Introduction to Strategy/ Strategic Management
What is Strategy?
Strategy comes from a Greek word “strategos” which means generalship i.e. art of the general.
A strategy could be-
- A plan or course of action or a set of decisions making a pattern or creating a common thread.
- A pattern or a common thread derived from the policies goals and objectives of an organization.
- The activities that move an organization from its current state to desired future state.
- The resources necessary for implementing a plan or following a course of action.
Prof. Henry Mintzberg distinguished between intended and emergent strategies. Intended strategies refer to the plans that managers develop while emergent strategies are the actions that take place over a period of time.
It is simply the means to achieve objectives. A strategy has the following components –
- It includes clear set of long term goals.
- it defines the scope of the firm(type of products)
- It is a statement of competitive advantage.
- It represents a firm`s internal activities which will allow it to achieve competitive advantage in the industry.
Therefore strategy is a large scale future oriented plan used to interact with competitive environment to achieve objectives. It provides a framework for managerial decisions. it reflects company`s awareness of the main elements of competition.
Strategic management is an art and science of formulating, implementing and evaluating cross functional decisions that enable an organization to achieve its objectives.
Strategic management is a set of managerial decisions and actions that determine the long term performance of a corporation.it includes: environment scanning, strategy formulation, strategy implementation, strategic evaluation and control.
It integrates marketing, production/operations, R&D, MIS, finance etc. to achieve organizational success.
DIMENSIONS OF STRATEGY/STRATEGIC DECISONS
- Strategic issues require top management decisions.
- Strategic issues involve the allocation of large amount of company`s resources.
- Strategic issues are likely to have a significant impact on the long term prosperity of the firm.
- Strategic issues are future oriented.
- Strategic issues usually have major multi-functional or multi-business consequences.
- Strategic issues necessitate consideration of factors in the firm’s external environment.
LEVELS OF STRATEGY
A. CORPORATE LEVEL– Board of Director, CEO, Administration and management.
B. BUSINESS LEVEL – Business and corporate managers, SBU*, SBA*
C. FUNCTIONAL LEVEL – Product managers, geographic and functional level managers
* SBU (Strategic business unit) – It is any part of the organization which is operated separately for strategic management purposes.
* SBA (Strategic business area) – A distinctive segment of the external environment in which the firm operates.