The terms ‘Strategy’ & ‘Plan’
This is at Highest Level and answers
“What” we want to achieve in
Strategy actually is the thinking process required to plan a change, course of action, or
organization. Strategy defines, or outlines, the desired goals and why you should go about
achieving them. The strategic planning phase involves business thinkers (namely you – the small
business owner) determining why, and in a global sense what, you will achieve in your stated
This answers “How” in business.
A basic management function involving formulation of one or more detailed plans to achieve
optimum balance of needs or demands with the available resources.
The planning process
(1) identifies the goals or objectives to be achieved,
(2) formulates strategies to achieve them,
(3) arranges or creates the means required, and
(4) implements, directs, and monitors all steps in their proper sequence.
The terms ‘Process’ &
This is step by step methodology of
These are short term actions that are
aligned to support success or achieve
common goal. Generally at
Consider one of the company manufacturing eye
glasses. They tend to earn more so strategize
The strategy is use of plastic instead of glass
making it light, unbreakable and exhibiting all
properties of glass that are required for vision.
The Plan is Circulation RFP, Shortlising two
vendors, have discussions, negotiation.
Tactic used with this are decision to collaborate
with vendors having small business for locking
effect and locking vendor to be continuous
supplier prevent copying for years together.
Process here is Floating RFP then step by step
execution to final product implimentation.
Types of strategies
Single-business companies have the advantage of focus and rapid
response but are vulnerable to problems in their industry. Their
corporate strategy must demonstrate the advantages of remaining
active in only one industry while evaluating business opportunities in
areas with complementary activities. With a goal of optimizing company
operations, profitability and growth, the corporate strategy must
compare the return of a continuing investment in the single business
with the acquisition or starting up of complementary businesses.
Business Unit Strategy
The business strategy of a single-business company is similar to that of
a business unit of a diversified company except that the business
strategy must support corporate strategic initiatives aimed at the single
business. The business strategy sets goals for performance, evaluates
the actions of competitors and specifies actions the company must take
to maintain and improve its competitive advantages. Typical strategies
are to become a low-price leader, to achieve differentiation in quality or
other desirable features or to focus on promotion.
Types of strategies
Operational strategies refers to the methods companies use to reach their
objectives. By developing operational strategies, a company can
examine and implement effective and efficient systems for using
resources, personnel and the work process. Service-oriented companies
also use basic operational strategies to link long- and short-term
corporate decisions and create an effective management team.
In companies that are marketing oriented, the marketing strategy on a
functional level influences the other functions and their strategies. A
typical marketing strategy is to determine customer needs in an area
where the company has a natural competitive advantage. Such
advantages might be in location, facilities, reputation or staffing. Once
the marketing strategy has identified the kind of product customers
want, it passes the information to operations to design and produce
such a product at the required cost. The advertising department must
develop a promotional strategy, sales must sell the product and
customer service must support it. The marketing strategy forms the
basis for the strategies of these other departments.
Strategic management involves the formulation and
implementation of the major goals and initiatives taken
by a company's top management on behalf of owners,
based on consideration of resources and an
assessment of the internal and external environments in
which the organization competes.
Strategic management provides overall direction to the
enterprise and involves specifying the organization's
objectives, developing policies and plans designed to
achieve these objectives, and then allocating resources
to implement the plans. Academics and practicing
managers have developed numerous models and
frameworks to assist in strategic decision making in the
context of complex environments and competitive
dynamics Strategic management is not static in nature;
the models often include a feedback loop to monitor
execution and inform the next round of planning.
This is all about the analysing the strength of businesses'
position and understanding the important external factors that
may influence that position. The process of Strategic Analysis
can be assisted by a number of tools, including:
PEST Analysis - a technique for understanding the
"environment" in which a business operates
Scenario Planning - a technique that builds various plausible
views of possible futures for a business
Five Forces Analysis - a technique for identifying the forces
which affect the level of competition in an industry
Market Segmentation - a technique which seeks to identify
similarities and differences between groups of customers or
Directional Policy Matrix - a technique which summarises
the competitive strength of a businesses operations in
Competitor Analysis - a wide range of techniques and
analysis that seeks to summarize a businesses' overall
Critical Success Factor Analysis - a technique to
identify those areas in which a business must
outperform the competition in order to succeed
SWOT Analysis - a useful summary technique for
summarising the key issues arising from an assessment
of a businesses "internal" position and "external"
This process involves understanding the nature of
stakeholder expectations (the "ground rules"),
identifying strategic options, and then evaluating and
selecting strategic options.
Often the hardest part. When a strategy has been
analysed and selected, the task is then to translate it
into organisational action.