Strategy meaning ,features and objectives

Notes on strategy

1. Strategy

2. content
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Theconceptofstrategy
meaningandimportance.
Deducingstrategyandarticulatingasummary
statementofstrategy

3. Theconceptofstrategy
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Theword“strategy”isderivedfromtheGreekword
“stratçgos”;stratus(meaningarmy)and“ago”
(meaningleading/moving).
Strategyisanactionthatmanagerstaketoattain
oneormoreoftheorganization’sgoals.Strategycan
alsobedefinedas“ Ageneraldirectionsetforthe
companyanditsvariouscomponentstoachievea
desiredstateinthefuture.Strategyresultsfromthe
detailedstrategicplanningprocess”.
Thedictionarymeaningofstrategyis,"theartof
movingordisposingtheinstrumentofwarfareasto
imposeuponenemy,theplacetimeandconditions

4. NATUREOFSTRATEGY
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Strategyisamajorcourseofactionthrough
whichanorganizationrelatesitselftoits
environmentparticularlytheexternalfactorsto
facilitateallactionsinvolvedinmeetingthe
objectivesoftheorganization.
Strategyistheblendofinternalandexternal
factors.Tomeettheopportunitiesandthreats
providedbytheexternalfactors,internalfactors
arematchedwiththem.
Strategyisthecombinationofactionsaimedto
meetaparticularcondition,tosolvecertain
problemsortoachieveadesirableendThe

5. 
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Duetoitsdependenceonenvironmentalvariables,
strategymayinvolveacontradictoryaction.An
organizationmaytakecontradictoryactionseither
simultaneouslyorwithagapoftime.Forexample,
afirmisengagedinclosingdownofsomeofits
businessandatthesametimeexpandingsome.
Strategyisfutureoriented.Strategicactionsare
requiredfornewsituationswhichhavenotarisen
beforeinthepast.
Strategyrequiressomesystemsandnormsforits
efficientadoptioninanyorganization.
Strategyprovidesoverallframeworkforguiding
enterprisethinkingandaction.

6. MeaningofStrategy
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Astrategyisallaboutintegratingorganizational
activitiesandutilizingandallocatingthescarce
resourceswithintheorganizationalenvironmentso
astomeetthepresentobjectives.
Whileplanningastrategyitisessentialtoconsider
thatdecisionsarenottakeninavacuumandthat
anyacttakenbyafirmislikelytobemetbya
reactionfromthoseaffected,competitors,
customers,employeesorsuppliers.
Strategycanalsobedefinedasknowledgeofthe
goals,theuncertaintyofeventsandtheneedto
takeintoconsiderationthelikelyoractualbehavior
ofothers.

7. 
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Strategyistheblueprintofdecisionsinan
organizationthatshowsitsobjectivesandgoals,
reducesthekeypolicies,andplansforachieving
thesegoals,anddefinesthebusinessthecompany
istocarryon,thetypeofeconomicandhuman
organizationitwantstobe,andthecontributionit
planstomaketoitsshareholders,customersand
societyatlarge.
Strategyisawelldefinedroadmapofan
organization.Itdefinestheoverallmission,vision
anddirectionofanorganization.Theobjectiveofa
strategyistomaximizeanorganization’sstrengths
andtominimizethestrengthsofthecompetitors.
Strategy,inshort,bridgesthegapbetween“where
weare”and“wherewewanttobe”

8. ImportanceofaBusinessStrategy
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Intheinitialphaseofabusiness,alotofplanningisrequired.
Whileaplanclarifiesthegoals,itisthestrategythathelpsin
executingandreachingthevision.
Whenleadersformulateastrategy,ithelpsthemunderstand
theirstrengthsandweaknesses.Thisway,theycan
capitalizeonwhattheyaregoodatandimproveontheir
weakeraspects.
Itensuresthateveryaspectofabusinessisplanned.This
meansmoreefficiencyandbetterandmoreeffectiveplans.
Everyoneintheteamisawareofwhattheyneedtodo,and
thecapitalisallocatedproperly.
Itcanhelpbusinessesgaincompetitiveadvantageover
othersinthesegment.Italsomakesthemuniqueintheeyes
oftheircustomers.

9. Deducingstrategyandarticulatingasummarystatement
ofstrategy
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Astrategystatementcommunicatesyourcompany’s
strategytoeveryonewithinyourstartup.
Thestatementconsistsofthreecomponents:
objective,scopeandcompetitiveadvantage.All
threecomponentsmustbeexpressedasclearlyas
possible.
Awell-writtenstrategystatementwillhelp
employeesandtheorganizationtounderstandtheir
roleswhenexecutingthecompany’sstrategy.
Withoutthisunderstanding,yourenterprisemaybe
pulledindifferentdirectionsandloseitsfocus.
Thepurposeofthestrategystatementistoensure
thatemployeeshaveaclearunderstandingofthe
company’sstrategy.

10.
Hierarchyofcompanystatements

11. Elementsofastrategystatement

12. Definingthestrategicobjective
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Thestrategicobjectiveisthesingle,specific
objectivethatwilldrivethebusinessoverthenext
fewyears.
Itisbasedonthemaxim,“Ifyoudon’tknowwhere
youaregoing,anyroadwillgetyouthere.”
Itisnottobeconfusedwiththecompany’smission,
visionorvalues,whicharenotusefulasstrategic
goals.
Theobjectivemustbespecific,measurableandtime
bound.
Itmustalsobeasinglegoal(thatis,growthor
profitability),althoughsubordinategoalsmayfollow
fromthestrategicobjective.

13. Definingthescope
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Thecompany’sscopeencompassesthreedimensions—the
targetcustomeroroffering,geographiclocation,and
verticalintegration(thatis,wholeproduct).
Eachdimensionmayvaryinrelevance(forexample,the
customermaybemoreimportantthangeographic
location).
Clearlydefiningtheboundariesineachareashouldmakeit
obviouswhichactivitiestoconcentrateon(andwhichones
toavoid).
Thecompany’sscopedoesnotdetermineexactlywhat
shouldbedonewithinthoseboundaries,asthereisroom
forexperimentationandinitiative.
However,itshouldspecifywherethecompanyorbusiness
willnotgo.Thiswillpreventemployeesfromwasting
resourcesonprojectsthatdonotfitthecorporatestrategy.

14. Definingthecompetitiveadvantage
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Thecompetitiveadvantageisthemostimportantpartof
thestrategystatement.
Itdescribesthelogicofwhyyouwillsucceed,howyou
differ,orwhatyouaredoingbetterthanthecompetition.
Todefinethecompetitiveadvantage:
Statethecustomervalueproposition.
Explainwhycustomersshouldbuyyourproductor
service.
Mapyourvaluepropositionagainstthoseofyour
competitorstoidentifywhatmakesyoursdistinctive.
Outlinetheuniqueactivities,orcomplexcombinationof
activities,thatallowyourcompanytodeliveryour
customervalueproposition

15. Developingastrategystatement
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First,createagreatproductstrategybasedon
carefulevaluationoftheindustrylandscape.Then,
developastrategystatementthatcapturesthe
strategy’sessenceinawaythatmakessenseto
everyoneatthecompany.
Theprocessshouldinvolveemployeesinallpartsof
thecompanyandatalllevels.Workthroughthe
wordingofthestrategystatementinasmuchdetail
aspossible.
Theendresultisabriefstatementthatreflectsthe
threeelementsofaneffectivestrategyandmakes
sensetoeveryoneinthecompany.Itmayinclude
explanatorynotestoclarifyissuesandimplications.

16. StrategyStatement

17. StrategicIntent
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Anorganization’sstrategicintentisthepurposethat
itexistsandwhyitwillcontinuetoexist,providingit
maintainsacompetitiveadvantage.
Strategicintentgivesapictureaboutwhatan
organizationmustgetintoimmediatelyinorderto
achievethecompany’svision.
Itmotivatesthepeople.Itclarifiesthevisionofthe
company.
Strategicintenthelpsmanagementtoemphasize
andconcentrateonthepriorities.
Strategicintentis,nothingbut,theinfluencingofan
organization’sresourcepotentialandcore
competenciestoachievewhatatfirstmayseemto
beunachievablegoalsinthecompetitive
environment.

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Awellexpressedstrategicintentshouldguide/steerthe
developmentofstrategicintentorthesettingofgoalsand
objectivesthatrequirethatalloforganization’s
competenciesbecontrolledtomaximumvalue.
Strategicintentincludesdirectingorganization’sattentionon
theneedofwinning;inspiringpeoplebytellingthemthatthe
targetsarevaluable;encouragingindividualandteam
participationaswellascontribution;andutilizingintentto
directallocationofresources.
Strategicintentdiffersfromstrategicfitinawaythatwhile
strategicfitdealswithharmonizingavailableresourcesand
potentialstotheexternalenvironment,strategicintent
emphasizesonbuildingnewresourcesandpotentialssoas
tocreateandexploitfutureopportunities.

19. a.
b.
c.
d.
e.
VISION: It is a position that a company would like to achieve in the
distant future (10-15 years). It is a powerful motivator to action.
VISION:Itisapositionthatacompanywouldliketoachieveinthe
distantfuture(10-15years).Itisapowerfulmotivatortoaction.
Vision of Walt Disney: To make others happy. VisionofWaltDisney:Tomakeothershappy.

It is a category of intentions that are broad, all-inclusive and foreword-
thinking.
Itisacategoryofintentionsthatarebroad,all-inclusiveandforeword-
thinking.
Why vision is needed? Whyvisionisneeded?
Good visions are inspiring. Goodvisionsareinspiring.
Good visions help in creation of a common identity and a shared sense
of purpose.
Goodvisionshelpincreationofacommonidentityandasharedsense
ofpurpose.
Good visions are competitive, original and unique. Goodvisionsarecompetitive,originalandunique.
It promotes risk-taking and experimentation.Itpromotesrisk-takingandexperimentation.
It promotes long-term thinking… IOItpromoteslong-termthinking… IO
VISION: VISION:
1
st
level of Strategic Intent1
st
levelofStrategicIntent

20. MISSION:
2
nd level of Strategic Intent
MISSION:
2
ndlevelofStrategicIntent
Vision is a foreward-thinking view of what an organization
wants to be. Mission is what an organization is and why it
exists.
Visionisaforeward-thinkingviewofwhatanorganization
wantstobe.Missioniswhatanorganizationisandwhyit
exists.

Mission is a statement that defines the role an organization
plays in a society.
Missionisastatementthatdefinestheroleanorganization
playsinasociety.
Eg: A newspaper & TV news editor: mission- information. Eg:Anewspaper&TVnewseditor:mission-information.

It is the purpose or reason for the organization’s existence.. Itisthepurposeorreasonfortheorganization’sexistence..

21. 1.
2.
3.
4.
5.
6.
Characteristics of Mission: CharacteristicsofMission:
It should be feasible. Itshouldbefeasible.
It should be precise; not too narrow & broad. Itshouldbeprecise;nottoonarrow&broad.
It should be clear. Itshouldbeclear.
It should be motivating. Itshouldbemotivating.
It should be distinctive; unique from competitors. Itshouldbedistinctive;uniquefromcompetitors.
It should indicate how objectives are to be achieved.Itshouldindicatehowobjectivesaretobeachieved.
Eg-Microsoft’smissionistohelppeopleandbusinesses
throughouttheworldtorealizetheirfullpotential.
Wal-Mart’smissionis“Togiveordinaryfolkthechanceto
buythesamethingasrichpeople.”

22. Goals & ObjectivesGoals&Objectives
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Agoalisadesiredfuturestateorobjectivethatan
organizationtriestoachieve.Goalsspecifyinparticular
whatmustbedoneifanorganizationistoattainmission
orvision.Goalsmakemissionmoreprominentand
concrete.Theyco-ordinateandintegratevarious
functionalanddepartmentalareasinanorganization.
Wellmadegoalshavefollowingfeatures-
Thesearepreciseandmeasurable.
Theselookaftercriticalandsignificantissues.
Thesearerealisticandchallenging.
Thesemustbeachievedwithinaspecifictimeframe.
Theseincludebothfinancialaswellasnon-financial
components.

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Objectivesaredefinedasgoalsthatorganization
wantstoachieveoveraperiodoftime.Thesearethe
foundationofplanning.Policiesaredevelopedinan
organizationsoastoachievetheseobjectives.
Formulationofobjectivesisthetaskoftoplevel
management.Effectiveobjectiveshavefollowing
features-
Thesearenotsingleforanorganization,butmultiple.
Objectivesshouldbebothshort-termaswellaslong-term.
Objectivesmustrespondandreacttochangesinenvironment,
i.e.,theymustbeflexible.
Thesemustbefeasible,realisticandoperational.

24. Whatisastrategicobjective?
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Strategicobjectivesarepurposestatementsthat
helpcreateanoverallvisionandsetgoalsand
measurablestepsforanorganizationtohelp
achievethedesiredoutcome.
Astrategicobjectiveismosteffectivewhenitis
quantifiableeitherbystatisticalresultsor
observabledata.
Businessescreatestrategicobjectivestofurtherthe
companyvision,aligncompanygoalsanddrive
decisionsthatimpactdailyproductivityfromthe
highestlevelsoftheorganizationtoallother
employees.

25. Strategicobjectives
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Strategicobjectivesaregoalsonnon-financialfactorsthatthecompany
aimstoachievewithaspecificindicatorthatwillallowittobe
measuredinaspecificperiodoftime.
Increasenumberofemployees
Positioningthebrand
Diversifyingsupply
Promoteaworkenvironmentthustoincreaseefficiencyinthe
processesoftheorganization
Consolidatethebusinessasasolidandorderlyorganization
Usetheappropriatehumanresources
Agileprocessesfocusedoninnovation
Givecustomerbenefitsforchoosingourbrand
Consolidategoodrelationstoretaincustomers

26. Financialobjectives
Forourcompany,agrowingcompanyitisvitaltosetgoals,forthisisnecessaryto
imposeaseriesofobjectivesthatwillsupportthesuccessofthesegoals,amongthem
arethefinancialobjectivesthatprovidethebasisforasolidplantomoveforwardonthe
pathofsuccessforourorganizationthesefinancialgoalsare:
Growthincome
Itisessentialforustopresentsolidannualrevenueswithamarginof20%increasefrom
thefirst5years,sofromthesecondyearcoverinitialexpensesandgeneratetheexpected
profits.
Profitmargins
Obtainprofitmarginstomeettheneedsoftheorganizationandincludeittoalsoinvestin
thebusinessforexpansionanddistributionamongemployeesinaprofit-sharing
agreement.
Sustainability
Werefertothecharacteristicsofdevelopmentthatwillhavethebusinessinordertohold
andatthesametimeprovidemorejobsandasteadyimprovementgradualgrowth.
Returnofinvestment
Thistermreturnoninvestmentreferstomoneyrecoveredforcapitalspending,our
companyexpectstoget100%returnoninvestmentwithin2yearsofprofit,generatinga
profitmarginof20%thefirst5yearsandlonger40%fromthesixth

27. StrategyFormulationProcess
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Definition:StrategyFormulationisananalytical
processofselectionofthebestsuitablecourseof
actiontomeettheorganizationalobjectivesand
vision.
Itisoneofthestepsofthestrategicmanagement
process.
Thestrategicplanallowsanorganizationto
examineitsresources,providesafinancialplanand
establishesthemostappropriateactionplanfor
increasingprofits.

28. StepsinStrategyFormulationProcess

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EstablishingOrganizationalObjectives:Thisinvolves
establishinglong-termgoalsofanorganization.Strategic
decisionscanbetakenoncetheorganizational
objectivesaredetermined.
AnalysisofOrganizationalEnvironment:Thisinvolves
SWOTanalysis,meaningidentifyingthecompany’s
strengthsandweaknessesandkeepingvigilanceover
competitors’actionstounderstandopportunitiesand
threats.Strengthsandweaknessesareinternalfactors
whichthecompanyhascontrolover.Opportunitiesand
threats,ontheotherhand,areexternalfactorsoverwhich
thecompanyhasnocontrol.Asuccessfulorganization
buildsonitsstrengths,overcomesitsweakness,
identifiesnewopportunitiesandprotectsagainstexternal
threats.
Formingquantitativegoals:Definingtargetssoasto
meetthecompany’sshort-termandlong-termobjectives.
Example,30%increaseinrevenuethisyearofacompany.

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Objectivesincontextwithdivisionalplans:Thisinvolves
settinguptargetsforeverydepartmentsothatthey
workincoherencewiththeorganizationasawhole.
PerformanceAnalysis:Thisisdonetoestimatethe
degreeofvariationbetweentheactualandthestandard
performanceofanorganization.
SelectionofStrategy:Thisisthefinalstepofstrategy
formulation.Itinvolvesevaluationofthealternatives
andselectionofthebeststrategyamongstthemtobe
thestrategyoftheorganization.
Strategyformulationprocessisanintegralpartof
strategicmanagement,asithelpsinframingeffective
strategiesfortheorganization,tosurviveandgrowin
thedynamicbusinessenvironment.