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Chapter 1: Introduction

1.2 What is strategy: Strategy is traced back to the new military and political leadership position.

It combined two words:

-Stratos: army spread out over the ground

-Agein: to lead

In 1960 Alfred Chandler give strategy a formally business context.The definition of this book for Strategy: strategy is the long-term direction of an organization.Figure1.2 Definitions of strategy

There are 2 advantages of strategy:

-First, the long-term direction of an organization can include both deliberate, logical strategy and more incremental, emergent patterns of strategy.-Second, long-term direction can include both strategies that emphasize difference and competition, and strategies that recognize the roles of cooperation and even imitation.

The 3 element of this strategy definition:

-The long term: The importance of a long-term perspective on strategy is

emphasized by the three horizons

oThree horizons: The tree horizons framework suggests organizations

should think of their businesses or activities in terms of different horizons

oHorizon 1 are the businesses basic current core activities. Horizon 2 :

Businesses are emerging activities that should provide new future sources

of profit. And Horizon 3: possibilities, which are more open and for which

outcomes are even uncertain 2 / 4

lOM oA RcPSD |266 833 4 Figure 1.3 Three horizons of strategy

-Strategic direction: managers and entrepreneurs try to set the direction of

their strategy according to long-term objectives, Sometimes a strategic direction only emerges as a coherent pattern over time

-Organizations: organizations involve many relationships, both internally and

externally. This is because very organizations has stakeholders (people and groups that depend on the organization and upon which the organization itself depends.

oInternally: organizations always filled with people

oExternally: organizations are surrounded by important relationships,

form example suppliers, customers Good strategy is about the practicalities of managing as well as the analysis of strategizing.

There are four way in which organizations typically define their purpose:

-A mission statement aims to provide employees and stakeholders with clarity about what the organization is fundamentally there to do. This is often expressed in the apparently simple but challenging questions (what business are we in? What would be lost if the organization did not exist? And How do we make a difference?-A visions statement is concerned with the future the organization seeks to create. The Vision typically expresses an aspiration that will enthuse, gain commitment and stretch performance (what do we want to achieve?) -Statements of corporate values communicate the underlying and enduring core ‘principles’ that guide an organization’s strategy and define the way that the

organizations should operate. Questions that could be asked: Would these

values change with circumstances – if the answer is yes then they are not core and not enduring.-Objectives are statements of specific outcomes that are to be achieved. These are often expressed in precise financial terms, for instance the level of sales, profits or share valuations in 1,2 or 3 years.All entrepreneurs and managers should be able to summarize their organization strategy with strategy statement 3 / 4

lOM oA RcPSD |266 833 4 Strategy statements: should have three main themes: the fundamental goals (mission, vision or objectives) that the organization seeks, the scope or domain of the organization activities and the particular advantages of capabilities it has to deliver all of these The mission, vision and objectives are described above. So here is the explanation of scope

and advantages:

•Scope: An organization’s scope or domain refers to three dimensions: customers or clients; geographical location; and extent of internal activities (‘vertical integration’).For a university, scope questions are twofold: first, which academic departments to have (a business school, an engineering department and so on); second, which activities to do internally themselves (vertically integrate) and which to externalize to subcontractors (for example, whether to manage campus restaurants in-house or to subcontract them).•Advantage: This part of a strategy statement describes how the organization will achieve the objectives it has set for itself in its chosen domain. In competitive environments, this refers to the competitive advantage: for example, how a particular company or sports club will achieve goals in the face of competition from other companies or clubs. The organization needs to be better than others at achieving its particular goal. In the public sector, advantage might refer simply to the organization’s capability in general. But even public- sector organizations frequently need to show that their capabilities are not only adequate, but superior to other rival departments or perhaps to private-sector contractors.

Inside an organization, strategy scan exist at three main levels:

-Corporate-level strategy is concerned with the overall scope of an organization and how value is added to the constituent businesses of the organizational whole -Business-level strategy is about how the individual businesses should compete in their particular markets (also called competitive strategy) -Functional strategies are concerned with how the components of an organization deliver effectively the corporate-and business-level strategies in terms of resources, processes and people 1.3 In order to help you to evaluate an organization strategy, this book provides a three-part framework that emphasizes the interconnected nature of strategic issues The exploring strategy framework includes understanding the strategic position of an organization assessing strategic choices for the future and managing strategy in action.Figure 1.4

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