The term ‘strategy’ took its origin from the Greek word “strategia” meaning ‘art of the general’ having strictly military connotation only. Over time the term ‘’strategy” came to be applied in various other areas, especially in the business management area. Strategy is the high-level planning aimed at achieving organizational objectives and goals while making use of the available resources. Strategy is the means to achieve certain ends. Usage of strategy in the business domain provides a great incentive in bridging the gap between organizational tactics and policies. Strategy mainly comprises of strategic thinking and strategic planning. Henry Mintzberg gave an elaborate definition of strategy by defining strategy as a plan, as a pattern, as a position, as a ploy, and finally, strategy as a perspective. Strategyinstils a sense of vision and helps in determining the scope of the company in the long run. Some of the essential features of strategy are – they are action-oriented, goal oriented, futuristic, flexible and dynamic, value addition in terms of performance and productivity, purposeful, and accountability.
Strategic management is an important domain within organizational management. Employment of strategic management tool is necessary to tackle the turbulent and dynamic corporate world. The strategy has become the mediating tool to bridge the gap between an organization and its dynamic environment. Strategic management demands a certain consistency and creativity and requires several levels of planning concerning mission, vision, objective, actions, and tools. Strategic management is divided into three levels – corporate strategy, business strategy and functional strategy. Corporate strategy is the highest level within strategic management that defines organizational goals and the most suitable ways to achieve them. The major components of strategic management are – goal setting that should be visionary and futuristic, environmental scanning, strategy formulation, strategy implementation, and finally, strategy evaluation. Strategic management demands continuous planning, analysis, monitoring and assessment of essential internal and external factors that exert a considerable impact on the organization. Strategic management is, in short, the art of achieving the goals and objectives of an organization by devising, implementing and monitoring cross-functional decisions.
Strategy management primarily deals with the formulation of basic long term and short term goals and objectives for an organization. Strategic management demands a set of ongoing activities like strategic analysis – i.e., the process of conducting research about a company and also on its operating environment; strategy creation – involving gathering of data, developing mission statements, identification of key objectives and devising tactical plans; implementation, i.e., the process that puts the devised strategies into action; and evaluation, i.e., is the crucial assessment and monitoring process of the implemented strategy to gather the performance and productivity index. Michael Porter, a leading economic theorist, formulated three generic competitive strategies to deal with market competition – differentiation strategy, i.e. it involves the firm attempting to become unique in the business market by offering those products and services which have a distinctive value and appeal to the customers; cost leadership strategy involves establishing a competitive advantage by offering products and services at the lowest of prices; and integrated strategy focuses on providing valuable services and at the same time also focusing on low cost. Porter’s strategic models describe the dual ways of achieving competitive advantage – by cost or by differentiation. SWOT analysis and experience curve are some of the most important concepts associated with strategy management.
Moreover, two of the most important approaches towards strategic management are – industrial-organizational approach and sociological approach. Industrial-organizational approach adopts an external perspective for explaining that external forces outside an organization exert a dominant influence on an organization’s strategic actions and plans. The sociological approach involves guiding the organization in managing the customers and devising tactics to satisfy them in a better way.
Organizational management and planning involve a greater deal of risk-taking and resource assessment, counter moves to tackle risk, and effective utilization of resources all the while requires consistent efforts to achieve significant organizational objectives. Strategy management is crucial for an organization in formulating plans and policies and is the key to making a company successful. By making using of systematic, rational and logical approaches, strategy management helps an organization to formulate sound strategies. It helps a company to be more proactive when it comes to initiating and influencing methods for improving profitability as well as the productivity of an organization. Strategy management helps a company to avoid any sort of resistance to change and strengthens a company to manage the internal strengths and weaknesses along with developing the right attitude to handle the external opportunities and threats. Strategic management plays a key role in areas like the planning of strategic policies and plans, assessment of the strengths and weaknesses of a company, developing the skills and knowledge of the employees, effective resource allocation and utilization, and environment scanning and looking out for opportunities as well as threats.
Strategy implementation is the step followed by strategy formulation wherein the devised strategies, policies and plans are put into action. Strategy implementation is the practical application of the strategic plans to achieve organizational goals and objectives. Strategy implementation is a long process that involves strategy articulation, strategy validation, strategy communication, strategy monitoring and finally, strategy engagement. Strategy implementation mainly involves all those means that are employed for the execution of strategic plans. Strategy implementation demands the use of strategic implementation and the employment of the best policies and programs for the steady growth of the company. Strategy implementation ensures a sound allocation and utilization of resources for strategy-related activities. Almost all of the modern business corporate engage in strategy management to ensure the achieving of the desired level of productivity and performance. However, on the road to strategy management, an organization comes across various challenges both in the internal front as well as from the external front. Some of the major challenges are – orientation for globalization, emerging e-commerce and internet culture, cutthroat competition, diversification, ineffective leadership, active pressure groups, the motive for CSR and ethics, improving government- business relationships and lastly, insufficient partner buy-in.
Would you like to read more about this topic? This book might interest you: Introduction to Strategy.