LW 1 1.2 What is strategy?

Strategy is the long-term direction of an organization

Example:

long-term direction of Amazon is from book retailing to internet services in general

A strategy statement is a summary of an organization's strategy

• long term

• direction

• organization

The "three horizons" framework suggests that organizations should think of their businesses or activities in terms of different horizons defined by time.

It encourages managers to push out Horizon 1 (current core activities) while looking to Horizons 2 (emerging activities) and 3 (more uncertain possibilities). 

• Strategic direction refers to the long-term trajectory or path that strategies follow

• It can be based on long-term objectives and may vary depending on the sector or type of organization. 

• Organizations have many internal and external stakeholders who have a significant impact on the organization and are dependent on it

• It is important to consider their diverse views, interests, and relationships when formulating strategy. 

• The purpose of a strategy is to define and express a clear and motivating purpose for the organization, which goes beyond simple profit-maximization and addresses how the organization makes a difference and for whom. 

1. Mission statement: Defines what the organization is fundamentally there to do. 

1. Vision statement: Describes the future the organization seeks to create. 

1. Statements of corporate values: Communicate the enduring core principles that guide the organization's strategy. 

1. Objectives: Statements of specific outcomes to be achieved, often expressed in financial or market-based terms. 

• A mission statement aims to provide clarity about what the organization fundamentally does

• It can be formulated by asking questions like:

  • "What business are we in?"

  • "What would be lost if the organization did not exist?"

  • "How do we make a difference?" 

• A vision statement expresses the future aspirations of the organization

• It answers the question, "What do we want to achieve?" 

Corporate values communicate the enduring core principles that guide an organization's strategy and define how it operates. 

• Objectives are specific outcomes that an organization aims to achieve, often expressed in financial or market-based terms

• They can also include environmental and social objectives.

• Vision, mission, and values provide overarching guidance and motivation, while objectives are more concrete and time-bound

• Visions, missions, and values can offer enduring sources of direction and motivation for the organization. 

A strategy statement should summarize the organization's fundamental goals, scope or domain of activities, and particular advantages or capabilities. 

The three dimensions of scope:

• customers or clients

• geographical location

• extent of internal activities (vertical integration)

describes how the organization will achieve its objectives and refers to its competitive advantage or superior capabilities. 

Strategy statements should be no more than 35 words long, deliberately concise and focused on the essentials.

• Strategy statements are relevant to organizations of all kinds as they serve various purposes such as persuading investors, reassuring clients and funders, inspiring volunteers and donors, and guiding decision-making

Corporate-level strategy is concerned with the overall scope of an organization and how value is added to its constituent businesses. 

addresses issues such as:

• geographical scope

• diversity of products or services

• acquisitions of new businesses,

• resource allocation within the organization.

Business-level strategy is focused on how individual businesses compete in their specific markets, often referred to as competitive strategy

Business-level strategy involves considerations such as innovation, appropriate scale, and response to competitors' actions.

Functional strategies ensure effective delivery of corporate- and business-level strategies by aligning resources, processes, and people within the organization. 

Integration is important in strategy because each level (corporate, business, and functional) needs to be aligned with the others for successful strategy implementation.

strategy is typically complex, requiring careful and sensitive management, and it is rarely simple.