Understanding Business Strategy As a 3+1 layered Concept

Introduction  
Generally, strategy refers to decision and choices about how - means by which - a given objective will be achieved. The term "strategy" is an overloaded word in everyday business conversations. ​Every company ( "for-profit" or "non-profit") has a strategy, but most people including professional practitioners do not bother to explicitly establish their point of view into what is essentially a layered concept when talking about strategy. This creates confusion in shared understanding about a critical differentiator and a necessary element for long-term success of an organization.

Strategy as a 3+1 Layered Concept
Strategy in a business organization is about how the organization seeks to survive and prosper within its environment over the long-term. ​Strategy provides an organization with an offensive device to compete against competitors and guides their actions when faced with a range of choices. 

Strategy as a concept exists at three (3) levels in a strategy hierarchy - corporate strategy, business strategy  and operations strategy - which are reinforced by functional strategy. 

Corporate Strategy 
Corporate strategy is concerned with decisions about the vision, mission, and values of the organization and establishing its direction and scope - product, vertical and geographic integration - of the firm. The focus is on decisions about growth, business portfolio, and comparative advantages.

Business Level Strategy 
Business strategy is concerned with how the firm competes within a particular industry or market. It is concerned with decisions about competitive advantage through cost leadership or differentiation focus. 

Operations Level Strategy 
Operations strategy is concerned with structural strategic decisions related to production or supply chain's configuration and infrastructures, the strategies to allocate resources, and the technologies to perform processes at each stage in the organization's value chain.

These decisions may involve choosing the location, site, installed capacity and purpose of production facilities; selection of transformation processes; configuration of a network of suppliers, distributors, and logistics handlers; long-term inventory management strategies; long-term technological improvement and capacity planning analyses; sourcing strategies. These decisions  have long-term impact on the performance of an organization's value creations and delivery network such as production and supply chains.

These strategic decisions include a wide range of uncertainties and carry higher levels of risk. However, effective operations strategic decisions lead to increased profitability and high levels of rewards for all stakeholders.
 
Functional (Tactical) Strategy
The strategic role of each function is to support those competitive dimensions within a market for which it is wholly or partly responsible. In this way the market comprises of the agenda based on functional strategies and becomes the mechanism for determining development and investment priorities, which is part of Corporate Strategy.


The strategy hierarchy model is company specific, customized to the company's own situation and performance objectives. The three (3) levels of strategy hierarchy model are interrelated through a specific dual integration, built through a vertical orientation - top-down and bottom- up to create sustainable competitive advantage. The success of  a strategy hierarchy is reinforced by functional strategy such as; marketing, finance, IT, HR, sales, etc., that appear simultaneously at all three levels of the strategy hierarchy. ​

Strategy Viewpoints and Types
The concept of viewpoint is a device that helps in developing a robust and successful strategy by enabling  approaches to highlighting problems that would undermine an intended strategy at implementation and execution. The viewpoints or approaches as proposed by Mintzburg include:

1. Plan - This is a device to help brainstorming options and planning how to deliver them. This may be general or detailed, formal or informal (in the mind). As a plan, strategy is conceived in advance, has a purpose and is thoughtful to some degree. This is deliberate and planned strategy which is a result of the rational planning approach of strategy development. The rational planning approach (e.g., Ansoff, 1979) defines an objective in advance, describes "where we are now," and uses a prescriptive approach in which "the three (3) core areas - strategic analysis, strategy development, and strategy implementation - are linked together sequentially" (Lynch, 2000; 24).
2. Perspective - This defines an orientation  - patterns of thinking - that shapes an organization's perspective on vision and direction - a view of what the company or organization is to become - and the things the organization is able to do well. Mintzburg points out that strategy as a perspective is the same as "Strategy as a Plan" but without the formal planning. In this view, many people in the organization have the same orientation or perspective when they make strategic decisions.
3. Pattern - A "realized pattern" of organizational behavior emerging as strategy. This comprises the decisions and actions over time that may be consistent or inconsistent but represents an emergent strategy. Emergent strategy is realized pattern (behavior) that was not expressly intended or planned that emerged from execution. It is a set of actions, or behavior, consistent over time, “a realized pattern that was not expressly intended” in the original planning of strategy. An emergent strategy develops when an organization takes a series of actions that with time turn into a consistent pattern of behavior, regardless of specific intentions. It consists of the moves made and approaches taken by management to produce successful performance of the organization in successfully competing against rivals. For example, the day-to-day decisions and actions in areas such as enter new business to diversify, extending geographically to grow, efforts to integrate forwards or backwards, efforts to broaden or narrow product/services, actions to capitalize on new opportunities, and actions to respond to changing industry conditions i.e., shifting demand patterns, new airport regulations, entry of new competitors. A consistent pattern of decisions may be the result of an explicit and written strategy or it may be result from organizational culture, or it may result from the influence of one or more leaders. An inconsistent pattern of decisions also represents a sort of strategy - a non-strategy, perhaps, but a strategy that governs decisions. So, in a sense, every organization has a strategy; they all make strategic decisions or non-decisions that are also decisions. 
4. Position - We may view a position taken by the organization that reflects decisions to offer particular products and services in particular markets as a strategy relative to the environment. 
5. Ploy - This is a deliberate exercise and device that can help the organization explore the possible future scenarios in which competition will occur. 

Decision makers or managers start with a given perspective, conclude that it calls for a certain position, and sets about achieving it by way of a carefully crafted plan. Over time things change; a pattern of decisions and actions marks movement from starting point to destination end-point (goal). This pattern of decisions and actions is called "realized pattern" or "emergent" strategy. The actual strategy of an organization is the combination of the executed parts of deliberate strategy and emergent strategy.

Roles of strategy in Business
Strategy plays a number/variety of roles in organization's success, including:

1. Preparing an organization for the future - This does not necessarily imply long-term planning or planning in general; it does imply forward-looking, which helps organization anticipate future needs. Strategy shapes the future so the organization can position itself to win in both the short- and long-term.
2. Distinguishing an organization from others - This implies focus on the organization's unique assets (capabilities/competencies) and features, and exploiting them in a meaningful way to gain advantage.
3. Providing an organization with some stability - This implies the organization transformation or change is guided by strategy so it is not caught in constant flux or reorientation which would cause it to drift.
4. Serving as a common frame of reference - This implies strategy offers an organization a common point of reference even in rapidly changing circumstances. This makes it possible for people in the organization to have a shared understanding and know what assumptions, ideas or plans they are going to deviate from.
5. Support for internal and external alignment - This implies strategy provides an overarching and integrative framework for the most important internal and external factors to be taken into account by management, thus helping to align the organization both internally as well as with its external environment.
6. Guides organizational action - The reason for having a strategy is to give direction and meaning to the things that an organization does. 

Strategy is a significant determinant on a company's success or failure, in addition to the significance of competence of its managerial leadership.