Strategy is a ‘plan of action to achieve a long-term objective or an overall aim’1 While strategy and plan are sometimes used interchangeably, they do not necessarily mean the same.
A plan is the goal that a company wants to achieve and when it needs to be achieved whereas a strategy is how the company intends to achieve that goal. For example, a business may plan to increase the company revenue by 20% in the following year and the strategy can be to sell more products to existing customers or expand into a new region to capture new customers.
This is a simple explanation of what strategy mean, but it goes deeper than this. Strategy is about increasing the odds of success though not guaranteeing it. It is also about making choices- what’s not to do is as important as what to do
There are corporate and business level strategies. Corporate strategy is long term and supports the organization’s mission and vision. It borders on growth, stability, renewal, transformation, and business model, and includes components such as portfolio management, resource allocation, strategic design and alignment. Corporate strategy is the preserve of the company’s Board and executives.
Business level strategy on the other hand deals with how a business unit competes in the marketplace. Business strategy is a sub-set of corporate strategy, and it is usually carried out by mid-level managers. Small businesses do not usually need business level strategies until they are big enough to require it. Corporate strategy may just be enough.Every organization, irrespective of size, has a strategy even if they are not aware of it or don’t know what the strategy is.
Back to our initial question. ‘Is strategy necessary for a business?
yes it is
A formal strategy allows a business to approach the market with intent and purpose. A formal strategy increases the odds of success as opposed to the lack of it.
What’s your company’s strategy? Are you aware of it? Do you have a formal strategy in place in your company?
