Strategy

The concept of strategy is central to understanding the process of strategic management.

The term
strategy is derived from the Greek word strategos, which means generalship. i.e. strategy
is art of
war, the skill in managing any affair or the use of a trick in order to succeed in some
purpose. In business
parlance, there is no definite meaning assigned to strategy. It is often used loosely to mean
a number
of things.
A strategy could be
A plan or course of action or a set of decision rules making a pattern or creating a
common
thread;
The pattern or common thread related to the organisations activities which are derived
from
the policies, objectives and goals;
Related to pursuing those activities which move an organization from its current position
to a
desired future state;
Concerned with the resources necessary for implementing a plan or following a course of
action;
Connected to the strategic positioning of a firm, making trade-offs between its different
activities
and creating a fit among these activities; and
The planned or actual coordination of the firms major goals and actions, in time and
space
that continuously co-align the firm with its environment.
In simple terms, a strategy is the means to achieve objectives. In complex terms, it may
possess all the
characteristics mentioned above.
Let us we take few definitions to understand the strategy
According to Alfred D. Chandler, strategy is the determination of the basic long-term goals
and
objectives of an enterprise and the adoption of the courses of action and the allocation of
resources
necessary for carrying out these goals.
According to William F. Glueck, strategy is a unified, comprehensive and integrated plan
designed to
assure that basic objectives of the enterprise are achieved.
According to Kenneth Andrews, strategy is the patterns of objectives, purpose, goals and
major policies
and plans for achieving these goals stated in such a way so as to define what the company
is in or is
to be and the kind of company it is or is to be.
For example, a company which was profitable in the past by making advertisement in T.V.
but in
present competitive situation, this company rethinks to give a free gift with the old product.
This new
course of action is called strategy.
1.2 Levels of Strategy
It is not uncommon to find many companies, or a group of companies, that while being
under the
same top management, are working in different business lines with regard to either
products/services,
markets or technology. Some examples are as follows :
Hindustan Levers, the venerable multinational subsidiary, organizes itself into four
businesses of
home and personal care, foods, new ventures and exports.
Finolex Group is a business conglomerate with interests in diverse areas such as
telecommunications,
petrochemicals, irrigation and education.
For such companies, a single strategy is not only inadequate but also inappropriate. The
need is for
multiple strategies at different levels. In order to segregate different units or segments, each
performing
a common set of activities, many companies organize on the basis of operating divisions or,
simply,
divisions. These divisions may also be known as profit centres or strategic business units
(SBUs). An SBU,
as defined by Sharplin, is any part of a business organization which is treated separately for
strategic
management purpose.
The following figure depicts the three levels of strategic management as structured in
practice.
Levels : S tructure : S trategy :
Corporate Office
Strategic
Business Unit
SBU
A
SBU
B
SBU
C
Business level
strategy
Functional
Level
Functional Strategy
Finance Marketing Operations Operations Operations
It is the classical corporate structure, comprises three fully operative levels: the corporate
level, the
business level, and the functional level.