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Strategy refers to the course of action which is required to achieve the objectives of an organisation and implement its goals. In other words, strategy is a means to achieve goals. In this article, we will talk about strategy, its definition, and features.
Concept of Strategy
According to Schendel and Hatten, the definition of business strategies is “the basic goals and objectives of the organisation; the major plan of action chosen to reach its goals as well as objectives”.
Strategy essentially defines the relationship between the firm and its environment. By determining a strategy, one can find answers related to the target customer base and the market segment they would represent. The main purpose of formulating a strategy is to create an edge in the competitive environment.
Features of Strategy
The following are some features of business strategies:
Generally, strategies are long run-in nature as they help to understand the path towards the future as well as its impact on present activities. However, in some cases, strategies may be made for a shorter period.
Strategy mainly defines the course of action of a business in general, which an organisation needs to follow in order to achieve its objectives.
Another important component of strategy is that it is dynamic in nature, and it needs to be changed or modified according to changing times and conditions.
Strategy provides a proper combination of external and internal factors that can affect the ability of an organisation to perform activities towards well-established goals.
Strategies are formulated mainly by top-level managers and directions are provided to the middle and lower-level managers to frame sub-strategies.
Strategy allows businesses to beat their competition by distributing scarce resources efficiently across different regions, resulting in optimal utilisation.
Strategies are forward-looking because they are developed and implemented with the goal of achieving the firm’s goals in the future.
Importance of Strategy
The importance of strategy in business organisations is as follows –
1. Direction and Action Plans: A strategy gives an organisation the appropriate course to follow in order to meet its objectives. It provided a clear and detailed action plan for achieving the targeted position in the future. The company receives comprehensive guidance on how things will be done and goals will be met.
2. Identification of Trends and Opportunities: Strategy helps to identify various market trends and future opportunities available to a business organisation. It helps in examining the different variations in the market like that of social, political, as well as customer changes and technological changes. Once the market changes have been identified, the firm develops certain tactics so that the business can adjust to the future changes.
3. Defining Accountability: Strategy helps to define accountability in a business enterprise. It also helps in setting the timelines in order to attain certain results on the strategic initiatives.
4. Improving Communication and Commitment: With a proper well-defined strategy, the level of communication, as well as commitment in the organisation, get enhanced as it helps in clarifying the accountability as well as vision. With a proper strategic plan, all the activities of businesses are aligned to safeguard the commitment.
5. Allocation of Desired Resources: Every firm, large or small, must allocate resources correctly. Since resources are limited, strategy determines which goods, services, and markets will be included in the company’s future and which will not. This guarantees that resources are efficiently utilised, resulting in maximum output for the company.
6. Framework for Decision-Making: A strategy helps in providing a proper framework regarding decision-making for a particular firm. Also, a strategy provides a reference point on the basis of which organisations can make decisions to ensure sustained business growth.
7. Competitive Advantage: By establishing strategies, businesses can get a competitive advantage over their competitors. Businesses can have a better understanding of themselves and their future goals. In this manner, resources are efficiently used, and everything runs smoothly, resulting in maximum productivity for the company.
Types of Strategy
Corporate Level Strategy: Corporate-level strategies are generally defined by senior management and include the long term objectives as well as influence the business units working under it.
Business-Level Strategy: These are strategies which are framed at the business unit level by a senior manager, which includes building a certain competitive advantage for the firm.
Functional Level Strategy: Functional strategy refers to strategies within a business enterprise that mainly focus on certain functional areas like that of marketing, sales as well as production.
Operational Level Strategy: These are strategies that are formed in the operating units of a company and are mainly developed by field-level managers. It mainly focuses on creating implementable plans for acting on business strategies.
Conclusion
These were some details of what the concept of strategies is, as well as its importance and types. Strategy plays an important role in helping an organisation achieve its business goals.
