THE CONCEPT OF STRATEGY

Strategy has been defined by Johnson and Scholes (1993) as: ’The direction and scope of an organization over the longer term, which ideally matches its resources to its changing environment, and in particular, to its markets, customers and clients to meet stakeholder expectations.’

Strategy determines the direction in which the organization is going in relation to its environment. It is the process of defining intentions (strategic intent) and allocating or matching resources to opportunities and needs (resource-based strategy). Business strategy is concerned with achieving competitive advantage. The effective development and implementation of strategy depends on the strategic capabilityof the organization’s managers. As expressed in the Professional Standards of the CIPD, this means the capacity to create an achievable vision for the future, to foresee longerterm developments, to envisage options (and their probable consequences), to select sound courses of action, to rise above the day-to-day detail, to challenge the status quo. Strategy is expressed in strategic goals and developed and implemented in strategic plans through the process of strategic management. Strategy is about implementation, which includes the management of change, as well as planning. An important aspect of strategy is the need to achieve strategic fit. This is used in three senses:

1. matching the organization’s capabilities and resources to the opportunities available in the external environment; 

2. matching one area of strategy, eg human resource management, to the business strategy; and 

3. ensuring that different aspects of a strategy area cohere and are mutually supportive.

The formulation of corporate strategy can be defined as a process for developing and defining a sense of direction. It has often been described as a logical, step-by-step affair, the outcome of which is a formal written statement that provides a definitive guide to the organization’s long-term intentions. Many people still believe that this is the case, but it is a misrepresentation of reality. In practice the formulation of strategy is never as rational and linear a process as some writers describe it or as some managers attempt to make it. 

Mintzberg (1987) believes that strategy formulation is not necessarily rational and continuous. In theory, he says, strategy is a systematic process: first we think, then we act; we formulate then we implement. But we also ’act in order to think’. In practice, ’a realized strategy can emerge in response to an evolving situation’ and the strategic planner is often ’a pattern organizer, a learner if you like, who manages a process in which strategies and visions can emerge as well as be conceived’. He has emphasized the concept of ’emergent strategies’, and a key aspect of this process is the production of something that is new to the organization even if it is not developed as logically as the traditional corporate planners believed to be appropriate.