INTRODUCTION TO STRATEGIC MANAGEMENT

The concept of strategy has been much used and often abused. It is a multi-dimensional concept and has found application in all fields of study and life. Has been defined variously as follows:-
According to Thompson and Strickland, it is ―The game plan management has for positioning the company in its chosen market arena, competing successfully, pleasing customers and achieving good business performance targets‖. According to Koch Richard (1995), it is ―The commercial logic of a business that defines why a firm can have a competitive advantage‖. Strategy is what a company does and how it actually positions itself commercially and conducts the competitive battle. Johnson, Scholes &Whittington (2005), ―Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations‖. According to (Pearce & Robinson, 1997) strategy is ―The set of decisions and actions resulting in formulation and implementation of strategies designed to achieve the objectives of an organization.
According to (Harvey, 1988) it is ―The process of formulating, implementing and evaluating business strategies to achieve future objectives.‖
Mintzberg (1998), Introduced the 5Ps of strategy. He stated strategy as a:

  1. Plan
  2. Ploy
  3. Pattern
  4. Position and
  5.  perspective

Strategy as a Plan

• Strategy specifies a consciously intended course of action
• Is designed in advance of the actions it governs
• Is developed deliberately/purposefully
• May be general or specific

Strategy as a Ploy

• Is a specific maneouver intended to outwit a competitor e.g. expansion
• The idea is to outsmart and shed off competitor threat Strategy as a pattern
• Strategy is a pattern that emerges from a stream of actions
• Is developed in the absence of intentions and without pre-conception
• Is visualized only after the events it governs (emergent)

Strategy as a position

• Is a means of locating an organization in the environment
• Indicates how an organization will develop a sustainable competitive advantage Strategy as a perspective
• Strategy gives an organization an identity and a perspective
• Reveals the way an organization perceives the outside world
• May be an abstraction which only exists in the mind of some interested party e.g. CEO

Characteristics of Strategy

• Long term direction of an organization
1.Where are we going?
2.Organization vision

• Organizational purpose
1.Defines obligations of the organization to its stakeholders
2.Defines the goals, objectives and priorities of the organization

• A unifying (integrating) pattern of decisions – a common thread

• Business Domain
1.Scope of an organization‘s activities
2.Product/market scope
3.What the organization will do and what it will not do

• Strategic fit
1.Matching of activities of an organization to the environment
2.Organizational positioning

• Competitive advantage
1.Basis of attracting customers

• Cost leadership

• Differentiation

• Focus

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