Strategy - Definition and Features

The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army)
and “ago” (meaning leading/moving).

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”.

A strategy is all about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment so as to meet the present
objectives. While planning a strategy it is essential to consider that decisions are not
taken in a vaccum and that any act taken by a firm is likely to be met by a reaction from
those affected, competitors, customers, employees or suppliers.

Strategy can also be defined as knowledge of the goals, the uncertainty of events and
the need to take into consideration the likely or actual behavior of others. Strategy is the
blueprint of decisions in an organization that shows its objectives and goals, reduces
the key policies, and plans for achieving these goals, and defines the business the
company is to carry on, the type of economic and human organization it wants to be,
and the contribution it plans to make to its shareholders, customers and society at large.

Features of Strategy

1. Strategy is Significant because it is not possible to foresee the future. Without a

perfect foresight, the firms must be ready to deal with the uncertain events which
constitute the business environment.
2. Strategy deals with long term developments rather than routine operations, i.e. it
deals with probability of innovations or new products, new methods of
productions, or new markets to be developed in future.
3. Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee
behavior.
Strategic Management

Definition: The term ‘strategic management’ is used to denote a branch of

management that is concerned with the development of strategic vision, setting out
objectives, formulating and implementing strategies and introducing corrective
measures for the deviations (if any) to reach the organization’s strategic intent. It has
two-fold objectives:

 To gain competitive advantage, with an aim of outperforming the competitors, to

achieve dominance over the market.

 To act as a guide to the organization to help in surviving the changes in the business
environment.

Here, changes refer to changes in the internal environment, i.e. within the organization,
introduced by the managers such as the change in business policies, procedures etc.
and changes in the external environment as in changes in the government rules that
can affect business, competitors move, change in customer’s tastes and preferences
and so forth.

Strategic management is the ongoing planning, monitoring, analysis and assessment

of all that is necessary for an organization to meet its goals and objectives. Changes in
the business environment require organizations to constantly assess their strategies for
success.

Strategic management is the ongoing planning, monitoring, analysis and assessment of

all that is necessary for an organization to meet its goals and objectives. Changes in the
business environment require organizations to constantly assess their strategies for
success. The strategic management process helps organizations take stock of their
present situation, chalk out strategies, deploy them and analyze the effectiveness of the
implemented management strategies.
Strategic management concepts

Strategic management is predicated on an organization's clear understanding of its

mission, or purpose for existing; its vision for where it wants to be in the future; and the
values that will guide its actions. It requires a commitment to strategic planning, the
subset of business management that involves an organization's ability to set both short-
and long-term goals and plan the strategic decisions, activities and resource
allocation needed to achieve those goals.

A process for managing an institution's strategies helps organizations make logical

decisions and develop new goals quickly in order to keep pace with evolving
technology, market and business conditions. Strategic management can, thus, help an
organization gain competitive advantage, improve market share and plan for its future.

Strategic management
Example of Strategic Management
For example, a for-profit technical college wishes to increase new student enrollment
and enrolled student graduation rates over the next three years. The purpose is to make
the college known as the best buy for a student's money among five for-profit technical
colleges in the region, with a goal of increasing revenue.

In that case, strategic management means ensuring the school has funds to create
high-tech classrooms and hire the most qualified instructors. The college also invests in
marketing and recruitment and implements student retention strategies. The college’s
leadership assesses whether its goals have been achieved on a periodic basis.

Strategic management is the management of an organization’s resources to achieve its

goals and objectives. Strategic management involves setting objectives, analyzing the
competitive environment, analyzing the internal organization, evaluating strategies, and
ensuring that management rolls out the strategies across the organization.
Understanding Strategic Management
Strategic management is divided into several schools of thought. A prescriptive
approach to strategic management outlines how strategies should be developed, while
a descriptive approach focuses on how strategies should be put into practice. These
schools differ on whether strategies are developed through an analytic process, in
which all threats and opportunities are accounted for, or are more like general guiding
principles to be applied.

Business culture, the skills and competencies of employees, and organizational

structure are all important factors that influence how an organization can achieve its
stated objectives. Inflexible companies may find it difficult to succeed in a changing
business environment. Creating a barrier between the development of strategies and
their implementation can make it difficult for managers to determine whether objectives
have been efficiently met.

While an organization’s upper management is ultimately responsible for its strategy, the
strategies themselves are often sparked by actions and ideas from lower-level
managers and employees. An organization may have several employees devoted to
strategy rather than relying solely on the chief executive officer (CEO) for guidance.

Because of this reality, organizational leaders focus on learning from past strategies
and examining the environment at large. The collective knowledge is then used to
develop future strategies and to guide the behavior of employees to ensure that the
entire organization is moving forward. For these reasons, effective strategic
management requires both an inward and outward perspective.
 Strategic Management Process

1. Defining the levels of strategic intent of the business:

 Establishing vision

 Designing mission

 Setting objectives

Formulation of strategy

 Performing environmental and organizational appraisal

 Considering strategies

 Carrying out strategic analysis

 Making strategies

 Preparing strategic plan

Implementation of strategy

 Putting strategies into practice

 Developing structures and systems

 Managing behavioural and functional implementation

Strategic Evaluation and Control

 Performing evaluation
 Exercising control

 Recreating strategies

Strategic Management is all about specifying organization’s vision, mission and

objectives, environment scanning, crafting strategies, evaluation and control.

Importance of Strategic Management

 It guides the company to move in a specific direction. It defines organization’s goals

and fixes realistic objectives, which are in alignment with the company’s vision.

 It assists the firm in becoming proactive, rather than reactive, to make it analyse the
actions of the competitors and take necessary steps to compete in the market,
instead of becoming spectators.

 It acts as a foundation for all key decisions of the firm.

 It attempts to prepare the organization for future challenges and play the role of
pioneer in exploring opportunities and also helps in identifying ways to reach those
opportunities.

 It ensures the long-term survival of the firm while coping with competition and
surviving the dynamic environment.

 It assists in the development of core competencies and competitive advantage, that

helps in the business survival and growth.

The basic purpose of strategic management is to gain sustained-strategic

competitiveness of the firm. It is possible by developing and implementing such
strategies that create value for the company. It focuses on assessing the opportunities
and threats, keeping in mind firm’s strengths and weaknesses and developing
strategies for its survival, growth and expansion.
Strategic management process has following four steps:

1. Environmental Scanning- Environmental scanning refers to a process of

collecting, scrutinizing and providing information for strategic purposes. It helps in
analyzing the internal and external factors influencing an organization. After
executing the environmental analysis process, management should evaluate it
on a continuous basis and strive to improve it.
2. Strategy Formulation- Strategy formulation is the process of deciding best
course of action for accomplishing organizational objectives and hence achieving
organizational purpose. After conducting environment scanning, managers
formulate corporate, business and functional strategies.
3. Strategy Implementation- Strategy implementation implies making the strategy
work as intended or putting the organization’s chosen strategy into action.
Strategy implementation includes designing the organization’s structure,
distributing resources, developing decision making process, and managing
human resources.
4. Strategy Evaluation- Strategy evaluation is the final step of strategy
management process. The key strategy evaluation activities are: appraising
internal and external factors that are the root of present strategies, measuring
performance, and taking remedial / corrective actions. Evaluation makes sure
that the organizational strategy as well as it’s implementation meets the
organizational objectives.

These components are steps that are carried, in chronological order, when creating a
new strategic management plan. Present businesses that have already created a
strategic management plan will revert to these steps as per the situation’s requirement,
so as to make essential changes.
 Components of Strategic Management Process

A Mission Statement defines the company’s business, its objectives and its approach to
reach those objectives. A Vision Statement describes the desired future position of the
company. Elements of Mission and Vision Statements are often combined to provide a
statement of the company’s purposes, goals and values. However, sometimes the two
terms are used interchangeably.

Usage and satisfaction among survey respondents

How Mission and Vision Statements work:

Typically, senior managers will write the company’s overall Mission and Vision
Statements. Other managers at different levels may write statements for their particular
divisions or business units. The development process requires managers to:

 Clearly identify the corporate culture, values, strategy and view of the future by
interviewing employees, suppliers and customers
 Address the commitment the firm has to its key stakeholders, including customers,
employees, shareholders and communities
 Ensure that the objectives are measurable, the approach is actionable and the vision is
achievable
 Communicate the message in clear, simple and precise language
 Develop buy-in and support throughout the organization

RELATED TOPICS HOW BAIN CAN HELP

 Corporate Values Statements  Strategy

 Cultural Transformation  Results Delivery®
 Strategic Planning  Bain Behavior Change Approach

Companies use Mission and Vision Statements to:

Internally

 Guide management’s thinking on strategic issues, especially during times of significant

change
 Help define performance standards
 Inspire employees to work more productively by providing focus and common goals
 Guide employee decision making
 Help establish a framework for ethical behavior

Externally

 Enlist external support

 Create closer linkages and better communication with customers, suppliers and alliance
partners
 Serve as a public relations tool

SWOT analysis

A SWOT analysis is one of the types of strategic management frameworks used by

organizations to build and test their business strategies. A SWOT analysis identifies and
compares the strengths and weaknesses of an organization with the
external opportunities and threats of its environment. The SWOT analysis clarifies the
internal, external and other factors that can have an impact on an organization's goals
and objectives.
The SWOT process helps leaders determine whether the organization's resources and
abilities will be effective in the competitive environment within which it has to function
and to refine the strategies required to remain successful in this environment.