectively implemented, the future is always dark and hence, moreare the chances of business failure.1
 
 
1.2
 
MEANING OF STRATEGY
The word ‘strategy’ has entered in the field of management from military where it refersto apply the forces against an enemy to win a war. Originally, the word strategy has beenderived from Greek ‘strategos’ which means generalship. The word was used first timearound 400 BC. The word strategy means the art of the general to fight in war.The dictionary meaning of strategy is, “the art of so moving or disposing the instrumentof warfare as to impose upon enemy, the place time and conditions for fighting by oneself.”In management, the concept of strategy is taken in more broader terms. According
Glueck,
 
“Strategy is the unified, comprehensive and integrated plan that relates thestrategic advantage of the firm to the challenges of the environment and is designedto ensure that basic objectives of the enterprise are achieved through properimplementation process.”
 It lays stress on the following:a)
 
Unified comprehensive and integrated plan.b)
 
Strategic advantage is related to challenges of environment.c)
 
Proper implementation ensures achievement of basic objectives.Another definition of strategy is given below which also relates strategy to itsenvironment.
“ Strategy is organization’s pattern of response to its environment overa period of time to achieve its goals and mission.”
This definition lays stress on the following:a)
 
It is organization’s pattern of response to its environment.b)
 
The objective is to achieve its goals and mission.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 1960s, chandler made an attempt to define strategy as “the determination of basiclong term goals and objective of an enterprise and the adoption of the courses of actionand the allocation of resources necessary for carrying out these goals.”This definition provides for three types of actions involved in strategy:i)
 
Determination of long term goals objectivesii)
 
Adoption of courses of actioniii)
 
Allocation of resources.2
 
 Strategy As Action Exclusive of Objective Setting
This is another view in which strategy has been defined. It states that strategy is a way inwhich the firm, reacting to its environment, deploys its principal resources and marshallsits efforts in pursuit of its purpose. Michael Porter has defined strategy as
“Creation of aunique and valued position involving a different set of actives. The company that isstrategically positioned performs different activities from rivals or performs similaractivities 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 thechallenges of the environment.After considering both the views, strategy can simply be put as management’s plan forachieving its objectives. It basically includes determination and evaluation of alternativepaths to an already established mission or objective and eventually, choice of bestalternative to be adopted.
1.3
 
NATURE OF STRATEGY
Based on the above definitions, we can understand the nature of strategy. A few aspectsregarding nature of strategy is a follows:
 
Strategy is a major course of action through which an organization relates itself toits environment particularly the external factors to facilitate all actions involved inmeeting the objective of the organization.
 
Strategy is the blend of internal and external factors. To meet the opportunities andthreats provided by the external factors, internal factors are matched with them.
 
Strategy is the combination of actions aimed to meet a particular condition, to solvecertain problems or to achieve a desirable end. The actions are different fordifferent situations.
 
Due to its dependence on environmental variables, strategy may involve acontradictory action. An organization may take contradictory actions eithersimultaneously or with a gap of time. For example, a firm is engaged in closingdown of some of its business and at the same time expanding some.
 
Strategy is future oriented. Strategy actions are required for new situations whichhave not arisen before in the past.
 
Strategy requires some systems and norms for its efficient adoption in anyorganization.
 
Strategy provides overall framework for guiding enterprise thinking and action.The purpose of strategy is to determine and communicate a picture of enterprise through asystem of major objectives and policies. Strategy is concerned with a unified direction andefficient allocation of an organization’s resources. A well made strategy guides managerialaction and thought. It provides an integrated approach for the organization and aids inmeeting the challenges posed by environment.3

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