What  is  Strategy?  
Essay  –  MART  434  
Professor  Phil  Osborne                                                                                                                                             1st  April  2010    

J e n n y   C h i n g   W e n   L i u                     I D #   6 0 1 6 1 9 2  

What  is  Strategy?    

 

Essay  –  MART  43434  

 

Introduction  
  Nowadays,   strategy   is   studied   more   than   it   was   in   the   past.   Many   articles   and   books   have   been   written   since   the   fifties   about   the   meaning   of   strategy.   There   are   many   models   and   approaches   about   strategy,   in   which   we   can   find   agreements   and   disagreements  between  the  authors  that  defined  them.       According   to   the   Oxford   English   Dictionary   strategy   is   “a   plan   that   designed   to   achieve   a   particular   long-­‐term   aim,   or   the   art   of   planning   and   directing   military   activity   in   a   war   or   battle   (often   contrasted   with   tactics).”   However,   we   know   that   this   general   definition   doesn’t   satisfy   our   issues   with   strategy.   There   is   a   general   consensus  that  strategy  has  different  meanings  depending  on  the  context  in  which  it   is  used.     Most  authors  agree  that  strategy  is  about  competitive  advantage,  the  ability  to  deal   with  changes,  and  planning  and  implementing  tactics  successfully.  All  of  these  topics   are  extremely  interesting  to  every  organization  in  every  country,  which  explains  the   growing  importance  of  strategy  in  our  society  and  why  it  is  so  popular  to  discuss.     The   main   purpose   of   this   essay   is   to   define   strategy,   present   the   agreements   and   disagreements   about   it,   and   suggest   how   it   can   be   developed   by   an   organization.   During   the   discussion   below   we   will   present   the   distinctive   views   of   numerous   authors,  their  diverse  models,  and  elements  of  strategy  that  they  created.  Accenture   –  a  global  management  consulting,  technology  services  and  outsourcing  company  –   will  be  used  as  example  to  clarify  how  to  define  a  company’s  strategy.  

2    

 

What  is  Strategy?  

 

Essay  –  MART  43434  

 

Strategy:  what  is  this  about?  
  Strategy   first   became   popular   during   the   1960s   and   its   relevance   has   been   increasing.   Many   authors   and   researchers   have   been   writing   articles   and   books   about   it.   The   principle   studies   will   be   presented   and   discussed   here.   First   we   will   have  a  timeline  about  strategy  from  1950  to  2000:    

1950´  
- Area still incipient as a field of knowledge

1960´  
- SWOT Analysis - BCG Matrix - Experience curve

1970´  
- Industry structure analysis (Porter) - Strategic units of business - Formal processes for elaboration of strategies - Social responsibilities

1980´  
- Competitive strategy (Porter) - Competitive advantage, value chain (Porter) - Better asset management - Corporate culture - Stakeholders’ importance

1990´  

2000'  

 

- Competitive - Blue Ocean advantage: Strategy analysis of resources and competencies of   organization - Ethic code - Corporate governance - Sustainability - Balanced Scorecard - BSC  

       

In  1950  the  topic  strategy  was  an  incipient  area  that  started  to  be  more  discussed.  In   1960’s  the  SWOT  (Strengths,  Weaknesses,  Opportunities  and  Threats)  analysis,  BCG   (Boston   Consulting   Group)   Matrix   and   experience   curve   were   created   and   they   developed   more   discussion   about   strategy.   In   1970,   Porter   created   the   industry   structure  analysis.  Also  strategic  units  of  business  were  developed,  along  with  formal   processes   for   elaboration   strategies   and   social   responsibilities   started   to   become   important   in   a   company.   In   1980,   Porter   introduced   the   themes   of   competitive   strategy,   competitive   advantage   and   value   chain.   The   aspects   of   better   asset   management,   corporate   culture   and   the   importance   of   stakeholders   in   the  
3  

 

What  is  Strategy?    

 

Essay  –  MART  43434  

companies   were   introduced   in   most   of   the   organizations.   In   1990,   competitive   advantage,  where  analyses  the  resources  and  the  competencies  of  an  organization,   was   introduced   and   ethic   code,   corporate   governance,   sustainability   became   important   in   the   organizations.   Also,   Balanced   Scorecard   (BSC),   a   strategic   performance   management   tool,   was   created   and   expanded   in   many   organizations   in   every  country.  After  that,  many  models  were  created,  but  they  are  really  similar  with   the   BSC.   One   interesting   model   is   the   Blue   ocean   strategy   that   was   created   by   W.   Chan   Kim   and   Renée   Mauborgne   in   the   2000’s.   This   historical   account   makes   strategy  increases  its  importance  and  it  is  essential  to  have  the  understanding  of  it   for  all  work  in  a  company.     WALKER   et   al.   (2003)   defined   strategy   as   a   “fundamental   pattern   of   present   and   planned  objectives,  resource  deployments,  and  interactions  of  an  organization  with   markets,   competitors,   and   other   environment   factors.”   His   definition   suggests   that   strategy   should   identify   what   objectives   need   to   be   accomplished,   where   it   is   necessary   to   focus,   and   how   allocate   resources   and   activities   to   each   product   or   service   to   meet   environmental   opportunities   and   to   gain   competitive   advantage.   CRAVENS  &  PIERCY  (2003)  stated  that  “corporate  strategy  consists  of  the  decisions   made  by  top  management  and  the  resulting  actions  taken  to  achieve  the  objectives   set   for   the   business.   Structure   (composition   of   the   corporation),   systems   (formal   policies   and   procedures   that   enable   the   organization   to   operate)   and   process   (informal   aspects   of   organization   to   operate)   are   aspects   of   strategy   that   consider   how   organization   controls   and   coordinates   the   activities   of   various   business   units   and   staff   functions”.   JAIN   (2004)   stated   that   “strategy   in   a   firm   is   the   pattern   of   major   objectives,   purposes,   or   goals   and   essential   policies   and   plans   for   achieving   those  goals,  stated  in  such  a  way  as  to  define  what  business  the  company  is  in  or  to   be  in  and  the  kind  of  company  it  is  or  is  to  be”.    Strategy  is  about  knowing  where  we   want  to  go  and  what  is  the  best  choice  to  reach  the  goal  and  purpose  of  a  company.          

4    

 

What  is  Strategy?  

 

Essay  –  MART  43434  

  WHITTINGTON   (1993)   presents   four   basics   conceptions   about   strategy:   classic,   evolutionary,   systemic   and   procedural.   Each   of   them   has   different   implications   on   how  to  “make  strategy”.    The  assumptions  of  these  four  approaches  could  be  plotted   in  two  vectors:  results  and  processes  (see  Picture  below):    

RESULTS Maximize profits

                The   classic   vision   is   the   oldest   and   more   influential.   In   this   vision   strategy   is   a   rational   process   of   account   and   analysis,   designed   to   maximize  the  long-­‐term  advantages.  The  principle   authors  of  this  approach  are  CHANDLER,  ANSOFF   and  PORTER.     CHANDLER   (1962)   studied   the   organizational   problems   of   four   American   companies   in   the   beginning   of   the   century.   He   concluded   that   the   organizational   structure   of   the   American   companies   changed   for   a   predictable   reason   as   a   function   of  the  strategy  adopted  by  them.  For  this  author,  strategy  is  “the  determination  of   the   basic   long   term   goals   and   objectives   of   an   enterprise   and   the   adoption   of   action  
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classic
PROCESSES Deliberate

evolutionary

Emerging

systemic

procedural
Pluralistic

 

What  is  Strategy?    

 

Essay  –  MART  43434  

and   allocation   of   resources   necessary   for   carrying   out   these   goals.”   He   states   that   this  structure  was  able  to  provide  time  and  information  to  the  executives  to  dedicate   themselves   to   long   term   planning,   since   the   operational   activities   were   the   responsibility   of   the   division   manager.   ANSOFF   &   MCDONNELL   (1988)   say   that   the   company's   performance   is   optimized   when   its   external   strategy   and   exit   potential   are   set   by   the   internal   turbulence   of   the   external   environment.   Through   a   methodology   for   mapping   the   company's   current   situation   and   tools   to   implement   strategic   management,   ANSOFF   &   MCDONNELL   (1988)   propose   means   for   maximizing  the  returns  of  the  company.  Michael  Porter  was  a  pioneer  in  bringing  the   idea  of  competitive  advantage.    PORTER  (1980,  1985,  1987)  created  the  three  basic   concepts  of  perform  strategic  analysis.  The  first  concept  is  the  relative  attractiveness   of  different  sectors  in  terms  of  long-­‐term  profits.  The  sectors  vary  according  to  five   basic  “competitive  forces”:  threat  of  new  entrants,  threat  of  substitutes,  bargaining   power  of  suppliers,  bargaining  power  of  buyers  and  rivalry  among  existing  firms.  The   second  concept  is  that  a  company  can  only  take  three  defensible  positions  that  will   give  them  the  success  with  the  five  competitive  forces,  provide  a  superior  return  on   their   investments   for   its   shareholders   and   have   a   better   performance   than   its   competitors   in   the   long   run:   overall   cost   leadership,   differentiation,   and   focus   on   specific   consumer.   His   last   concept   is   that   analysis   of   the   sources   of   competitive   advantage  had  to  occur not  in  the  company  as  a  whole,  but  at  the  level  of  distinct   activities  that  a  company  has  to  design,  produce,  market,  deliver  and  support  your   product.   The   value   chain   has   five   primary   activities   (logistics   of   entry,   operations,   logistics   of   foreign,   marketing   and   sales,   services)   and   four   secondary   supports   (acquisition,  development  of  technology,  human  resource  management,  company’s   infrastructure).          
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What  is  Strategy?  

 

Essay  –  MART  43434  

                    For  CHANDLER,  PORTER  and  ANSOFF  &  MCDONNELL,  strategy  is  a  rational  process,  is   planned,  and  is  based  on  analytical  processes.  This  view  of  strategy  predominated  in   the  1960’s  to  the  1980’s.  New  forms  of  thinking  were  emerged  with  the  economic,   social  and  political  atmosphere  of  the  1990’s.     For   the   evolutionary   approaches,   the   market   ensures   the   maximization   of   profit.   Relying  on  competitive  processes  of  natural  selection,  evolutionary  theorists  do  not   propose   methods   of   rational   planning.   They   believe   that   any   method   adopted   by   managers   will   be   tested   in   the   market   and   only   those   that   have   the   best   performance  will  survive.     The   evolutionary   perspective   of   strategy   is   related   to   organizational   ecologists   seeking   to   explain   how   the   political,   social   and   economic   atmosphere   affects   the   relative   abundance   and   diversity   of   organizations.   A   research   of   this   idea   proposes   three  observations.  The  first  is  that  diversity  is  a  property  of  organizational  clusters.   The   second   is   that   organizations   often   have   difficulty   in   providing   and   implementing   changes  quickly  enough  to  environmental  demands.  The  last  one  is  that  community   organizations  rarely  appear  and  disappear  constantly.  HANNAN  &  FREEMAN  (1977)   present  the  theory  of  structural  inertia  to  explain  environmental  determinism.  This  
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What  is  Strategy?    

 

Essay  –  MART  43434  

theory   asserts   that   existing   organizations   often   have   difficulties   in   changing   their   strategy   and   structure   to   follow   the   demands   of   changing   environments.   It   emphasizes  that  most  of  the  organizational  innovations  occur  in  the  early  history  of   the   organization.   Analyzing   the   importance   of   individual   action   in   the   process   of   organizational  adaptation,  HANNAN  &  FREEMAN  (1989)  reported  that  individuals  are   responsible   for   influencing   the   success   and   survival   of   the   organization;   however,   individuals   often   can   not   determine   in   advance   what   changes   will   occur   of   change   the  strategy  or  the  structure  of  their  organizations  at  the  speed  necessary  to  monitor   environmental   change.   The   evolutionary   view   is   fatalistic   –   it   says   that   investing   in   long-­‐term  strategy  may  not  be  productive.  Organizations  maximize  their  chances  of   survival  in  the  short  term  reaching  a  perfect  fit  with  the  environment  in  which  they   are  inserted.   The  procedural  approaches  share  the  skepticism  of  evolutionists  about  the  rational   planning  strategy.  This  strategy,  in  the  view  of  the  proceedings,  is  the  way  in  which   managers  try  to  simplify  and  coordinate  a  world  that  is  very  complex  and  chaotic  for   understanding.  Some  of  the  main  theorists  of  this  approach  are  MINTZBERG  (1987)   and   HAMEL   &   PRAHALAD   (1994).   MINTZBERG   (1987)   proposes   the   metaphor   that   strategy  is  a  "craft".  In  a  complex  world  full  of  surprises,  the  strategist  must  retain   the   proximity,   perception   and   adaptability   of   a   craftsman.   The   process   of   shaping   the   strategy   is   ongoing   and   adaptive,   where   the   formation   and   implementation   of   the  strategy  are  interdependent.     MINTZBERG   (1994)   proposes   to   replace   the   strategic   planning   with   strategic   thinking.   While   strategic   planning   (classic   posture)   is   related   to   the   analysis,   strategic   thinking   is   based  on  synthesis  and  involves  intuition  and   creativity.  The  result  of  strategic  thinking  is  an   integrated  company.     For  MINTZBERG  (1994),  "the  preparation  of  the  strategy  is  a  process  that  may  follow   in  the  other  direction.  We  think  to  act,  but  also  act  to  think".  HAMEL  &  PRAHALAD  
8    

 

What  is  Strategy?  

 

Essay  –  MART  43434  

  (1994)  argue  that  companies  should  be  thought  of  as  a  set  of  core  competencies.  In   other   words,   skills   and   technologies   enable   a   company   to   provide   benefits   to   customers.  The  core  competence  can  be  defined  as  a  cumulative  basic  capacity  -­‐  if   someone   learns   something   by   doing   X   they   can   take   advantage   of   this   learning   by   creating   Y   and   Z.   To   learn   basic   skills   the   company   must   map   their   products   and   services,   seeking   to   discover   what   benefits   are   offered   to   customers.   HAMEL   &   PRAHALAD  (1994)  question  traditional  (classical)  competition  and  propose  to  replace   strategic   planning   with   strategic   architecture.   Strategic   architecture   is   not   a   detailed   plan.  It  is  an  overview  with  new  features  and  new  skills  to  leverage  existing  skills  and   reconfigure  the  interface  with  the  customer.  HAMEL  &  PRAHALAD  (1994)  reinforce   the   importance   of   synthesis   in   the   process   of   formulating   strategy.   The   successful   organizations   have   strategic   intent   -­‐   a   widely   shared   aspiration.   The   procedural   view   of   strategy   has   four   conceptions   of   it   that   are   radically   different   from   the   classical   perspective.  First,  strategy  can  be  heuristic  decision-­‐making,  a  tool  used  to  simplify   reality   into   something   that   managers   can   relate   to;   second,   plans   may   be   only   the   "sticks"  of  managers  providing  security  and  direction;  third,  strategy  can  emerge  in   retrospect,  after  the  action  has  already  happened  and  forth,  strategy  is  not  related   solely  to  the  choice  of  markets  and  the  control  performance  but  also  the  cultivation   of   internal   powers.   The   procedural   vision   sees   strategy   as   an   emergent   process   of   learning  and  adaptation  and  can  be  considered  pragmatic.   WHINTTIGTON   (1993)   supports   the   systemic   perspective   of   strategy.   The   growth   of   international   competition,   the   entry   of   non   Anglo-­‐Saxon   nations   into   the   capitalist   world   and   the   transformation   of   companies   in   a   pluralistic  environment  have  created  the  need   for   competition   and   cooperation   between   firms   in   a   pluralistic   environment,   where   history  and  society  influence  the  strategy.     The  systemic  perspective  suggests  that  the  goals  and  practices  of  strategy  depend  on   the  specific  social  system  where  it  is  being  formulated  and  that  the  strategy  reflects  
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What  is  Strategy?    

 

Essay  –  MART  43434  

this   specificity.   Systemic   theorists   insist   that   the   rational   behind   the   strategy   is   peculiar   to   specific   sociological   contexts.   The   rules   that   guide   strategy   are   derived   from   the   cultural   norms   of   society   and   are   influenced   by   the   class   and   occupation   of   the   strategist,   family   values,   and   other   social   values.   The   very   notion   of   strategy   can   be   different   in   different   cultures.   For   deterministic   cultures   (Chinese,   Islamic   fundamentalists),  the  idea  of  strategy  contains  within  it  a  proactive  that  is  difficult  to   understand.  Systemic  approaches  emphasize  that  the  processes  and  strategic  goals   reflect  the  social  systems  where  the  strategy  is  being  formulated,  and  are  influenced   by  changes  in  the  market,  in  the  state,  in  the  cultural  systems,  in  the  demography,   etc.  KNIGHTS  &  MORGAN  (1991)  argue  that  strategy  is  not  simply  a  technique  or  a   body   of   knowledge   -­‐   strategy   is   essentially   a   speech,   influenced   by   people   in   the   organization   and   is   the   influencer   of   these   same   people.   In   short   the   systemic   approach  is  relativistic.  In  other  words,  the  purpose  and  means  of  strategy  are  fully   related  to  social  systems  where  they  occur.  The  systemic  approach  is  best  suited  to   the  reality  of  the  new  millennium  -­‐  a  paradoxical  reality  –  where  there  is  an  increase   of   economic   globalization,   there   is   also   an   emphasis   on   cultural   and   social   differences.   We  cannot  say  that  one  of  these  four  different  approaches  is  right  and  the  other  one   is   wrong.   All   of   these   approaches   can   be   used   depending   on   the   context   and   situation   of   the   organization;   they   diverge   and   complement   each   other.   The   organization  should  choose  what  would  fit  best  for  them;  they  can  choose  to  follow   one  or  more  of  these  approaches.       CHAFFEE   (1985)   mentioned   three   models   of   strategy:   linear,   adaptive   and   interpretative.  The  first  one  is  focused  on  planning,  i.e.  to  reach  long-­‐term  goals.  The   adaptive   model   is   based   on   the   relationship   between   the   opportunities   and   risks   present   in   the   market   and   the   capabilities   and   resources   for   available   to   exploit   these  opportunities.  In  the  interpretative  model,  strategy  is  defined  by  metaphors  or   frames  of  reference  that  allow  companies  and  their  environment  to  be  understood   by  organizational  stakeholders.    
10    

 

What  is  Strategy?  

 

Essay  –  MART  43434  

  MINTZBERG   (1999)   created   “   the   ten   schools   of   thought”   that   can   be   used   to   categorize   the   field   of   strategic   management.   The   ten   schools   are   design   (strategy   is   a  process  of  conception),  planning  (strategy  is  a  formal  process),  position  (strategy  is   a   analytical   process),   entrepreneurial   (strategy   is   a   visionary   process),   cognitive   (strategy   is   a   mental   process),   learning   (strategy   is   a   emergent   process),   power   (strategy   is   a   process   of   negotiation),   cultural   (strategy   is   a   collective   process),   environmental   (strategy   is   a   reactive   process)   and   configuration   (strategy   is   a   process  of  transformation).                                  
11  

 

What  is  Strategy?    

 

Essay  –  MART  43434  

According   to   TREACY   &   WIERSEMA   (1993)   and   FLEURY   &   FLEURY   (2003),   any   competitive  strategy  can  be  classified  into  one  of  these  three  categories:  operational   excellence,  innovation  in  product  or  customer-­‐oriented.  The  operational  excellence   strategy   is   applied   by   companies   that   compete   in   markets   where   the   main   determinant   of   competitiveness   of   product   or   services   is   the   relationship   between   quality   and   price.   Companies   that   compete   with   Innovation   in   Product   are   continuously   investing   to   create   new   product   concepts   for   customers   and   market   segments.   The   oriented   client   strategy   is   dedicated   to   the   specific   needs   of   customers  and  seeks  to  specialize  in  developing  products,  systems  and  solutions  that   meet  their  current  and  future  demands.  The  authors  emphasize  that  the  process  of   creating  a  competitive  advantage  is  necessary  to  align  the  competitive  strategy  and   core  competence.  The  choice  of  a  strategy  is  associated  with  a  jurisdiction  in  which   the   company   must   be   "more   excellent   than   its   competitors,"   and   the   other   two   powers  should  support  the  first.       KIM   &   MAUBORGNE   (2004)   wrote   a   business   strategy   book   called   Blue   Ocean   Strategy.  This  book  is  about  the  growth  and  profits  that  organizations  can  make  by   creating   a   new   demand   in   an   unknown   market:   the   ‘blue   ocean’.   The   authors   said   that   it   “is   not   a   way   to   sustain   high   performance   by   competing   in   overcrowded   industries;   the   real   opportunity   is   to   create   blue   oceans   of   uncontested   market   space”.     A   metaphor   was   used   to   explain   their   ideas.   The   Red   ocean   is   all   of   the   industries   that   exist   today,   where   they   need   to   follow   the   competitive   rules.   The   Blue  ocean  is  all  of  the  industries  that  do  not  exist  today,  where  the  competition  is   irrelevant  and  there  are  no  rules  yet.  The  potential  of  a  market  will  be  explored  by   an   organization   using   the   blue   ocean   strategy.   One   example   of   creating   a   new   market  is  the  company  Cirque  du  Soleil  that  introduced  a  performance  of  circus  with   ballet  and  opera.        
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What  is  Strategy?  

 

Essay  –  MART  43434  

  COLLINS  &  RUKSTAD  (2008)  mentioned,   “The  strategic  sweet  spot  of  a  company   is   where   it   meets   customers   needs   in   a   way   that   rivals   can’t,   given   the   context   in   which   it   competes”.   Customers   are   the  main  goal  of  all  companies  and  they   can   reach   their   needs   by   a   strategy   to   capture   them   and   give   them   products   and  services  that  the  others  competitors   cannot.   This   can   be   related   with   the   blue   ocean   strategy,   where   the   companies  try  to  reach  what  the  others   cannot  offer  too.       Strategy   is   the   form   or   manner   determined   by   the   company   to   achieve   the   final   target   or   objective   of   it.   Through   all   the   models   studied   above,   we   realize   that   we   can  categorize  the  types  of  strategies  that  organizations  have  made  over  the  years.   We  learn  from  these  models  how  to  better  plan  our  own  strategy,  but  we  must  keep   in  mind  that  there  is  not  a  recipe  to  determine  a  strategy;  each  organization  should   analyze  their  goal  and  determine  the  strategy  would  best  suit  it.     For   example,   Accenture   is   a   global   leader   company   in   management   consulting,   technology  services  and  application  outsourcing,  exists  in  49  countries  and  has  more   than  181  thousand  employees  and  a  turnover  of  US$21.58  billion  in  the  fiscal  year   2009.  The  company  has  a  model  of  performance  based  on  building  a  broad  "business   network"   with   customers   and   partners.   They   improved   their   ability   to   provide   consulting   services   and   application   outsourcing   through   alliances   and   affiliated   companies  in  different  areas  of  expertise.  With  its  structure  and  intellectual  capital,   Accenture   finds   innovations   that   shorten   the   time   required   for   your   customers   to   reach   their   goals   and   has   experience   and   capabilities   in   all   industry   segments.   Accenture   collaborates   with   clients   to   help   them   achieve   high   performance.   The  
13  

 

What  is  Strategy?    

 

Essay  –  MART  43434  

rapid   growth   of   Accenture   is   based   on   its   search   for   a   relationship   of   long-­‐term   partnership   with   its   customers.   Then,   according   to   FLEURY   &   FLEURY   (2003),   any   competitive   strategy   can   be   classified   into   one   of   three   categories:   operational   excellence,   innovation   in   product   or   customer-­‐oriented.   Considering   Accenture,   where  I  was  an  intern  in  2009,  the  strategy  that  it  adopts  is  oriented  to  customers   because  it  is  geared  towards  the  needs  of  specific  customers  and  seeks  to  specialize   in  the  development  of  its  services,  systems  and  solutions.  Accenture  prioritizes  the   development   of   knowledge   about   each   customer   and   their   business.   Considering   WHITTINGTON’s   approach,   we   could   consider   Accenture   to   have   a   more   evolutionary   approach   than   the   others,   because   they   consider   what   the   market   (customers)   are   requiring   to   define   their   actions.   If   Accenture   tries   to   reach   the   sweet   spot,   mentioned   by   COLLINS   &   RUKSTAD   (2008),   they   will   achieve   better   their   goals.     According  to  FLEURY  &  FLEURY  (2003),  it  is  necessary  to  align  competitive  strategy   and  core  competence  to  create  a  competitive  advantage  in  a  company.  The  choice  of   strategy   (operational   excellence,   innovation   in   product   or   customer-­‐oriented)   is   associated  with  a  skill,  which  the  company  must  be  better  than  its  competitors.  The   others  two  strategy  choices  should  support  the  chosen  choice  by  the  company.       MILLS  et  al.  (2002)  stated  that  there  are  five  types  of  organizational  competencies:   essential   Skills,   organizational   skills,   support   skills,   distinctive   skills   and   dynamic   capability.   Essential   skills   are   higher   activities   and   skills   at   the   corporate   level,   which   are   key   to   the   survival   of   the   company   and   central   to   its   strategy.   Organizational   skills  are  key  activities  that  are  expected  to  be  present  in  each  company's  business.   Support   skills   are   valuable   activities   that   support   a   range   of   skills.   Distinctive   skills   are   the   skills   and   activities   that   customers   recognize   as   differentiating   it   from   its   competitors;   they   come   from   competitive   advantage.   Dynamic   capability   is   the  

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What  is  Strategy?  

 

Essay  –  MART  43434  

  ability   of   a   company   to   adapt   their   skills   through   time;   it   is   directly   related   to   important  resources  for  change.                   DAY   (1994)   agrees   that   two   capabilities   are   especially   important   to   achieve   and   sustain  a  market  orientation.  “One  capability  is  the  market  sensing  capability,  which   determines  how  well  the  organization  is  equipped  to  continuously  sense  changes  in   its  market  sensing  and  to  anticipate  the  responses  to  marketing  actions.  The  other  is   the   customer-­‐linking   capability,   which   comprises   the   skills,   abilities   and   processes   needed   to   achieve   collaborative   customer   relationships   so   individual   customer   needs   are   quickly   apparent   to   all   functions   and   well-­‐defined   procedures   are   in   place   for  responding  to  them.”   Thus,   these   capabilities   stated   by   DAY   (1994)   and   MILLS   et   al.   (2002)   should   be   defined  by  the  company  in  order  to  reach  a  better  competitive  advantage  than  other   competitors.    

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What  is  Strategy?    

 

Essay  –  MART  43434  

Conclusion  
  Defining   the   strategy   of   companies   is   a   difficult   task   for   all,   COLLINS   &   RUKSTAD   (2008),   in   their   article   Can   you   say   what   your   strategy   is?   said   that   “most   executives   cannot   articulate   the   objective,   scope   and   advantage   of   their   business   in   a   simple   statement”.     It   could   be   difficult   to   define   strategy   with   a   simple   answer   but   it   is   possible  to  define  a  strategy  when  the  goal  is  clear.     To   define   the   strategy   of   a   company   it   is   necessary   to   know   what   is   the   objective   and   purpose   of   your   company.   To   simplify,   we   know   that   strategy   means   knowing   where   we   want  to  go  and  decide  upon  how  best   to  get  there.       Every   organization   must   have   a   strategy   to   successfully   reach   their   goals   and   purposes.  Through  the  above  study,  we  realize  that  there  are  different  models  and   approaches  we  can  follow  to  define  the  best  strategy  for  our  companies.  A  company   could   define   their   strategy   through   Whittington’s   approaches   of   strategy:   classic   (analyze,  plan  and  command;  long  term  profit),  evolutionary  (the  market  determines   the   actions;   profit   depends   on   the   market),   procedural   (“follow   the   flow”;   profit   come   because   of   competences)   and   systemic   (play   with   the   locals   rules;   profit   function  of  local  rules).  Or  a  company  could  define  its  strategy  through  these  three   categories:   operational   excellence,   innovation   in   product   or   customer-­‐oriented   (TREACY   &   WIERSEMA,   1993).   It   is   essential   to   align   competitive   strategy   and   core   competence  to  achieve  competitive  advantage.  The  choice  of  strategy  is  associated   with  the  company’s  skills,  which  must  be  better  than  its  competitors’  skills  to  have   better  competitive  advantage  over  their  competitors.  

 
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What  is  Strategy?  

 

Essay  –  MART  43434  

 

References  
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Chaffee,   E.   E.   (1985)   Three   Models   of   Strategy.   Academic   Management   Review,   10   (1),  89  –  98.       Chandler,   A.   D.,   Jr.   (1962)   Strategy   and   Structure:   Chapters   in   the   History   of   the   American  Industrial  Enterprise.  Cambridge,  MA:  MIT  Press.     Day,   G.   S.   (1994)   The   Capabilities   of   Market-­‐Driven   Organizations.   Journal   of   Marketing,  58  (4),  37  –  52.       Collis,   D.   J.   &   Rukstad,   M.   G.   (2008)   Can   You   Say   What   Your   Strategy   Is?   Harvard   Business  Review,  86  (4),  82  –  90.   Cravens,  D.W.  &  Piercy,  N.F.  (2003)  Strategic  Marketing.  8th  edition.  Irwin,  McGraw-­‐ Hill.      

Fleury,   A.   &   Fleury,   M.T.   (2004)   Alinhando   Estratégia   a   Competência.   Revista   de   Administração  Empresas  (RAE),  44  (1),  44  –  57.    

Fleury,  A.  &  Fleury,  M.  T.  (2003)  Estratégias  Competitivas  e  Competências  Essenciais:   Perspectivas   para   a   Internacionalização   da   Indústria   no   Brasil.   Gestão   &   Produção,   101  (2),  129  –  144.       Gilligan,   C.   &   Wilson,   R.M.S.   (2009)   Strategic   Marketing   Planning.     2nd   edition.   Oxford,  Elsevier.    

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Hannan,   M.   T.   &   Freeman,   J.   H.   (1989)   Organizational   ecology.   Cambridge,   MA:   Harvard  University  Press.     Jain,   S.C.   &   Harley,   G.T.   (2004)   Marketing:   Planning   and   Strategy.   7th   edition.   Cincinnati,  Thomson  Custom  Publishing.    

Kim,  W.  C.  &  Mauborgne,  R.  (2004)  Blue  Ocean  Strategy.  Harvard  Business  Review,   82  (10),  76  –  85.          

Knights,  D.  &  Morgan,  G.  (1991)  Corporate  Strategy,  Organizations,  and  Subjectivity:   A  Critique.  Organization  Studies,  12  (2),  251  –  273.       Mills,   J.;   Platts,   K.;   Bourne,   M.   &   Richards,   H.   (2002)   Competing   Through   Competences.  Cambridge,  Cambridge  University  Press.   Mintzberg,  H.  (1987)  Crafting  Strategy.  Harvard  Business  Review,  65  (4),  66  –  75.     Mintzberg,  H.  (1994)  The  rise  and  fall  of  strategic  planning:  Reconceiving  the  roles  for   planning,  plans,  planners.  New  York  and  Toronto,  Free  Press.   Mintzberg,   H.   &   Lampbel,   J.   (1999)   Reflecting   on   the   strategy   process.   Sloan   Management  Review,  40  (3),  21  –  30.     Prahalad,   C.K.   &   Hamel,   G.   (1994)   Competing   for   the   future.   Boston,   Harvard   Business  School  Press.   Porter,   M.   E.   (1980)   Competitive   Strategy:   Techniques   for   Analyzing   Industries   and   Competitors.  New  York,  The  Free  Press.   Porter,  M.E.  (1985)  Competitive  Advantage.  New  York,  Free  Press.     Porter,   M.   E.   (1987)   From   Competitive   Advantage   to   Corporate   Strategy.   Harvard   Business  Review,  65  (3),  43  –  59.   Simpson,   J.   (no   date)   Oxford   English   Dictionary.   [Online]   Available   from:   http://www.oed.com/  [Accessed  16th  March  2010].  

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Essay  –  MART  43434  

  Treacy,   M.   &   Wiersema,   F.   (1993)   Customer   Intimacy   and   Other   Value   Disciplines.   Harvard  Business  Review,  71  (1),  84  –  93.    

Walker   Jr.,   O.   C.;   Mullins,   J.   W.;   Boyd   Jr.,   H.   W.   &   Larreche,   J.   (2003)   Marketing   Strategy.    5th  edition.  Irwin,  McGraw-­‐Hill.      

Whittington,  R.  (1993)  What  is  Strategy  and  Does  it  Matter?  London,  Routledge.    

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