STUDY MATERIAL E2
T H E N A T U R E O F S T R A T E G I C M A N A G E M E N T
. ‘A statement of long-term goals along with a deﬁnition of the strate-gies and policies which will ensure achievement of these goals.’ CIMA:
Management Accounting: Ofﬁcial Terminology
, 2005 edition p. 54.3. Strategy is the direction and scope of an organisation over the
. Whichachieves advantage in a changing
through its conﬁguration of
resources and competences
with the aim of fulﬁlling
. (2008).4. ‘The basic characteristic of the match an organisation achieves with its environment iscalled its strategy.’ Hofer and Schendel (1978, p. 4).5. ‘Corporate strategy is the pattern of major objectives, purposes and goals and essen-tial policies or plans for achieving those goals, stated in such a way as to deﬁne whatbusiness the company is in or is to be in and the kind of company it is or is to be.’ Andrews, cited in Lynch (2006).6. ‘Corporate strategy is concerned with an organisation’s basic direction for the future:its purpose, its ambitions, its resources and how it interacts with the world in which itoperates.’Lynch (2006).
1.2.1 Common themes in strategy
From these different deﬁnitions strategy is concerned with:
The purpose and long-term direction of the business.
The scope of an organisation’s activities and actions required to meet its objectives(broad or narrow).
Meeting the challenges from the ﬁrm’s business external environment, such as competi-tors and the changing needs of customers.
Using the organisation’s internal resources and competencies effectively and building onits strengths to meet environmental challenges.
Delivering value to the people who depend on the ﬁrm, its stakeholders, such as custom-ers and shareholders, to achieve competitive advantage. Whatever interpretation is put on strategy, the strategic actions of an organisation will have widespread and long-term consequences for the position of the organisation in the market-place, its relationship with different stakeholders, and overall performance.
1.3 Levels of strategy
Strategy occurs at different levels in the organisation. Figure 1.1 provides asimpliﬁed model of the hierarchy at which different strategies are made. At thetop of the hierarchy is where corporate strategy is made; this provides the framework for the development of business strategy, which in turn provides the framework forfunctional strategies. The different levels of strategy formulation are therefore inter-dependent in that one level should be consistent with the strategies at the next level.
The corporate centre is at the apex of the organisation. It is the head ofﬁce of the ﬁrm and will contain the corporate board.