The term strategy is one of the most commonly used words, especially in the business environment. Many organizations find it necessary to define the term and use it in their business operations. Management, business schools and inside training focus on a different strategy development intended to equip people with the knowledge they need to form and implement strategic decisions in their organizations. People find it necessary to use strategy in different settings, especially whenever they need to plan something. This includes planning anything from business and organizational issues to social life and other informal situations. Different departments within the organization have their own strategies, which might be distinct from the overall organization strategy, but which contribute towards fulfilling the goals that the organization has established. Strategy implies having the foresight, a holistic view of issues while identifying and defining goals as well as finding ways to achieve them.
In simple terms, strategy refers to the general direction that an organization takes in fulfillment of its goals. It is “an action plan designed to move an organization toward the achievement of its vision”. Although the term strategy is often used in business, it is borrowed from the military language. In the military sense, the term strategy is the action of directing troops into position, before they engage the enemy in war. This involves understanding the best position and direction to use, as well as understanding the enemy in order to enable one to become successful, once the enemy becomes involved in the war. In understanding strategy as a term used in the military, Liddel Hart defines strategy as “the art of distributing and applying military means to fulfill the ends of policy”. The same concept applies in business since strategy creates a competitive advantage. It involves the organization having the foresight of the industry and market and developing measures to ensure that it is ready to handle the competition. For an organization to develop a strategy, it has to have a policy, which will help in achieving its aim. This way, the organization is able to spearhead and pioneer the competition. Strategy acts as a link between the gaps that exist, once an organization forms a policy and tactics that it intends to use in terms of implementing the policies. Strategic decisions enable an organization to differentiate itself from the competition. It is not a short-term measure, but it is a way for the organization to ensure that it takes care of its future needs by developing long-term goals.
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Different authors have written about strategies in different ways. They have developed various perspectives and theories on strategy. Wittington identified four diverse perspectives of strategy. These include the classical perspective, evolutionary perspective, processual perspective, and the systemic perspective. The classical perspective focuses on the significance of the manager in distributing resources. According to this perspective, the manager has almost complete control in determining how to allocate resources in the organization. This perspective is guided by the rationality and self-interest of the manager because he or she is able to allocate these resources at will. The evolutionary perspective is concerned with the essential behavioral differences between distinct firms and market selection. This perspective notes the limitations of the manager or the decision-maker, which is different from that of the classical perspective. The manager may be in an executive position, but he or she is not in a position to have complete control of the resources. The manager does not get all the credit for the performance. The performance is determined by the mix of different market forces, feedback, and other events.
The processual perspective of strategy recognizes the significance of the interaction between individuals and the environment. The interaction between different individuals and the environment is crucial in determining the economic outcome of the organization. No one can take the credit for the organization’s performance, because it is not possible to predict the result of this interaction. Despite knowledge in human behavior, it is not possible to determine which actions a person will take in a particular situation. People behave differently, and they may not always think rationally; this results in unintended consequences. In addition, people have different motivations for doing something, and they use these motivations as a guide in terms of the direction they will take. The systematic perspective of strategy identifies the significance of the context when defining strategy. Not everyone will rely on the Western or Anglo-Saxon perspective of strategy. The strategy depends on the cultural or social context, educational norms, and the historical context among other factors. An organization in one country may identify its strategy in terms of accomplishing its goals, and this strategy might seem like a short-term initiative in another organization.
Mintzberg and Waters identified strategies as planned or emergent. Organizations take the time to plan their strategies. They usually have clear intentions, when developing their strategies. They implement their decisions based on the strategies they have formulated. On the other hand, it is not always possible to predict the outcome of different situations. Emergent strategies occur, when people make decisions after the feedback they receive, the opportunities they get, and after the bargaining process. They are a result of the interaction between organizations and their environment. Organizations are different, and they choose the strategies, they will use depending on their nature. In some cases, strategies are not planned or emergent. They identified that entrepreneurial, umbrella and ideological strategies lie in between the planned and emergent strategies.
Mintzberg notes that people use strategy in different ways. He observes that people implement strategies to plan how they will move from one level to the other. People tend to develop a pattern of the things they do regularly, and this enables them to develop a strategy for this effect. He adds that strategy is an organization’s perspective in developing its direction and vision. People use strategy when deciding on the products and services to offer to particular markets. The use of strategy in such a manner highlights the competitive concept of strategy. He further argues that strategies change with time, even as organizations face changes. As organizations, industries, and markets change, the strategies need to be changed accordingly in order to reflect reality. Strategies are practical, and they have to be realistic for the organization to fulfill its objectives. An organization might formulate its objective in a certain way, in an attempt to use this strategy to fulfill its goals, but it ends up changing the strategy along the way as positions and other aspects of the organization change. This requires organizations to have a flexible approach towards its business operations, especially if it intends on forming strategies.
George Steiner explains the strategy in terms of the advantage it offers a business. He notes that strategy enables the organization to respond to and counter the moves or the predicted moves of the competition. Steiner further notes that different people have different definitions and meanings of strategy. Due to this, some people formulate their strategies differently, and they have a distinct way of developing strategies in their organizations. The different meanings that people have of the term strategy mean that they have a diverse approach towards it. Some consider it the most significant and fundamental thing to their organizations, while others see it as part of the organization’s systems and processes.
Michael Porter focuses on a competitive strategy, which he sees as a plan for the organization to accomplish its objectives and the position that the organization takes in ensuring that it maintains a competitive edge. The competitive strategy involves being different in the way that one chooses to do things. Individuals and organizations that choose to do things the same way that their competitors are doing are not being strategic. Organizations have to be deliberate when deciding on the course of actions to take with the purpose of differentiating themselves from the competitors. The organization has to have a clear idea of the industry, products, and services offered, and methods that different companies use in their operations so that it can identify ways of being distinct. It also has to be innovative and embrace creativity in order to be different.
There are many different perspectives of strategy, as noted by numerous writers. However, despite the varying differences, writers seem to agree on several issues. For instance, many of them agree that strategy involves having a clearer and deeper understanding of the organization. This will enable people to make decisions that benefit the organization. In addition, being strategic does not have a time frame. Organizations try to apply long-term strategies, but this can change with time. Different writers agree that change is imminent when applying the strategy. Organizations change and this may mean changing the strategy that an organization had decided to take. On the other hand, formulating and implementing a strategy can involve changing the way an organization performs its business operations. Competition is a major element of strategy formulation, although not all writers tend to focus on it. Organizations form strategies to enable them to move forward or to progress in their industry. Forming strategies enable them to increase their competitive abilities, and this benefits the organizations since they can increase their profitability.
Forming strategies requires a leader to have strategic thinking. The strategy involves making the right choices concerning the best way to create a competitive advantage. For a person to do this, he or she has to have the right knowledge. Poor strategic thinking leads to poor decision making in business, and this can be detrimental to the organization. Therefore, a person has to be able to think strategically. This begins by asking the right strategic questions, which will lead to effective solutions for the organization. Strategic thinking involves identifying the crucial questions that will enable the organization to make a positive difference. Strategic thinking challenges norms. Leaders do not have to conduct business operations the way that others before them have done or the way that other businesses do. Strategic thinking requires one to have a different approach towards issues. This means that the formulation of a strategy is not always a rational or logical decision. Being innovative and creative requires a person to apply irrational thinking in some situations.
Strategic thinking has become more significant in modern times, especially because of globalization. Many organizations have found the need to expand globally as they seek to expand their markets. The different cultural aspects in many regions require leaders to adopt strategic management, which includes making strategic decisions. Strategic decisions affect a large part of the organization. Strategic decisions require the organization to interact with different environments. Although strategic decisions have a short-term effect, they usually reflect the direction that the organization will take, and they tend to be long-term in nature. The nature of the time that the strategic decisions have depends on the nature of the organization and on the type of industry, which the organization operates. Organizations that choose to adopt strategic decisions invest a lot of their resources to ensure that they are committed to the decision. They invest a lot of money and time in ensuring that they are committed to taking and implementing the decisions. For instance, organizations, which choose to open new stores in different countries, maybe making a strategic decision, because this involves a lot of time, money and commitment of different individuals. It is also long-term in nature, and organizations are not likely to close the stores immediately after they open.
The strategy has come to be one of the most significant business terms in modern times. The fact that many people tend to use the term so often and apply it in various situations reflects the numerous diverse meanings that the term has to different people. There are diverse perspectives concerning strategy. Forming a strategy determines the direction that the organization should take. Organizations formulate goals, and they establish policies. Then, they form different strategies, which will enable them to fulfill those goals. The type of strategies formed depends on the nature of the organization. Although many strategies tend to be long-term, some of the strategies are short-term in nature, especially those in fast-moving industries. Forming strategies and implementing them enables an organization to have a competitive edge in its industry. This is the main reason why many organizations form strategies, and why they strive to ensure that they have achieved them.