Attaining Sustainable Organizational Growth and Profitability
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 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:
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:
Strategy is a significant determinant on a company's success or failure, in addition to the significance of competence of its managerial leadership.
I am a computer scientist by education and training. My interests are in modeling complex business and social systems to foster better strategic and operations management processes in delivering value to customers while meeting the expectations of stakeholders.