Strategy

Meaning: In ancient Greece, the term Strategos was used in military science and implied the
plan to win a battle. However, in business, strategies are more about understanding the
competition and preparing a plan to match/surpass the potential of the rivals.

Definition: Strategy is an action that managers take to attain one or more of the organization’s
goals. Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed strategic
planning process”.
Features:
 Specialized plan to outperform the competitors.
 Details about how managers must respond to any change in the business environment.
 Redefines direction towards common goals.
 Reflects the concern to effectively mobilize resources.
 Maximizes the organization’s chances to achieve the set objectives.

Strategies at Different Levels of Business

In an organization, strategies can exist at all levels – right from the overall business to the
individuals working in it. Here are some common types of strategies:

1. Corporate Strategies – These are explicitly mentioned in the organization’s Mission

Statement. They involve the overall purpose and scope of the business to help it meet the
expectations of stakeholders. These are important strategies due to the heavy influence of
investors. Further, corporate strategies act as a guide for strategic decision-making
throughout the business.
2. Business Unit Strategies – These are more about how a business competes successfully
in a particular market. They involve strategic decisions about:
a. Choosing products
b. Meeting the needs of the consumers
c. Gaining an advantage over the competitors
d. Creating new opportunities, etc.
3. Operational Strategies – These are about how each part of the business is organized to
deliver the corporate and business unit level strategic direction. Therefore, these strategies
focus on the issues of resources, people, processes, etc.

Components of Strategy
The main constituents of a strategic statement are as follows:
1. Strategic Intent - Strategic intent gives a picture about what an organization must get
into immediately in order to achieve the company’s vision. It motivates the people. It
clarifies the vision of the vision of the company. Strategic intent helps management to
emphasize and concentrate on the priorities. Strategic intent is, nothing but, the
influencing of an organization’s resource potential and core competencies to achieve
what at first may seem to be unachievable goals in the competitive environment.
2. Mission Statement - Mission statement is the statement of the role by which an
organization intends to serve it’s stakeholders. It describes why an organization is
operating and thus provides a framework within which strategies are formulated. It
describes what the organization does (i.e., present capabilities), who all it serves (i.e.,
stakeholders) and what makes an organization unique (i.e., reason for existence). For
instance, Microsoft’s mission is to help people and businesses throughout the world to
realize their full potential. Wal-Mart’s mission is “To give ordinary folk the chance to
buy the same thing as rich people.” An effective vision statement must have following
features-
a. Mission must be feasible and attainable. It should be possible to achieve it.
b. Mission should be clear enough so that any action can be taken.
c. It should be inspiring for the management, staff and society at large.
d. It should be precise enough, i.e., it should be neither too broad nor too narrow.
e. It should be unique and distinctive to leave an impact in everyone’s mind.
f. It should be analytical,i.e., it should analyze the key components of the strategy.
g. It should be credible, i.e., all stakeholders should be able to believe it.
3. Vision - A vision statement identifies where the organization wants or intends to be in future
or where it should be to best meet the needs of the stakeholders. It describes dreams and
aspirations for future. For instance, Microsoft’s vision is “to empower people through great
software, any time, any place, or any device.” Wal-Mart’s vision is to become worldwide leader
in retailing. An effective vision statement must have following features-
a. It must be unambiguous.
b. It must be clear.
c. It must harmonize with organization’s culture and values.
d. The dreams and aspirations must be rational/realistic.
e. Vision statements should be shorter so that they are easier to memorize.
4. Goals and Objectives - A goal is a desired future state or objective that an organization
tries to achieve. Goals specify in particular what must be done if an organization is to
attain mission or vision. Goals make mission more prominent and concrete. They co-
ordinate and integrate various functional and departmental areas in an organization. Well-
made goals have following features-
a. These are precise and measurable.
b. These look after critical and significant issues.
c. These are realistic and challenging.
d. These must be achieved within a specific time frame.
e. These include both financial as well as non-financial components.
Objectives are defined as goals that organization wants to achieve over a period of time.
These are the foundation of planning. Policies are developed in an organization so as to
achieve these objectives. Formulation of objectives is the task of top level management.
Effective objectives have following features-
a. These are not single for an organization, but multiple.
b. Objectives should be both short-term as well as long-term.
c. Objectives must respond and react to changes in environment, i.e., they must
be flexible.
d. These must be feasible, realistic and operational.
Basis Concepts
SWOT Analysis
SWOT analysis helps enterprises assess their strengths and overcome weaknesses as well as use
opportunities to sort out threats.

 Strengths – Firms need to focus and improve their strengths in order to achieve their
goals, focusing on USP (unique selling point) and increasing quality of products/services
in competition of the competitors. Strengths are an internal factor.
 Weaknesses – This implies what the company lacks or is unable to achieve. Lower profits
in a specific department or products plus sales and internal structural problems.
Weaknesses need to be dealt with since this is also an internal factor.
 Opportunity – This is an external factor as it is directly related to the firm’s external
environment, through which these companies can gain a lot if they plan their moves
wisely. Firms can benefit from lower taxes, good market trends and a booming economy.
 Threats – Companies don’t have control over threats since they are external factors which
can create uncertainty. This has a negative impact on the business. Unrest, new
competitors, and government policies are some examples.

PEST Analysis
PEST Analysis looks at external factors and is primarily used for market research. It is used as an
alternative to SWOT analysis:

 Political – These are the external factors that influence the business environment.
Government decisions and policies affect a firm’s position and structure, Tax laws,
monetary and fiscal policies as well as reforms of labor and workforce, all influence
companies in future. These factors are important and need to be managed in order to
overcome uncertainty.
 Economical – Economical factors are the most important since it impacts business in the
long run. Inflation, interest rates, economic growth and demand/supply trends are to be
considered and analyzed effectively before planning and implementing. Economic factors
affect both consumers and enterprises.
 Social – Social factors involve the trends of population, domestic markets, cultural trends
and demographics. These factors help businesses assess the market and improve their
products/service accordingly.
 Technological – This analyses the technology trends and advancements in business
environment, innovations and advancements lowers barriers to entry plus decreased
production levels as it results in unemployment. This includes research and development
activity, automation and incentives.
Strategic Management
Meaning: The strategic management process means defining the organization’s strategy. It is
also defined as the process by which managers make a choice of a set of strategies for the
organization that will enable it to achieve better performance.

Definition: Strategic management is a continuous process that appraises the business and
industries in which the organization is involved; appraises it’s competitors; and fixes goals to
meet all the present and future competitor’s and then reassesses each strategy.

The Strategic Management Process

The strategic management process consists of three, four, or five steps depending upon how the
different stages are labeled and grouped. But all of the approaches include the same basic actions
in the same order. A brief description of these steps follows:

1. Strategic Objectives and Analysis. The first step is to define the vision, mission, and
values statements of the organization. This is done in combination with the external
analysis of the business environment (PEST) and internal analysis of the organization
(SWOT). An organization’s statements may evolve as information is discovered that
affects a company’s ability to operate in the external environment.

2. Strategic Formulation. The information from PEST and SWOT analyses should be used
to set clear and realistic goals and objectives based on the strengths and weaknesses of
the company. Identify if the organization needs to find additional resources and how to
obtain them. Formulate targeted plans to achieve the goals. Prioritize the tactics most
important to achieving the objectives. Continue to scan the external environment for
changes that would affect the chances of achieving the strategic goals.

3. Strategic Implementation. Sometimes referred to as strategic execution, this stage is

when the planning stops and the action begins. The best plans won’t make up for sloppy
implementation. Everyone in the organization should be aware of his or her particular
assignments, responsibilities and authority. Management should provide additional
employee training to meet plan objectives during this stage, as well. It should also
allocate resources, including funding. Success in this stage depends upon employees
being given the tools needed to implement the plan and being motivated to make it work.

4. Strategic Evaluation and Control. Because external and internal conditions are always
changing, this stage is extremely important. Performance measurements (determined by
the nature of the goal) will help determine if key milestones are being met. If actual
results vary from the strategic plan, corrective actions will need to be taken. If necessary,
reexamine the goals or the measurement criteria. If it becomes apparent that the strategy
is not working according to plan, then new plans need to be formulated (see Step 2) or
organizational structures adjusted. Personnel may need to be retrained or shifted to other
duties. You may even have to repeat the strategic management process from the
beginning, including the information and knowledge gained from this first attempt.