Strategy: What is strategy?

Overall Definition:
Johnson and Scholes (Exploring Corporate Strategy) deIine strategy as Iollows:
"Strategy is the direction and scope oI an organisation over the long-term: which achieves
advantage Ior the organisation through its conIiguration oI resources within a challenging
environment, to meet the needs oI markets and to IulIil stakeholder expectations".
In other words, strategy is about:
* Where is the business trying to get to in the long-term (/irection)
* Which markets should a business compete in and what kind oI activities are involved in
such markets? (markets; scope)
* How can the business perIorm better than the competition in those markets? (a/vantage)?
* What resources (skills, assets, Iinance, relationships, technical competence, Iacilities) are
required in order to be able to compete? (resources)?
* What external, environmental Iactors aIIect the businesses' ability to compete?
(environment)?
* What are the values and expectations oI those who have power in and around the business?
(stakehol/ers)
Strategy at Different Levels of a Business
Strategies exist at several levels in any organisation - ranging Irom the overall business (or
group oI businesses) through to individuals working in it.
orporate Strategy - is concerned with the overall purpose and scope oI the business to meet
stakeholder expectations. This is a crucial level since it is heavily inIluenced by investors in
the business and acts to guide strategic decision-making throughout the business. Corporate
strategy is oIten stated explicitly in a "mission statement".
Business Unit Strategy - is concerned more with how a business competes successIully in a
particular market. It concerns strategic decisions about choice oI products, meeting needs oI
customers, gaining advantage over competitors, exploiting or creating new opportunities etc.
Operational Strategy - is concerned with how each part oI the business is organised to
deliver the corporate and business-unit level strategic direction. Operational strategy
thereIore Iocuses on issues oI resources, processes, people etc.
ow Strategy is Manage/ - Strategic Management
In its broadest sense, strategic management is about taking "strategic decisions" - decisions
that answer the questions above.
In practice, a thorough strategic management process has three main components, shown in
the Iigure below:

Strategic Analysis
This is all about the analysing the strength oI businesses' position and understanding the
important external Iactors that may inIluence that position. The process oI Strategic Analysis
can be assisted by a number oI tools, including:
!S1 Analysis - a technique Ior understanding the "environment" in which a business
operates
Scenario !lanning - a technique that builds various plausible views oI possible Iutures Ior a
business
Five Forces Analysis - a technique Ior identiIying the Iorces which aIIect the level oI
competition in an industry
Market Segmentation - a technique which seeks to identiIy similarities and diIIerences
between groups oI customers or users
Directional !olicy Matrix - a technique which summarises the competitive strength oI a
businesses operations in speciIic markets
ompetitor Analysis - a wide range oI techniques and analysis that seeks to summarise a
businesses' overall competitive position
ritical Success Factor Analysis - a technique to identiIy those areas in which a business
must outperIorm the competition in order to succeed
SWO1 Analysis - a useIul summary technique Ior summarising the key issues arising Irom an
assessment oI a businesses "internal" position and "external" environmental inIluences.
Strategic Choice
This process involves understanding the nature oI stakeholder expectations (the "ground
rules"), identiIying strategic options, and then evaluating and selecting strategic options.
Strategy Implementation
OIten the hardest part. When a strategy has been analysed and selected, the task is then to
translate it into organisational action.