What Is Strategy?

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You've probably heard the term "business strategy" used in the workplace.

But what is strategy, exactly? And are you aware that you need different types of strategy at different levels within your organization?

In this article, we're looking at some common definitions of strategy. We'll focus on three strategic levels ? corporate strategy, business unit strategy, and team strategy ? and we'll look at some of the core tools and models associated with each area.

Defining Strategy

Strategy has been studied for years by business leaders and by business theorists. Yet, there is no definitive answer about what strategy really is.

One reason for this is that people think about strategy in different ways.

For instance, some people believe that you must analyze the present carefully, anticipate changes in your market or industry, and, from this, plan how you'll succeed in the future. Meanwhile, others think that the future is just too difficult to predict, and they prefer to evolve their strategies organically.

Gerry Johnson and Kevan Scholes, authors of "Exploring Corporate Strategy," say that strategy determines the direction and scope of an organization over the long term, and they say that it should determine how resources should be configured to meet the needs of markets and stakeholders.

Michael Porter, a strategy expert and professor at Harvard Business School, emphasizes the need for strategy to define and communicate an organization's unique position, and says that it should determine how organizational resources, skills, and competencies should be combined to create competitive advantage.

While there will always be some evolved element of strategy, at Mind Tools, we believe that planning for success in the marketplace is important; and that, to take full advantage of the opportunities open to them, organizations need to anticipate and prepare for the future at all levels.

For instance, many successful and productive organizations have a corporate strategy to guide the big picture. Each business unit within the organization then has a business unit strategy, which its leaders use to determine how they will compete in their individual markets.

In turn, each team should have its own strategy to ensure that its day-to-day activities help move the organization in the right direction.

At each level, though, a simple definition of strategy can be: "Determining how we are going to win in the period ahead."

We'll now look more deeply at each level of strategy ? corporate, business unit, and team.

Corporate Strategy

In business, corporate strategy refers to the overall strategy of an organization that is made up of multiple business units, operating in multiple markets. It determines how the corporation as a whole supports and enhances the value of the business units within it; and it answers the question, "How do we structure the overall business, so that all of its parts create more value together than they would individually?"

Corporations can do this by building strong internal competences, by sharing technologies and resources between business units, by raising capital cost-effectively, by developing and nurturing a strong corporate brand, and so on.

So, at this level of strategy, we're concerned with thinking about how the business units within the corporation should fit together, and understanding how resources should be deployed to create the greatest possible value. Tools like Porter's Generic Strategies Add to My Personal Learning Plan, the Boston Matrix Add to My Personal Learning Plan, the ADL Matrix Add to My Personal Learning Plan and VRIO Analysis Add to My Personal Learning Plan will help with this type of high-level analysis and planning.

The organization's design Add to My Personal Learning Plan is another important strategic factor that needs to be considered at this level. How you structure your business, your people, and other resources ? all of these affect competitive advantage and can support your strategic goals.

https://www.mindtools.com/pages/article/what-is-strategy.htm