The word “strategy” is derived from a Greek word “strategia”, which means “generalship”. The term “strategy” entered the business world from military services where it was originally used. Strategy works as a blueprint of an organisation that defines its vision, mission, and also helps in determining the future course of action. Strategy helps an organisation to minimise the strengths of competitors by maximising its own strengths. Strategy is formulated to achieve current goals of an enterprise by optimum allocation and utilisation of internal resources and by collaborating different organizational pursuits. Strategy helps to achieve synergy and balance between objectives, resources and concepts to maximise the possibility of success and fruitful results. In wider terms, strategy refers to determining the fundamental long-term organisational goals and at the same time developing plans, acquiring, allocating and deploying resources In order to achieve those goals. The purpose of formulating strategy is to bring consistency and alignment in the activities of an organisation, which can be accomplished by various endeavours, methods and resources.
According to George A. Steiner, “Strategy means deciding the basic mission Of a company. the objectives which it seeks to achieve and the policies governing the use of resources at the disposal of the fir-ni to achieve its objectives”.
Strategy is not as simple as it seems to be. However, a logical understanding of its theory helps to grasp it and work with more ease. Theories help in understanding the various concepts related to Strategy such as definitions, terms, assumptions and their explanations, propositions and related hypotheses, and the techniques used to test and modify them.
Nature of Strategy
The nature of strategy can be understood by following points:
Provides Structure: Strategy helps to establish and communicate the image of the organisation with the help of its various goals and objectives. Strategy develops a fundamental roadmap for providing guidance to the enterprise for making rational decisions and achieving organisational goals.
Integrated Approach: A good strategy follows an integrative approach for allocating internal resources and using them for the benefit Of the entire organisation. It directs and supports the enterprise in taking necessary decisions for maximising the strengths and facing the environmental threats with confidence.
Relates an Organisation with the Environment: With the help of strategy an organisation can interact with the factors of external environment so that the management can take necessary steps to achieve the organisational goals. Hence, formulating strategy is an important activity by which the enterprise can relate to its environment.
Set of Actions: Strategy is an arrangement of different actions that are taken in varying situations to achieve certain objectives, or to solve some problems.
Future-Oriented: Strategies are formulated to solve problems that are new and have not been previously handled by the organisation. Hence, it can be said that it is future-oriented.
Combination of Internal and External Factors: Strategy tries to match the internal strengths to meet external opportunities and threats. Therefore, it is a combination of internal and external of the environment.
System-oriented: To work efficiently, strategy operates under a certain system that consists of rules and standards, followed in the organisation.
Involves Contradictory Actions: As strategic actions are influenced by environmental factors, at times certain decisions taken on the basis of the strategy may be contradictory in nature. These actions may occur simultaneously or consecutively.
Importance of Strategy
Following points highlight the imponance of strategy:
Provides Direction: Strategies direct an organisation to achieve its goals. Organisations lose their purpose in absence of proper guiding strategies.
Facilitates Decision-Making: Strategy facilitates decision-making as strategy and strategic initiatives act as point of reference for any action.
Ensures Proper Allocation of Resources: A good strategy helps the organisation in allocating the resources in an efficient manner. While formulating a strategy, the strategists have to keep in mind the information that they have access to, and appraise all possible outcomes before selecting a particular alternative.
Synchronises Activities: Organisations can also be benefited by developing a master Strategy that encompasses the entire organisation. This comprehensive stratev helps the organisation in synchronising the strategic initiatives taken at different levels. A companywide strategy also ensures that there are no variations, and all the departments are working towards achieving a single goal with minimum conflicts, overlaps, and contradictions in the organisation.
Improves Communication and Commitment: Strategy helps in configuring companywide actions, communication and level of commitment between different departments of the organisation by giving a clear description of the vision and responsibilities.
Enables Comparison Of Alternative Actions: Strategies help in analysing the records Of previously adopted strategic initiative and allows the top level management to compare the alternative actions and select the best option among them for different business units. This ensures that the valuable resources are allocated optimally.
Helps Accomplishing Goals: Strategies enable a company to achieve its goals and create a market position by allocating resources, providing proper training to employees, enhancing the capacity of production, etc.