What is strategy? I was talking about this topic with a friend a few days ago and I noticed that most of the people have an understanding of what strategy is, but they don’t really know how to define it.
The consolidated definition is the following: strategy is an integrated and coordinated set of commitments and actions designed to explore core competencies and gain a competitive advantage.
Strategy is the plan of action or policy designed to achieve a major or overall aim. In the context of a business goal, strategy aims to make profit and create value for shareholders, thus, obtaining a competitive advantage. A strategy examines why some firms perform better than others and therefore why they can earn above average returns. A firm has a competitive advantage when it implements a strategy that creates superior value for customers that competitors are unable or find too costly to imitate and it earns above-average returns, defined as returns in excess of what investors expect to earn from other investments having a similar amount of risk.
But be aware: a strategy is as much as deciding what not to do, as about deciding what to do (Michael Porter).
Strategy is not a science with universally accepted principles, it is not a clear cut solution, not a singe formula. But strategy is not an operational plan, neither a vision, nor a mission.
Attached you’ll see the process one must go through to formulate a strategy, implement it, and finally achieve strategic competitiveness. I hope this clears the concept a bit.
Have a Safe Journey!
Hitt, M.A., Duane Ireland, R., Hoskisson, R.E. (2015) Strategic Management, Competitiveness & Globalization: Concepts and Cases, 12e, Cenage Learning.