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Strategy

What is the definition of Strategy?

Strategy is a plan of action to achieve short, middle and long term desired goals.

What is the definition of Strategy?

Strategy is a plan of action to achieve short, middle and long term desired goals.

There are generally three types of strategies in business. The corporate strategy defines the strategic goals of the overall company. The second type of strategy, the business strategy, establishes the strategic goals for a business unit. The functional strategies are about the strategic goals to achieve the business goals, and to keep developing the functional area itself.

Goals are important for organizations to determine the future direction of a company. A good strategy always stems from a thorough analysis of the company’s position in the market. This is where a company’s strengths and weaknesses, as well as opportunities and threats are incorporated (SWOT analysis).

The usefulness of an effective strategy (importance) does not stop with providing direction for management and employees. In addition to its function as a North Star, also plays an important role in the decision-making process. For organizations that have an adequate understanding of their strengths and weaknesses, the strategy helps managers decide where best to spend efforts and resources.

Today’s modern business and markets act on a planning from dynamic strategies. Companies and organizations need to have to survive, save their market position and expand with new products and customers. Various tools exist to support this process. For example, the CAGE Distance Framework is used to identify important differences between countries that companies should take into account when developing the strategy. The McKinsey Three Horizons of Growth model helps companies avoid a gap between what a company wants to achieve in the future and where it is now in relation to its strategy.

A strategy charts the course of a business. There are many theories and methods that orient themselves towards the best one. It’s always about the best fit and the commitment that’s required to make it successful. An example of this are the 5 Ps of Strategy by Henry Mintzberg. Kenichi Ohmae’s 3C model focuses on the three key factors for success that must be balanced in the form of a strategic triangle.

A strategy is usually translated into a strategic plan. The strategic plan consists of five elements, namely vision-mission, objectives, core values, KPIs (Key Performance Indicators) and policy & responsibility. The vision and mission align an organization. In this way, people in the organization can join forces to increase efficiency. A company’s core values reflect what it is good at and what it is proud of. A plan is furthermore nothing without well-defined objectives, the fourth part of a strategic plan. Suitable KPIs are selected to monitor progress towards the objectives.

There have been lots of scientific and practical studies on this topic by Michael Porter, C. K. Prahalad, Gary Hamel and many more, from a learning and developing point of view. Michael Porter in particular has become known for his vision of strategy. According to him, a strategy is aimed at cost leadership, differentiation and focus. These strategies are known as Porter’s three generic strategies. Porter’s strategies basically describe the trade-off of strategies between cost minimization, product differentiation strategies and market focus.

Strategy methods, theories and tips

What are the most known and used theories and management models? What are their success stories and practical tips when you apply these? These posts are all about great tools and methods that can help you to achieve your goal or understand certain aspects that come with strategic planning.

Mission Statement

May 12th, 2020

This article provides a practical explanation of the mission statement. After reading, you will understand the basics of this powerful strategy tool. What is a mission statement? A mission statement is a brief description of why an organisation…

Resource Allocation

April 29th, 2020

Resource Allocation: this article provides a practical explanation of resource allocation. After reading, you’ll understand the basics of this powerful strategy tool. What is Resource Allocation? Resource allocation is the process in which a company decides where to…

Business Transformation

April 26th, 2020

This article provides a practical explanation of Business Transformation. After reading, you’ll understand the basics of this powerful strategy tool. What is Business Transformation? The definition Business Transformation is a concept with a lot of different definitions. To…

Modern Portfolio Theory (Markowitz)

April 16th, 2020

This article provides a practical explanation of the Modern Portfolio Theory. After reading, you’ll understand the basics of this powerful strategy tool. What is modern portfolio theory and investment analysis? The Harry Markowitz’s Modern Portfolio Theory is an…

Functional Strategy

March 30th, 2020

This article provides a practical explanation of functional strategy. After reading, you’ll understand the basics of this powerful strategy tool. What is a Functional Strategy? In business, plans for the future are defined with goals and objectives. Together these goals…

MOST Analysis

February 25th, 2020

This article provides a practical explanation of the MOST Analysis. After reading, you’ll understand the basics of this powerful strategy tool. What is the MOST Analysis? The MOST Analysis is an analytical technique that is used for strategic planning and…

Carroll’s CSR pyramid

February 13th, 2020

This article provides a practical explanation of Carroll’s CSR pyramid. After reading, you’ll understand the basics of this powerful strategy tool. Carroll’s CSR pyramid explained Carroll’s CSR pyramid is a framework that explains how and why organisations should…

Teece’s Win-Lose Innovation Model

January 23rd, 2020

This article explains Teece’s Win-Lose Innovation Model in a practical way. After reading, you’ll understand the basics of this powerful strategy tool. What is Teece’s Win-Lose Innovation Model? Teece’s Win-Lose Innovation Model describes the required steps that organizations should…

Flywheel Concept by Jim Collins

January 12th, 2020

This article describes the Flywheel Concept, created by Jim Collins, in a practical way. After reading you will understand the definition and basics of this powerful strategy tool. What is the Flywheel Concept? A flywheel is a…

OGSM Framework

December 20th, 2019

This article provides a practical explanation of the OGSM Framework. After reading, you’ll understand the basics of this powerful strategy tool. The tool was popularised by Proctor & Gamble, and can be applied to an entire organisation, but…

SPACE Analysis

November 14th, 2019

This article explains the SPACE Analysis model in a practical way. After reading it, you understand the basics of this strategy tool. What is the SPACE Analysis? A SPACE Analysis makes it easier for upper management to make strategic choices…

SOAR Analysis

November 7th, 2019

This article explains the SOAR Analysis in a practical way. After reading it, you understand the basics of this strategic planning tool. This article also contains a downloadable and editable SOAR Analysis template. What is the SOAR Analysis? A…
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