Chapter 1: Introducing strategy
Strategy is about the key issues for the future of organisations. There are
different definitions of strategy which all focus on distinct elements of
strategy.
"The determination of long-run goals and objectives of an enterprise and the
adoption of courses of action and the allocation of resource necessary for
carrying out these goals." -Alfred D. Chandler
Strategy is the long-term direction of an organisation
The long-term: Strategies are typically measured over years, for some
organisations a decade or more. Timescales may differ, but managers
need to avoid focusing on short-term issues of their existing activities
and have a long-term perspective.
Strategic direction: Over the years, strategies follow a long-term
direction. Sometimes a strategic direction only emerges as a coherent
pattern over time. Typically managers and entrepreneurs try to set the
direction of their strategy according to long-term objectives. The
objectives behind strategic direction always need close examination.
Organisation: Organisations involve complex relationships, both
internally and externally. This is because organisations often have
many internal and external stakeholders, people and groups that
depend on the organisation and upon which the organisation itself
depends.
Levels of strategy
Corporate-level strategy is concerned with the overall scope of an
organisation and how value is added to the constituent businesses of the
organisational whole. Being clear about corporate-level strategy is
important; determining the range of businesses to include is the basis of
other strategic decisions, such as acquisitions and alliances.
Business-level strategy is about how the individual businesses should
compete in their particular markets. This typically concerns issues such as
innovation, appropriate scale and response to competitors' moves. Where
the businesses are units within a larger organisation, business-level
strategy should clearly fit with corporate-level strategy.
Operational strategies are concerned with how the components of an
organisation deliver effectively the corporate- and business-level
strategies in terms of resources, processes and people. Successful
business strategies depend to a large extent on decisions that are taken
at the operational level.
1
, This need to link corporation, business and operational levels underlines
the importance of integration in strategy.
Strategy Statements
A strategy statement should cover the goals (mission, vision or objectives)
that the organisation seeks, the scope of the organisation's activities and
the advantages or capabilities it has to deliver all of these.
Mission: This relates to the goals, and refers to the overriding purpose of
the organisation.
Vision: This relates to the goals, and refers to the desired future state of
the organisation.
Objectives: These are more precise and ideally quantifiable statements of
the organisation's goals over some period of time. Objectives introduce
discipline to strategy.
Scope: An organisation's scope/ domain refers to three dimensions:
customers, geographical location, and extent of internal activities (vertical
integration).
Advantage: This part of the strategy statement describes how the
organisation will achieve the objectives it has set for itself in its chosen
domain.
The Exploring Strategy Model
The exploring strategy model includes understanding the strategic
position of an organisation, assessing strategic choices for the future, and
managing strategy in action.
The strategic position is concerned with the impact on strategy of the
external environment.
Environment (opportunities and threats)
Strategic capability (strengths and weaknesses)
Strategic purpose (mission, vision and objectives)
Culture (organisational culture, industry culture, nations culture)
The strategic choices involve the options for strategy in terms of both the
directions in which strategy might move and the methods by which
strategy might be pursued.
Business strategy (competing at the individual business level)
Corporate strategy and diversification (corporate-level strategy)
2
Strategy is about the key issues for the future of organisations. There are
different definitions of strategy which all focus on distinct elements of
strategy.
"The determination of long-run goals and objectives of an enterprise and the
adoption of courses of action and the allocation of resource necessary for
carrying out these goals." -Alfred D. Chandler
Strategy is the long-term direction of an organisation
The long-term: Strategies are typically measured over years, for some
organisations a decade or more. Timescales may differ, but managers
need to avoid focusing on short-term issues of their existing activities
and have a long-term perspective.
Strategic direction: Over the years, strategies follow a long-term
direction. Sometimes a strategic direction only emerges as a coherent
pattern over time. Typically managers and entrepreneurs try to set the
direction of their strategy according to long-term objectives. The
objectives behind strategic direction always need close examination.
Organisation: Organisations involve complex relationships, both
internally and externally. This is because organisations often have
many internal and external stakeholders, people and groups that
depend on the organisation and upon which the organisation itself
depends.
Levels of strategy
Corporate-level strategy is concerned with the overall scope of an
organisation and how value is added to the constituent businesses of the
organisational whole. Being clear about corporate-level strategy is
important; determining the range of businesses to include is the basis of
other strategic decisions, such as acquisitions and alliances.
Business-level strategy is about how the individual businesses should
compete in their particular markets. This typically concerns issues such as
innovation, appropriate scale and response to competitors' moves. Where
the businesses are units within a larger organisation, business-level
strategy should clearly fit with corporate-level strategy.
Operational strategies are concerned with how the components of an
organisation deliver effectively the corporate- and business-level
strategies in terms of resources, processes and people. Successful
business strategies depend to a large extent on decisions that are taken
at the operational level.
1
, This need to link corporation, business and operational levels underlines
the importance of integration in strategy.
Strategy Statements
A strategy statement should cover the goals (mission, vision or objectives)
that the organisation seeks, the scope of the organisation's activities and
the advantages or capabilities it has to deliver all of these.
Mission: This relates to the goals, and refers to the overriding purpose of
the organisation.
Vision: This relates to the goals, and refers to the desired future state of
the organisation.
Objectives: These are more precise and ideally quantifiable statements of
the organisation's goals over some period of time. Objectives introduce
discipline to strategy.
Scope: An organisation's scope/ domain refers to three dimensions:
customers, geographical location, and extent of internal activities (vertical
integration).
Advantage: This part of the strategy statement describes how the
organisation will achieve the objectives it has set for itself in its chosen
domain.
The Exploring Strategy Model
The exploring strategy model includes understanding the strategic
position of an organisation, assessing strategic choices for the future, and
managing strategy in action.
The strategic position is concerned with the impact on strategy of the
external environment.
Environment (opportunities and threats)
Strategic capability (strengths and weaknesses)
Strategic purpose (mission, vision and objectives)
Culture (organisational culture, industry culture, nations culture)
The strategic choices involve the options for strategy in terms of both the
directions in which strategy might move and the methods by which
strategy might be pursued.
Business strategy (competing at the individual business level)
Corporate strategy and diversification (corporate-level strategy)
2
