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Strategy

"Strategy is thedirectionandscopeof an organisation over thelong-term:which achievesadvantagefor the organisationthrough its configuration of resources within a challengingenvironment, to meet the needs ofmarketsand to fulfil stakeholderexpectations".

StrategyIn 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)

StrategyA strategy is: A solution to move from where you are now (A) to where you want to be (B)It is what you want to happen to achieve an end. Strategy is a class of solution that deals with uncertainty the possibility that opposing forces may inhibit you reaching (B) or reaching it in acceptably good form.A strategy should raise the probability that its employer will reach (B) in good form. It does so mostly by creating conditions that favour success.

StrategyFor example, a strategy can be that you will only support businesses where you can be a first or second tier player.Where your objective is to build a product solutions portfolio that fits that defined nature. Building a portfolio of first or second tier only product solutions is what you want to do. It is a solution to a problem associated with running a type of business that you determined third or less tier product solutions will not support.

StrategyStrategyStrategy involves a blueprint for gaining a competitive advantage. For example, eyeglasses had glass lenses for more than 400 years. A company developed a strategy to design plastic lenses that would be cheaper, almost unbreakable and lightweight. This product gave the company a competitive advantage over other eyeglass manufacturers. Its strategy included all of the complex plans necessary to bring this project to fruition.People use strategies in their personal lives to improve their competitiveness or financial stability. For example, a newly hired college graduate develops a strategy to climb the corporate hierarchy. His strategy includes capitalizing on his strengths and overcoming objections.

StrategyYour strategy does not specifically say how you will arrive at this end. That is where your plan comes in.A plan is how you will move from (A) to (B). As such it should support your strategy by providing a way to reach (B) that provides an acceptable balance of risk and reward. So your strategy iswhatyou want to do and your plan ishowyou will do it.

StrategyPlansPlans are the second-level goals in the hierarchy. A complex strategy may contain many plans. Using the eyeglass example, the manufacturer had to identify an appropriate plastic that was hard enough for daily use but soft enough for grinding to the correct magnification. Locate or design equipment to grind and buff the lenses; Contract with suppliers.Find outlets to sell the product.Advertise its new invention to the public. Each part of the strategy has a separate plan to accomplish its goal.

StrategyTacticsTactics are the step-by-step methods you use to accomplish a plan. Continuing the eyeglass example, to complete the plan of identifying an appropriate plastic, the tactics would include: Identify all businesses that produce plastics.Buy samples of each type of plastic, test samples. Record pros and cons.Decide whether one plastic is appropriate or if the company needs a custom formula.

StrategyPeople use strategy, plans, tactics and processes to accomplish successful outcomes in their business projects and personal goals. The four concepts work together and are, in fact, interdependent on each other. You cannot develop plans without a strategy, or tactics without a plan or without a process.

StrategyThe History of Strategy and Its Future ProspectsStrategy, for most of its 2,500-year history, was one-dimensional. Warmongers were largely focused on avoiding wars by not instigating them.Business was mostly focused on building power and monopolies. The past 50 years have more than made up for this one-way view as strategy hit its prime and spewed out countless new ideas and solutionsStrategy is on the verge of reinventing itself and reclaiming its rightful place at the top of the business food chain.

StrategyThe Early Days:The beginnings of strategy can be traced back to The Art of War by Sun Tzu (5th Century BC). The same holds true for On War by Carl von Clausewitz, a major general in the German Prussian army ( Between 1816 and 1830) The book covers all aspects of waging war and provides copious amounts of strategic and philosophical advice still being used as a source of inspiration for politicians and business leaders. Interestingly, both books extensively cover how to avoid war.

StrategyExclusivity Strategies: Up to 1900Warmongers have long enjoyed the strategic and tactical richness of how not to go to war. While business strategy through the 1800s mostly revolved around just creating exclusivity and monopolies.Ida Tarbells 1904 book, The History of the Standard Oil Company, signaled the transition to a new strategic era. Tarbell depicted John D. Rockefeller as a money-grabber who was viciously effective at monopolizing the oil trade. Rockefeller gradually expanded his control over the refining business by taking over competitors. It is estimated that at one point more than 90 percent of North American refinery capacity was controlled by Standard Oil and its 30 wholly and partially owned subsidiaries

StrategyIndustrial Proficiency Strategies: 19001968:This focus on pushing the boundaries of industrialization and operations marked the strategic space over the next 60 or so years. Alfred P. Sloan, who helped make General Motors the worlds largest industrial corporation for many decades, was accused of the same narrow focus on metrics, tasks, and efficiencies. In 1952, the MIT School of Industrial Management was established through a Sloan Foundation grant.

StrategyThe school, designed to educate the ideal manager, was later renamed the Alfred P. Sloan School of Management and today is one of the worlds premier business schools.As the period progressed, scientific management made way for more holistic perspectives that pushed the boundaries of operations by looking at all aspects of productivity and efficiency. By 1969, these perspectives had become input for true strategic analyses and planning, marking a new period in strategy development.

StrategyStrategy Heydays: 1969 to Mid1990s:In the late 1960s and early 1970s, Bruce Henderson, who later founded the Boston Consulting Group, published work on the experience curve, an idea that there is a direct relationship between cumulative production and production costs. In other words, the more experience a company has making a product, the lower its costs. This became the basis for strategizing the combination of price setting, production volumes, and production costs against competitors. It also played to the heart of analyses-driven strategy development.

StrategySoon after publishing this work, Henderson came up with the growth-share (BCG) matrix, made famous by its quadrant names: cash cows, dogs, stars, and question marks. The matrix helped companies with multiple experience curves manage an ongoing portfolio of activities.Harvard professor Michael Porter expanded the competitiveness concept with yet more strategies.

StrategyIn his 1985 book, Competitive Advantage: Creating and Sustaining Superior Performance, Porter presents the notion of differentiating strategies and strategies focused on specific segments as alternatives to cost leadership strategies. He also creates the five forces model and the value chain model to help companies formulate more powerful strategies.In their 1990 article, The Core Competence of the Corporation, C. K. Prahalad and Gary Hamel highlight the importance of gaining competitive advantage by not only looking at positioning in terms of markets and competitors, but also by looking inside your own company.

StrategyNow inside-out strategies and outside-in strategies - both mattered.During this period, strategy became a proper discipline: more standalone, more analytical, and more cerebral. Strategy shifted from being one of the daily tasks for senior executives and landed instead in the hands of strategy professionals and planners. This had a rather unwanted side effect as it created a distinct handover between strategy formulation and strategy implementation.In fact, the more sophisticated and far-sweeping strategies became, the larger the handover hurdles.

StrategyWith globalization and automation, things got worse; change management and getting buy-in were much-discussed topics and strategy implementation gradually became a self-inflicted major issue.Some years earlier, Edgar H. Schein released his influential works on culture and leadership and their importance for strategy, and Henry Mintzberg was talking about designing organizations suitable for executing specific strategies from the bottom up.

StrategyPerformance metrics were another helpful component in strategy execution, with several initiatives pushing the envelope for effective strategic metrics in the early 1990s. The most well-known are those of Robert S. Kaplan and David P. Norton, who wrote articles in 1992 and 1993 and then published The Balanced Scorecard: Translating Strategy Into Action in 1996.

Strategy

Strategic Proliferation: Mid1990s to Mid2010sSuddenly, there was a trend so big that it didnt fit our strategy frameworks, and the reengineering revolution hijacked the strategy process. By the late 1980s and early 1990s, fundamental shifts brought about by advances in areas such as technology had a great impact, as did the shift in the developed world from industrial-based to service-based.But the reengineering revolution did not last long. By the late 1990s, the next strategic revolution had arrived, drawing us all into the big promise of the Internet and the notion of the new economy.

StrategyIn 1999, Blown to Bits: How the New Economics of Information Transforms Strategy by Philip Evans and Thomas S. Wurster of Boston Consulting Group, made a convincing argument that the Internet changed everything. Suddenly, disintermediation was possible for just about anything, and it was clear that intermediaries would be eliminated sooner rather than later.It was never a question of which strategic revolution was the most important; rather, it was the fact that they were piling up, each one bringing with it plenty of opportunities to create or lose competitive advantage.

StrategyReclaiming Strategy: 2014 and BeyondShifting strategy formulation from current-out to future-in Shifting the strategy process from cascading down to organizationally inclusiveDont aim for a single strategy but for an ongoing portfolio of competitive advantagesEach one is interesting and promising in itself, but the combination of all three holds the biggest promise for taking strategy back, using the following logic:Coming Full Circle: Strategy as Organizational Energy

DIFFERENT LEVELS OFSTRATEGY

CORPORATE LEVEL STRATEGIESTop managements overall plan for the entire organization and its strategic business units.Corporate level strategy occupies the heights level of DECISION MAKING.The nature of the decisions tends to be value oriented, conceptual than the Business level, and Operational or Functional level.

Types of Corporate Strategies

Growth: expansion into new products and markets.Stability: maintenance of the status of the organization.Renewal: redirection of the firm into new markets.

CORPORATE LEVEL STRATERGYGrowth StrategySeeking to increase the organizations business by expansion into new products and markets.Types of Growth StrategiesConcentrationVertical integrationHorizontal integrationDiversification

CORPORATE LEVEL STRATERGYConcentration: Focusing on a primary line of business and increasing the number of products offered or markets served.Vertical Integration: Backward vertical integration.Forward vertical integration. Horizontal Integration: Combining operations with another competitor in the same industry to increase competitive strengths.

CORPORATE LEVEL STRATERGYDiversification:Related Diversification: Expanding by merging with firms in different, but related industriesUnrelated Diversification: Growing by merging with firms in unrelated industries where higher financial returns are possible.

CORPORATE LEVEL STRATERGYStability Strategy: A strategy that seeks to maintain the status with the uncertainty of the environment, when the industry is experiencing slow- or no-growth conditions.

Renewal Strategy: Developing strategies to counter organization weaknesses that are leading to performance declines.

Business-Level StrategiesA strategy that seeks to determine how an organization should compete in each of its SBUs (strategic business units).

At Business-level ALLOCATION of re-sources among Functional-level an COORDINATE with the Corporate level to the ACHIEVEMENT of the Corporate level OBJECTIVES.

Business-Level StrategiesCost leadership: Attaining, then using the lowest total cost basis as a competitive advantage.

Differentiation: Using product features or services to distinguish the firms offerings from its competitors.

Market focus: Concentrating competitively on a specific market segment.

Functional-Level StrategiesFocus is on improving the effectiveness of operations within a company.Which is done by:ManufacturingMarketingMaterials managementResearch and developmentHuman resources

IT StrategyA process, in contrast, is a defined way of doing a task. It can be a linear in nature do A, then do B, then do C or it can have branches do A, then B, and then C or D depending. A process sets strict parameters to the how that can, if misapplied, allow the how to take priority over the what.Since a process is so anchored in the how, it can never be a strategy. If used well, a process can be an essential part of a strategy.

IT StrategyTechnology strategy(Information Technology strategyorIT strategy) is the overall plan which consist of objective(s), principles and tactics relating to use of the technologies within a particular organization. A technology strategy has traditionally been expressed in a document that explains how technology should be utilized as part of an organization's overallcorporate strategyand eachbusiness strategy.

IT StrategyIT Strategy is a comprehensive plan thatinformation technology management professionals use to guide their organizations.An IT strategy should cover all facets oftechnology management including:Cost managementHuman capital managementHardware andsoftwaremanagementVendor managementRisk management

IT Strategy

Executing an IT strategy requires: Strong IT leadershipThechief information officer(CIO)Chief technology officer(CTO) need to work closely with: Business, budget and legal departments as well as with otheruser groupswithin the organization.