Chapter 1: Introducing Strategy
I: What is strategy? * Strategy is the long-term direction of an organization
a) Defining strategy
Defining strategy as the long-term direction of an organization implies a more comprehensive view than some influential definitions. 1. Chandler emphasizes a logical flow from the determination of goals and objectives to the allocation of resources necessary for carrying out these goals. 2. Porter focuses on deliberate choices, difference and competition. Competitive strategy means deliberately choosing a different set of activities to deliver a unique mix of value. 3. Mintzberg uses the word ‘pattern’ to allow for the fact that strategies do not always follow a deliberately chosen and logical plan, but can emerge in more ad hoc ways.
However, this book’s definition of strategy as ‘the long-term direction of an organization has two advantages: (1) First, the long-term direction of an organization can include both deliberate, logical strategy and more incremental, emergent patterns of strategy. (2) Second, long-term can include both strategies that emphasize difference and competition and strategies that recognize the roles of cooperation and even imitation.
b) Levels of strategy
Inside an organization, strategies can exist at three main levels:
1. Corporate-level strategy is concerned with the overall scope of an organization and how value is added to the constituent businesses of the organizational whole. Corporate-level strategy issues include geographical scope, diversity of products or services, acquisitions of new businesses, and how resources are allocated between the different elements of the organization. 2. Business-level strategy is about how the individual business should compete in their particular markets. 3. Operational strategies are concerned with how the components of an organization deliver effectively the corporate- and business-level strategies in terms of resources, processes and people.
In conclusion, This link between the corporate, business and operational levels underlines the importance of integration in strategy. Each levels needs to be aligned with the others.
c) Strategy statements.
All entrepreneurs and managers should be able to summarize their organization’s strategy with a ‘strategy statement’. * Strategy statements should have three main themes: (1) The fundamental goals that the organization seeks, which typically draw on the organization’s stated mission, vision and objectives; (2) The scope or domain of the organization’s activities; (3) And, the particular advantages or capabilities it has to deliver all of these.
II: Working with Strategy * All managers are concerned with strategy to some extent or another. * Strategy is certainly a key issue for top management, but it is not just their preserve. * Middle and lower-level managers have to meet the objectives set by their organization’s strategy and observe the constraints imposed by it. * Managers have to communicate strategy to their teams, and will achieve greater performance from them the more convincing they are in doing so. * Indeed, as responsibility is increasingly decentralized in many organizations, middle and lower-level managers play a growing part in shaping strategy themselves. * Because they are closer to the daily realities of the business, lower-level managers can be a crucial source of ideas and feedback for senior management teams.
Strategy, then, is part of many managers work. However, there are also specialist strategists such as strategy consultants and in-house strategic planners.
III: The Exploring Strategy Model * The Exploring Strategy Model includes understanding the strategic position of an organization (context); assessing strategic choices