strategy - what is strategy?

Overall Definition:

Johnson and Scholes define strategy as follows:

"Strategy is the direction and scope of an organisation over the long-term: which
achieves advantage for the organisation through its configuration of resources within a
challenging environment, to meet the needs of markets and to fulfil stakeholder
expectations".

In other words, strategy is about:

* Where is the business trying to get to in the long-term (direction)

* Which markets should a business compete in and what kind of activities are involved in
such markets? (markets; scope)
* How can the business perform better than the competition in those markets?
(advantage)?
* What resources (skills, assets, finance, relationships, technical competence, facilities)
are required in order to be able to compete? (resources)?
* What external, environmental factors affect the businesses' ability to compete?
(environment)?
* What are the values and expectations of those who have power in and around the
business? (stakeholders)

Strategy at Different Levels of a Business

Strategies exist at several levels in any organisation - ranging from the overall business
(or group of businesses) through to individuals working in it.

Corporate Strategy - is concerned with the overall purpose and scope of the business to
meet stakeholder expectations. This is a crucial level since it is heavily influenced by
investors in the business and acts to guide strategic decision-making throughout the
business. Corporate strategy is often stated explicitly in a "mission statement".

Business Unit Strategy - is concerned more with how a business competes successfully in
a particular market. It concerns strategic decisions about choice of products, meeting
needs of customers, gaining advantage over competitors, exploiting or creating new
opportunities etc.

Operational Strategy - is concerned with how each part of the business is organised to
deliver the corporate and business-unit level strategic direction. Operational strategy
therefore focuses on issues of resources, processes, people etc.
How Strategy is Managed - Strategic Management

In its broadest sense, strategic management is about taking "strategic decisions" -

decisions that answer the questions above.

In practice, a thorough strategic management process has three main components, shown
in the figure below:

Strategic Analysis

This is all about the analysing the strength of businesses' position and understanding the
important external factors that may influence that position. The process of Strategic
Analysis can be assisted by a number of tools, including:

PEST Analysis - a technique for understanding the "environment" in which a business

operates
Scenario Planning - a technique that builds various plausible views of possible futures for
a business
Five Forces Analysis - a technique for identifying the forces which affect the level of
competition in an industry
Market Segmentation - a technique which seeks to identify similarities and differences
between groups of customers or users
Directional Policy Matrix - a technique which summarises the competitive strength of a
businesses operations in specific markets
Competitor Analysis - a wide range of techniques and analysis that seeks to summarise a
businesses' overall competitive position
Critical Success Factor Analysis - a technique to identify those areas in which a business
must outperform the competition in order to succeed
SWOT Analysis - a useful summary technique for summarising the key issues arising from
an assessment of a businesses "internal" position and "external" environmental influences.

Strategic Choice

This process involves understanding the nature of stakeholder expectations (the "ground
rules"), identifying strategic options, and then evaluating and selecting strategic options.

Strategy Implementation

Often the hardest part. When a strategy has been analysed and selected, the task is then to
translate it into organisational action

Marketing strategy is a method of focusing an organization's energies and resources on

a course of action which can lead to increased sales and dominance of a targeted market
niche. A marketing strategy combines product development, promotion, distribution,
pricing, relationship management and other elements; identifies the firm's marketing
goals, and explains how they will be achieved, ideally within a stated timeframe.
Marketing strategy determines the choice of target market segments, positioning,
marketing mix, and allocation of resources. It is most effective when it is an integral
component of overall firm strategy, defining how the organization will successfully
engage customers, prospects, and competitors in the market arena. Corporate strategies,
corporate missions, and corporate goals. As the customer constitutes the source of a
company's revenue, marketing strategy is closely linked with sales. A key component of
marketing strategy is often to keep marketing in line with a company's overarching
mission statement[4].

Marketing Strategies: A marketing strategy serves as the foundation of a marketing

plan. A marketing plan contains a list of specific actions required to successfully
implement a specific marketing strategy. An example of marketing strategy is as follows:
"Use a low cost product to attract consumers. Once our organization, via our low cost
product, has established a relationship with consumers, our organization will sell
additional, higher-margin products and services that enhance the consumer's interaction
with the low-cost product or service."

A strategy is different than a tactic. While it is possible to write a tactical marketing plan
without a sound, well-considered strategy, it is not recommended. Without a sound
marketing strategy, a marketing plan has no foundation. Marketing strategies serve as the
fundamental underpinning of marketing plans designed to reach marketing objectives. It
is important that these objectives have measurable results.
A good marketing strategy should integrate an organization's marketing goals, policies,
and action sequences (tactics) into a cohesive whole. The objective of a marketing
strategy is to provide a foundation from which a tactical plan is developed. This allows
the organization to carry out its mission effectively and efficiently

Coporate strategy

Corporate strategy is about enabling an organization to achieve and sustain superior

overall performance and returns. It is a core responsibility of senior executives and
encompasses a range of critical activities, from defining and refining corporate vision to
strategic performance measurement and management.

Approach to future that involves (1) examination of the current and anticipated factors
associated with customers and competitors (external environment) and the firm itself
(internal environment), (2) envisioning a new or effective role for the firm in a creative
manner, and (3) aligning policies, practices, and resources to realize that vision.

strategic planning - the link with marketing

Introduction

Businesses that succeed do so by creating and keeping customers. They do this by

providing better value for the customer than the competition.

Marketing management constantly have to assess which customers they are trying to
reach and how they can design products and services that provide better value
(“competitive advantage”).

The main problem with this process is that the “environment” in which businesses
operate is constantly changing. So a business must adapt to reflect changes in the
environment and make decisions about how to change the marketing mix in order to
succeed. This process of adapting and decision-making is known as marketing planning.

Where does marketing planning fit in with the overall strategic planning of a business?

Strategic planning is concerned about the overall direction of the business. It is concerned
with marketing, of course. But it also involves decision-making about production and
operations, finance, human resource management and other business issues.

The objective of a strategic plan is to set the direction of a business and create its shape
so that the products and services it provides meet the overall business objectives.
Marketing has a key role to play in strategic planning, because it is the job of marketing
management to understand and manage the links between the business and the
“environment”.

Sometimes this is quite a straightforward task. For example, in many small businesses
there is only one geographical market and a limited number of products (perhaps only
one product!).

However, consider the challenge faced by marketing management in a multinational

business, with hundreds of business units located around the globe, producing a wide
range of products. How can such management keep control of marketing decision-
making in such a complex situation? This calls for well-organised marketing planning.

What are the key issues that should be addressed in strategic and marketing planning?

The following questions lie at the heart of any marketing and strategic planning process:

• Where are we now?

• How did we get there?
• Where are we heading?
• Where would we like to be?
• How do we get there?
• Are we on course?

Why is marketing planning essential?

Businesses operate in hostile and increasingly complex environment. The ability of a

business to achieve profitable sales is impacted by dozens of environmental factors, many
of which are inter-connected. It makes sense to try to bring some order to this chaos by
understanding the commercial environment and bringing some strategic sense to the
process of marketing products and services.

A marketing plan is useful to many people in a business. It can help to:

• Identify sources of competitive advantage

• Gain commitment to a strategy
• Get resources needed to invest in and build the business
• Inform stakeholders in the business
• Set objectives and strategies
• Measure performance