What is Meant By Strategy?
Written by Rahul Kumar for Gaebler Ventures
We all have loosely played around with the term strategy in our daily lives without identifying the key features that are implicitly addressed in our usage. My aim here is to isolate the key aspects of strategy as they pertain to starting and running a business.
What is strategy?
Putting it simply, strategy refers to the action/method/trick/technique/direction one would adopt in achieving a certain objective. For business purposes, objectives are usually more precisely defined using numerical values - 10% increase in sales in the next year could be an example of a business objective (sales). Objectives differ depending upon the conditions one may find himself in and therefore would result in the adoption of varied strategies. In a football field the formation of on-field players like 4-4-2 could be a part of the winning strategy, changing interest rates by the fed or the central bank could be a part of an economic strategy.
Similarly, there could be political strategies, business strategies and so on. It is nothing but natural for strategies to differ in substance but they all share some common issues that get addressed in the process. So, in order to work on strategic substance it is imperative we understand the issues that need to be answered in our strategic choices. Let us look at this rather fundamental structure of strategy definition.
Firstly, when we think of strategy we are thinking on a long term basis. Strategies are formed keeping in mind the mission of an organization that help further decide the direction to be adopted. Mission is basically the broad reason for an organization's existence. This is the first structural block.
Secondly, strategies are crafted under the characteristics of an organization's strengths and weaknesses. The resources and competencies of a system help define and shape the multitude of strategic choices available to the management to choose from. This forms the second major structural block and alongside the first lays the basic foundation for strategy formation.
The rest is basically a web where we need to analyze the current domain of the organization's activities and possible future expanse, the culture of the organization, the values and expectations of stakeholders, the operational and business environment and the competition. Once this analysis is done, strategies can be derived that help to provide a competitive advantage in the given environment after also considering its expected future developments. This aspect is rather important as strategies cannot be altered time and again. They, however, should keep room for a little change as they have to stand the test of time and therefore need to be aligned correspondingly to dynamic environments.
To sum it up, strategies are essentially long term directions of an organization that define the manner in which competitive advantage shall be achieved, alongside the fulfillment of stakeholders' expectations, within the boundaries of the organization's strengths and weaknesses. Evidently, the process of developing strategies is a tedious one and requires concrete analysis of many inter-related factors. It is extremely complex and has an inherent uncertainty about its conception.
As strategy developer one has to be harmonized with the vagueness of the opportunity costs for a particular strategic choice and once committed, should focus entirely on the chosen strategic direction. All actions are linked to the strategy of the organization and hence a thorough analysis of various mediating factors is critical to its success. We shall look into the analysis in the following sections but for now it is important to accept and understand strategy in all its inherent individual colors.
Rahul Kumar writes about entrepreneurial topics while he completes his Masters in Management degree at the ESCP-EAP European School of Management. He completed his undergraduate studies at the Indian Institute of Technology (IIT) in Delhi, India.
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