Meaning of Strategy

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Meaning of Strategy

The present business world is highly competitive mainly due to globalization, liberalization, and growth of technology. In such a competitive business environment, managers must adopt a new mindset that values flexibility, speed, innovation, and the challenges that evolve from constantly changing business conditions. In a competitive market, firms often aggressively challenge their competitors to improve their competitive position and performance. In such a situation, strategy serves as a means for achieving sustainable competitive advantage.

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Strategy is a means to achieve long-term objectives. It is a potential plan of action that includes top management decisions and a significant amount of resources. Strategy is likely to be concerned with the long-term direction of an organization. In addition, it affects an organization’s long-term prosperity, typically for at least five years. Hence, it is future-oriented. It has multifunctional or multidivisional consequences and requires consideration of both external and internal factors facing the firm. A strategy may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint venture.

The word strategy was derived from military science. With competition, this word gradually got popularity in the business world as well.

“A strategy is a unified, comprehensive, and integrated plan that relates the strategic advantage of a firm to the challenges of the environment. It is designed to ensure that basic objectives of the enterprises are achieved through proper execution of the organization.” – Jauch and Glueck

“Strategy is the direction and scope of an organization over long-term which achieves advantage for the organization through its configuration of resources within a changing environment and to fulfill stakeholders’ expectations.” – Johnson and Scholes

“Strategies are the means by which long-term objectives will be achieved.”-David

“A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.”- Hitt, Ireland and Hoskisson

In this way, strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. In this sense, the chosen strategy indicates what the firm will do and not do. A firm’s strategy also demonstrates how it differs from its competitors. Effective use of strategic management processes reduces the likelihood of business failure in today’s competitive business environment. Strategy is concerned with the following issues.

  • Current and future business
  • Products to be offered by the business
  • Target customer and market of the business
  • Value to be generated for competitive advantage
  • Resources allocation
  • Environmental adaptation
  • Reflection of Stakeholders’ expectation
  • Organizational structure

In summary, it may be concluded that strategy is a long-term action plan that seeks to achieve sustainable competitive advantage. Strategy is formulated and implemented considering the internal as well as external factors of the organization.

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