Definition – The concept of Strategy can be defined as the measures taken by the managers and management of the firm to attain one or more goals and objectives of the firm and business as a whole. It results in a detailed plan of the strategic process.
It can also be defined as the set of general directions for the company and its various departments and facets to accomplish the desired state of the future.
Meaning of Strategy
The concept of strategy highlights on the fact of integrating the entire gamut of the company’s activities and utilizing and distributing all of the scarce resources within the ecosystem of the business with an intention to accomplish the desired goals and objectives.
Whilst planning and making any kind of business strategy in the firm it is very important to take decisions based on the aspects such as competition in the market, tastes and preferences of the customers, nature of employees, vendors, and suppliers, needs and demands of the market, and various other factors rather than making any sort of ad-hoc decisions.
It is known as having the knowledge about the goals of the firm, events that can be and are uncertain in nature, and the consideration of the actual or the likely behavior of the stakeholders of the firm.
It works as the blueprint of the decisions of the firm showcasing goals and objectives, plans to attain the goals, key policies of the firm, business of the firm, type of human and economic organization that the firm wants to be, and the plans of the firm to contribute to its customers, employees, shareholders, and all the other stakeholders of the firm.
Features of Strategy
The strategy is quite a significant element for the firm as it facilitates to foresee the future of the firm as without a good foresight it will be impossible for the firm to deal with uncertain market events and the dynamic business environment.
Rather than focusing on the routine and general operations of the firm, it lays its emphasis on the long term developments such as new and novel methods of production, and innovation of new products and services, and new markets and target audience to tap in and explore.
It does consider the probable behavior of the customers and competitors in the market plus it also predicts the behavior of its employees.
As mentioned earlier, it is like the roadmap of the company defining the mission, vision, and objectives of the firm. Its main motive is to maximize the opportunities and strengths of the firm and minimize that of the competitors.
It bridges the gap between where the firm is where it wants to be.
Types of Strategy
1. Corporate Strategy
In the stream of business, corporate strategy is the overall and cumulative strategy of the firm that consists of the various business units that operate in several markets. It harps on the fact that how the overall firm supports and elevates the value of the various business units within the business. It is more about structuring the overall business so that all of its departments and verticals create a value that is higher in nature.
All of it can be accomplished by building the internal capabilities that are strong and capable by sharing technologies and resources in between the business units of the firm. It also helps to utilize the capital cost-effectively and nurture and enhance the brand value of the firm.
At this level of strategy, the focus is laid on the thought process of how all the units of the business will fit in together in a seamless fashion and understand how to deploy various resources in order to come up with the highest and optimum possible value at the workplace. There are various tools, theories, and platforms that help with planning and high levels of analysis.
At this level, another strategic factor that needs to be considered is the design of the organization taking care of factors such as the structure of the business, people, and all the other resources that can act as a competitive advantage in the market and help you accomplish all your strategic goals.
2. Business Unit Strategy
The business unit strategy is more focused on competing with the markets that are already quite successful and it answers the question of how to win the market gaining a competitive advantage. It is also to be noted that it is necessary to link this strategy with the objectives mentioned in the corporate level strategy.
At this level of strategy, competitive analysis along with the amalgamation of competitive intelligence can be the starting point as it is important here to figure out your core competencies and how you can make use of them to meet the needs and demands of your target audience in the market. The next step involves conducting a USP analysis in order to strengthen your competitive position in the market.
You will also need to explore the various options in order to exploit and create newer opportunities using tools such as SWOT Analysis that help you understand and gather information on your strengths, weaknesses, opportunities, and threats.
3. Team Strategy
You need all the teams of your firm to work together at an optimum level in order to execute corporate and business unit strategies quite successfully. It is to be noted that each team in the company has different contributions to make and hence, each team needs to have its own team strategy at their level. The strategies involved at these levels lead to the accomplishment of goals in the corporate and business unit strategies ensuring that the overall goals and objectives of the organization are achieved at this level as teamwork.
Here, it is quite essential to define the overall purpose and boundaries of the team. The team should use the best of practices and the platforms to meet the overall goals and objectives of the firm in a successful fashion. Team strategy has to be quite efficient and effective in nature and order.
Questions to be answered at every level of Strategy
What level of value you will create?
The strategic framework of any company or organization must come up with a strategic plan that will deliver to its targeted customers for what they are willing to pay in the market plus how the management will accomplish its targets and raise its levels of profits.
The main role of strategy is to establish the game of business and ways to win the same. It is not necessary that it has answers to all the questions but it certainly has the framework to accomplish the goals and objectives of the firm. It also establishes the plan to avoid the game that you are not playing which means the products and services that you are not going to deliver even if your customer demands the same.
Identifying the areas such as product and service offerings and target market is just the start; the framework of strategy is to come up with the business model used to create the sufficient volumes of sales, profits, and value.
What levels of profits and revenues to expect?
It answers questions such as what will it take to make your business profitable and how will you attain the expected volumes of sales.
How can you beat the competition in the market?
It is to be noted that businesses do not operate alone and there are many other new and existing players in the market from which you have to stand apart and above in the market.
Why will the customers in the market choose your products and not of your competitor even if he is offering the same type of products? What is your competitive edge and advantage in the market? Is it still valid and relevant in the market? It is quite necessary for conducting thorough market research and study at every level and facet of strategy.
Clarity is the main element of Strategy
Strategic decisions are quite big in nature as they drive factors such as the hiring of employees, investments and funding, timeframes, and business development amongst others. All of it allows every team member in the firm to work in a cohesive fashion working towards the common goals and objectives.
When we come to talk about the clarity of strategy and each of its elements, it is vital to have a proper plan and processes in place.
Pinky is an MBA in Marketing from the University of Mumbai. She loves helping people out in learning Marketing and sharing latest ideas and tactics for growing businesses.