In order to understand business functions, it is important to understand the term strategy. After all, every business needs a strategy to be successful. The word ‘strategy’ comes from the ancient Greek word ‘Strategos’, meaning ‘the art of the General’.
However, in business, it is more about the managerial response to changes in the business environment than the art of war. In this article, we will take a quick look at the meaning and types of strategies in business.
Meaning of Strategy
In ancient Greece, the term Strategos was used in military science and implied the plan to win a battle. However, in business, strategies are more about understanding the competition and preparing a plan to match/surpass the potential of the rivals. It is defined as:
“Strategy is the direction and scope of an organization over the long-term. It helps achieve an advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and fulfill stakeholder expectations.”
Features of Strategy
- Specialized plan to outperform the competitors.
- Details about how managers must respond to any change in the business environment.
- Redefines direction towards common goals.
- Reflects the concern to effectively mobilize resources.
- Maximizes the organization’s chances to achieve the set objectives.
Further, the top management formulates strategies.
Strategies at Different Levels of Business
In an organization, strategies can exist at all levels – right from the overall business to the individuals working in it. Here are some common types of strategies:
- Corporate Strategies – These are also explicitly mentioned in the organization’s Mission Statement. They involve the overall purpose and scope of the business to help it meet the expectations of stakeholders. These are important strategies due to the heavy influence of investors. Further, corporate strategies act as a guide for strategic decision-making throughout the business.
- Business Unit Strategies – These are more about how a business competes successfully in a particular market. They involve strategic decisions about:
- Choosing products
- Meeting the needs of the consumers
- Gaining an advantage over the competitors
- Creating new opportunities, etc.
- Operational Strategies – These are about how each part of the business is organized to deliver the corporate and business unit level strategic direction. Therefore, these strategies focus on the issues of resources, people, processes, etc.
Solved Question on Strategy
Q1. Define Strategy. Also, describe its features.
A strategy is the direction and scope of an organization in the long run. It helps an organization achieve an advantage over its competitors through an efficient configuration of resources. It also ensures that the market’s needs are met along with the expectations of all stakeholders. The features of a strategy are:
- Creation of a plan to outdo the rivals.
- Also, assist managers in responding to any changes in the business environment.
- Redefine direction towards common objectives.
- Enable effective mobilization of resources.
- Finally, improve the organization’s chances to achieve the set targets.