By Dr. Alfredo Anthony
What is strategy? Shivakumar (2014) argued that the word strategy is one of the most frequently used words in the business vocabulary, but even most experts cannot agree on a definition. Improperly differentiating strategic decisions with non-strategic decisions can be catastrophic to businesses. Thompson, Peteraf, Gamble, and Strickland (2013) defined strategy as a company’s “action plan for outperforming its competitors and achieving superior profitability” (p. 4). A company can best assess how strong their strategy is by determining the strength of their stated financial and strategic objectives, whether the financial objectives are being met, and whether it is gaining customers and increasing the share of the market (Thompson et al., 2013). Contrariwise, Michael Porter, a world-renowned academic in business strategy at Harvard University, defined strategy as “creating fit among a company’s activities. The success of a strategy depends on doing many things well—not just a few—and integrating among them” (Porter, 1996, p. 15). This definition suggests that the activities a company performs determine the strategy that it will implement. Regardless of which interpretation one follows, the common element between both is that companies develop strategies to generate a competitive advantage over their rivals.
A corporate strategy conveys the roadmap for businesses to achieve their goals; however, even companies with strong positions in their respective industries have essential structures and major economic or technical characteristics that can succumb to the forces of competition. It is incumbent upon owners, senior executives, and managers to understand the business operating environment and determine how best to develop the conditions that will generate a competitive advantage over rivals. Conversely, companies that do not understand the business environment and develop inadequate strategies will always experience defeat (Porter, 1979). Developing a corporate strategy gives employees a vision of the trajectory that the company wants to pursue over a specific timeframe. Alignment of the corporate strategy with the vision, mission, operations, and projects is critical to obtaining the desired results; the comprehensive yield of those factors are the heart of soul of strategy.
Strategy begins with the end in mind; that is, what does an owner or senior executive want the organization to look like in the next one, three, five or 20 years? Establishing and implementing a strategy does not serve as a panacea for generating a competitive advantage, but it can increase the probability of achieving an advantage in the market space. Attaining a competitive advantage requires one to continuously measure and assess the progress of the operations, projects, products, services, etc. that link into the overall strategy. The measurement and assessment processes are integral elements in the strategic planning cycle.
References:
Goldman, E., Cahill, T., Filho, R. P., & Merlis, L. M. (2009). Experiences that develop the ability to think Strategically. Journal of Healthcare Management, 54(6), 403-16; Available at: https://www.researchgate.net/publication/41026651_Experiences_That_Develop_the_Ability_to_Think_Strategically
Porter, M. 1996. What is Strategy? Harvard Business Review, 74 (6), 61–78
Shivakumar, R. (2014). How to tell which decisions are strategic. California Management Review, 56(3), 78-97. doi:10.1525/cmr.2014.56.3.78.
Thompson, A., Peteraf, Gamble, J., and Strickland III, A. (2013). Crafting and Executing
Strategy: Concepts and Readings. McGraw-Hill.