No doubt that there has been an extensive research on the meaning and nature of strategy. Certainly, organisations need strategies for a variety of reasons. Without strategies, organisations lack future direction. The discussion which follows focuses on the definition and nature of strategy from a business point of view.
Definition of strategy
‘Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations’ (Johnson, Scholes, and Whittington, 2006, p.9).
Strategy gives a company direction as to what to be done in the future by effectively using the resources of the company in order to achieve competitive advantage and meet the expectations of the stakeholders. Organisations usually develop strategies by keeping both the internal and external environments in mind.
Strategies are subjected to change in line with the change in environment. For example, a company may introduce a new product if there is enough demand for it. Likewise, a company may withdraw a product if the demand decreases significantly.
Types of strategy
In a broad sense, strategies are of two types i.e. emergent and prescriptive. Based on this, there are two schools of thought in business and management literature. Famous writers such as Michael Porter and Henry Mintzberg have significantly contributed to the development of prescriptive and emergent schools of thought.
Determining what strategies to pursue depends on a number of factors. Firms need to pursue strategies that increase their both short-term and long-term profits. Likewise, companies should consider resources while deciding on strategy. Financial, human, and technical resources are very important in this regard.
Whether it is growth or retrenchment, a strategy should be implemented for the best interest of the company. Strategies provide clarity in direction of activities and increase organizational effectiveness. Recently, Facebook has demonstrated that they have adopted a strategy of substantive growth. It is evidenced from their acquisition of WhatsApp.
The article publication date: 06 September 2016
Johnson, G., Scholes, K. and Whittington, R. (2006) Exploring Corporate Strategy: Text and Cases, 7th Edition, UK: Prentice Hall
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Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.