Business brief 9

Strategy

Strategy is an outline of how a business intends to achieve its goals. The goals are the objective; the strategy sets out the route to that objective. In the early stages, business objectives are usually fairly simple: to survive and to achieve growth targets. Strategies are correspondingly simple, and are often not even committed to paper; it is enough that everyone in the company understands where it is going and how it will get there. But as the business grows, so does the need for co-ordination. Everyone in the business contributes to the execution of the strategy in some way. Many managers believe that the key to successful leadership (and a successful strategy) is articulating a l ong-term vision, sometimes known as a 'mission statement', 'strategic intent' or 'corporate purpose'. This is a long-term view of what a company should be doing and where it should be going. The mission statement should be clear and understood by everyone in the organisation. Professor Donald Suit from the London Business School suggests these three steps for setting out a company's vision: 1 Specify the industry domain: a long-term vision should define where the company competes. This helps managers and employees to sort opportunities in their domain from those that distract them from their core business. 2 Specify geographic scope: does a company consider itself local, national, regional or global? 3 Set aspirations: many companies state this in terms of global leadership or excellence. The problem, of course, is that most companies aspire to `being number one or number two'. Long-term visions offer certain advantages. They give an organisation a shared sense of direction and can motivate people to achieve the vision. Professor Suit, however, believes that too much vision can result in managers becoming fixated on a long-term goal rather than concentrating on the here and now. Take, for example, Microsoft's early vision of a world with 'a computer on every desk and in every home, running Microsoft software'. It was a vision that blinded the company to the early potential of the Internet. Management thinkers tend to fall into one of two camps, according to Simon London of the Financial Times: strategists, who believe that most companies fail because they try to sell the wrong products to the wrong customers at the wrong price; and pragmatists, who see business failure as mainly the result of poor execution: missed sales targets, poor-quality products and tactical errors. The best managers have the mental agility to deal with both the strategic and operational issues. Experts also say that television and Internet media have allowed advertisers to address precise market segments. This can actually reduce competition between companies by enabling them to concentrate on distinct sub-markets. Yet fragmentation increases the complexity of advertising. It also makes it necessary for companies to think hard about their value proposition, which is the essence of strategy. Nicholas Carr, author at the Harvard Business Review, looks at competitive advantage from the viewpoint of information technology. He argues that IT has become so diffused through the economy that it is no longer a source of differentiation; technology is now a cost of doing business. This challenges managers to think again about adding value in ways that are difficult for competitors to replicate.

Strategy and your students

In-work students will be able to discuss strategy and growth, vision and mission statements in the context of their own companies and organisations and competitors. Pre-work students may have knowledge of strategies concerning marketing, pricing and 'fast fashion' of high-street retailers such as Zara, Benetton, Gap, etc. They can also talk about the vision and purpose of the organisations where they study. All students will have general world experience of successful and unsuccessful companies, and what makes the most successful companies different from their competitors. It may also be appropriate for both types of student to discuss the ideas of certain influential management writers, such as those listed here.

Read on
Ji m Collins: Good to great, Random House Business Books, 2001 Peter Drucker: The essential Drucker.- the best of sixty years of Peter Drucker's essential writings on management, HarperCollins, 2003 Henry Mintzberg: The rise and fall ofstrategic planning, Financial Times Prentice Hall, 2000 Henry Mintzberg, Bruce Ahlstrand, Joseph B. Lampeh Strategy bites back, Financial Times Prentice Hall, 2004 Kevan Scholes, Gerry Johnson, Richard Whittington: Exploring corporate strategy. text and cases, FT Prentice Hall, 2004 Pearson Education Limited 20 06