Strategy

Strategy can be defined as a course of action carried out to achieve a stated objective by effective utilization of resources.

Strategic Management

Mission

Mission explains the purpose of the organization therefore this demonstrates the nature of business and the process of generating value to a particular target market.
Mission statement will explain these values in order to communicate stakeholders.

Eg: BMW “the ultimate driving machine”
Eg: Coca Cola “We refresh the world”
Eg: Nokia “Connecting people”
Eg: Samsung “A better world is our business”

Characteristics of Mission – by Hooley

1. Mission should demonstrate the purpose of the organization
2. Mission should demonstrate the nature of the business. (“What business are you in?”)
3. This should demonstrate a particular value system. Eg: BMW – quality
4. This should indicate a specific standard. Eg: McDonalds.

Mission is qualitative

Objective

This is a qualitative statement developed through the mission. The mission is transformed through the objectives for decision making (mission practice through objective).

Characteristics of objectives

PRIME

Plan
Objective should be enabling the organization to take place the future through systematic planning; this provides a direction for developing a plan.

Responsibility
Objective should provide very clear guidelines for the staff to operate based on specific duties.

Integration
The objective should enable every employee and systems to integrate based on common values.

Motivate
The objective should provide specific target for the staff in order to generate results.

Evaluate
The objective should enable the organization to evaluate performance over a passage of time and control.

CSF – Critical success factor – by Johnson & Scholes

These are few areas of business which should be successful in order to achieve the objective.

Development of critical success factors

1. Identify the critical success factor. Eg: Coca Cola
- brand name
- distribution
- quality
- communication
- HR

2. Identify the competence of the CSF
This will demonstrate the ability of each factor. (Eg: Brand name; the competence is to generate awareness).

3. Identify the competitive advantage
The CSF should enable the organization to differentiate (create a different experience).
This should enable the organization to achieve better results than rivals in the market place. Eg: Wal-Mart, KFC.

4. Develop key performance indicators (KFI)
This will measure the achievement of the CSF
eg: Impact of branding (this can be evaluated)
(a) Estimating brand value
(b) Estimating brand awareness

5. Develop a sustainable advantage considering competition
The CSF should enable the organization to operate with an edge over competitors consistently. Eg: McDonald – Fast Food

6. Monitoring & Control
CSFs will enable the organization to maintain the standard and control.



Elements of Strategy



Competitive or Business Strategy

This is the fundamental beginning of strategy. The strategy is developed by identifying the nature of business and the direction. “What business are you in?”

This is demonstrated as business strategy by emphasizing on a particular value created to a targeted market. This will address the following:

i) The nature of business
ii) The nature of customers
iii) The nature of competition
iv) The nature of product & services
v) The business process

Eg: Toyota PRIUS is environmental friendly car which is powered through electricity targeted at environmental friendly customers.

Investment and resource strategy

This strategy is developed based on the competitive strategy. This strategy will emphasize on identifying the required resources to facilitate business strategy. This will demonstrate the nature of the investment required and the resources to ensure a successful business strategy.

Resources for PRIUS

i) Specific production plant
ii) Specific production area
iii) Specific engineers
iv) Specific suppliers
v) Specific systems

Financial Strategy

This strategy is developed based on the requirement of recourses. This will identify the nature of finance required to acquire specific resources. Therefore this will determined a suited method of finance for the strategy formulation. The decision will depend on the availability of equity or debt, and also long and short term sources.



Levels of strategy


The levels of strategy is required if the organization operates within more than ONE business.


Corporate Strategy

This is the highest levels of strategy. The objective of corporate strategy is to integrate different business strategy under a common philosophy. The corporate strategy will provide a framework for the decision making and control. This will demonstrate specific guidelines based on corporate values to ensure consistency.

This will ensure the following (basis):

i) The stakeholders and their interest
ii) The human resources (HR)
iii) The environmental impact
iv) The corporate values
v) The corporate standards
vi) The legal and regulatory issues
vii) Social responsibility

The corporate strategy in a policy therefore will NOT compete

Eg: General Electric which is a diversified company withdraws from investment in Myanmar due to violation of fundamental human rights.

Business Strategy (Refer to competitive or business strategy)

Functional Strategy (operational strategy)

The functional strategy is developed based on the business strategy. The objective of functional strategy is to support the business strategy by ensuring the development of required functional areas of business.

The functional strategy will demonstrate how business strategy is practiced. Eg: Marketing