Strategy

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For other uses, see Strategy (disambiguation).

Strategy

Strategy topics

Major dimensions[hide]

Strategy • Strategic management

Military strategy • Maritime strategy

Strategic planning • Game theory

Strategic studies • Strategic thinking

Major thinkers[hide]

Michael Porter • Rita Gunther McGrath

Bruce Henderson • Gary Hamel

Candace A. Yano • C. K. Prahalad

Jim Collins • Liddell Hart

Carl von Clausewitz • Sun Tzu

Julian Corbett • Alfred Thayer Mahan

J.C. Wylie • Adrian Slywotzky

Sharon Oster • Chris Zook

Henry Mintzberg • Clay Christensen

Concepts[hide]

Business model

Competitive advantage • Experience curve

Value chain • Portfolio theory

Core competency • Generic strategies

Uberisation

Sharing economy

Frameworks and tools[hide]

SWOT • Five forces

Balanced scorecard

PEST analysis • Growth–share matrix

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Strategy (from Greek στρατηγία stratēgia, "art of troop leader; office of general, command,
generalship"[1]) is a high-level plan to achieve one or more goals under conditions of uncertainty. In
the sense of the "art of the general", which included several subsets of skills including "tactics",
siegecraft, logistics etc., the term came into use in the 6th century CE in East Roman terminology,
and was translated into Western vernacular languages only in the 18th century. From then until the
20th century, the word "strategy" came to denote "a comprehensive way to try to pursue political
ends, including the threat or actual use of force, in a dialectic of wills" in a military conflict, in which
both adversaries interact.[2]

Strategy is important because the resources available to achieve these goals are usually limited.
Strategy generally involves setting goals, determining actions to achieve the goals, and mobilizing
resources to execute the actions[3][4]. A strategy describes how the ends (goals) will be achieved by
the means (resources). Strategy can be intended or can emerge as a pattern of activity as the
organization adapts to its environment or competes[5][3]. It involves activities such as strategic
planning and strategic thinking.[6]

Henry Mintzberg from McGill University defined strategy as a pattern in a stream of decisions to
contrast with a view of strategy as planning,[7][4] while Henrik von Scheel defines the essence of
strategy as the activities to deliver a unique mix of value – choosing to perform activities differently
or to perform different activities than rivals. [8] while Max McKeown (2011) argues that "strategy is
about shaping the future" and is the human attempt to get to "desirable ends with available means".
Dr. Vladimir Kvint defines strategy as "a system of finding, formulating, and developing a doctrine
that will ensure long-term success if followed faithfully."[9] Complexity theorists define strategy as
the unfolding of the internal and external aspects of the organization that results in actions in a
socio-economic context.[10][11][12]

Contents

1 Components of strategy

2 Formulating and implementing strategy

3 Military theory

4 Management theory

5 Strategies in game theory

6 See also

7 References

8 Further reading

Components of strategy
Professor Richard P. Rumelt described strategy as a type of problem solving in 2011. He wrote that
good strategy has an underlying structure he called a kernel. The kernel has three parts: 1) A
diagnosis that defines or explains the nature of the challenge; 2) A guiding policy for dealing with the
challenge; and 3) Coherent actions designed to carry out the guiding policy.[13] President Kennedy
illustrated these three elements of strategy in his Cuban Missile Crisis Address to the Nation of 22
October 1962:

Diagnosis: "This Government, as promised, has maintained the closest surveillance of the Soviet
military buildup on the island of Cuba. Within the past week, unmistakable evidence has established
the fact that a series of offensive missile sites are now in preparation on that imprisoned island. The
purpose of these bases can be none other than to provide a nuclear strike capability against the
Western Hemisphere."

Guiding Policy: "Our unswerving objective, therefore, must be to prevent the use of these missiles
against this or any other country, and to secure their withdrawal or elimination from the Western
Hemisphere."

Action Plans: First among seven numbered steps was the following: "To halt this offensive buildup a
strict quarantine on all offensive military equipment under shipment to Cuba is being initiated. All
ships of any kind bound for Cuba from whatever nation or port will, if found to contain cargoes of
offensive weapons, be turned back." [14]

Rumelt wrote in 2011 that three important aspects of strategy include "premeditation, the
anticipation of others' behavior, and the purposeful design of coordinated actions." He described
strategy as solving a design problem, with trade-offs among various elements that must be arranged,
adjusted and coordinated, rather than a plan or choice.[13]

Formulating and implementing strategy

Strategy typically involves two major processes: formulation and implementation. Formulation
involves analyzing the environment or situation, making a diagnosis, and developing guiding policies.
It includes such activities as strategic planning and strategic thinking. Implementation refers to the
action plans taken to achieve the goals established by the guiding policy.[6][13]

Bruce Henderson wrote in 1981 that: "Strategy depends upon the ability to foresee future
consequences of present initiatives." He wrote that the basic requirements for strategy
development include, among other factors: 1) extensive knowledge about the environment, market
and competitors; 2) ability to examine this knowledge as an interactive dynamic system; and 3) the
imagination and logic to choose between specific alternatives. Henderson wrote that strategy was
valuable because of: "finite resources, uncertainty about an adversary's capability and intentions;
the irreversible commitment of resources; necessity of coordinating action over time and distance;
uncertainty about control of the initiative; and the nature of adversaries' mutual perceptions of each
other."[15]

Military theory
Main article: Military strategy

Subordinating the political point of view to the military would be absurd, for it is policy that has
created war...Policy is the guiding intelligence, and war only the instrument, not vice-versa.

On War by Carl von Clausewitz

In military theory, strategy is "the utilization during both peace and war, of all of the nation's forces,
through large scale, long-range planning and development, to ensure security and victory" (Random
House Dictionary).[7]

The father of Western modern strategic study, Carl von Clausewitz, defined military strategy as "the
employment of battles to gain the end of war." B. H. Liddell Hart's definition put less emphasis on
battles, defining strategy as "the art of distributing and applying military means to fulfill the ends of
policy".[16] Hence, both gave the pre-eminence to political aims over military goals. U.S. Naval War
College instructor Andrew Wilson defined strategy as the "process by which political purpose is
translated into military action."[17]

Eastern military philosophy dates back much further, with examples such as The Art of War by Sun
Tzu dated around 500 B.C.[18]

Management theory

Main article: Strategic management

The essence of formulating competitive strategy is relating a company to its environment.

Michael Porter[19]

Modern business strategy emerged as a field of study and practice in the 1960s; prior to that time,
the words "strategy" and "competition" rarely appeared in the most prominent management
literature.[20][21] Alfred Chandler wrote in 1962 that: "Strategy is the determination of the basic
long-term goals of an enterprise, and the adoption of courses of action and the allocation of
resources necessary for carrying out these goals."[22] Michael Porter defined strategy in 1980 as the
"...broad formula for how a business is going to compete, what its goals should be, and what policies
will be needed to carry out those goals" and the "...combination of the ends (goals) for which the
firm is striving and the means (policies) by which it is seeking to get there."[19]

Henry Mintzberg described five definitions of strategy in 1998:

Strategy as plan – a directed course of action to achieve an intended set of goals; similar to the
strategic planning concept;

Strategy as pattern – a consistent pattern of past behavior, with a strategy realized over time rather
than planned or intended. Where the realized pattern was different from the intent, he referred to
the strategy as emergent;
Strategy as position – locating brands, products, or companies within the market, based on the
conceptual framework of consumers or other stakeholders; a strategy determined primarily by
factors outside the firm;

Strategy as ploy – a specific maneuver intended to outwit a competitor; and

Strategy as perspective – executing strategy based on a "theory of the business" or natural extension
of the mindset or ideological perspective of the organization.[23]

Strategies in game theory

Main article: Strategy (game theory)

In game theory, a strategy refers to the rules that a player uses to choose between the available
actionable options. Every player in a non-trivial game has a set of possible strategies to use when
choosing what moves to make.

A strategy may recursively look ahead and consider what actions can happen in each contingent
state of the game—e.g. if the player takes action 1, then that presents the opponent with a certain
situation, which might be good or bad, whereas if the player takes action 2 then the opponents will
be presented with a different situation, and in each case the choices they make will determine their
own future situation.

Strategies in game theory may be random (mixed) or deterministic (pure). Pure strategies can be
thought of as a special case of mixed strategies, in which only probabilities 0 or 1 are assigned to
actions.

Strategy based games generally require a player to think through a sequence of solutions to
determine the best way to defeat the opponent.

See also