Strategy emerges over times as intentions collide with and accommodate a changing reality. Thus, one might start with perspective and conclude that it calls for certain position, which is to be achieved by way of carefully crafted plan, with the eventual outcome and strategy reflected in a pattern evident in decisions and actions over time. This pattern in decisions and actions defines what is called realized or emergent strategy.
Strategy as the basis or competition is best understood from the perspective of Michael Porter. According to Porter, competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.
Thus, Porter argues that strategy is about competitive position, about differentiating yourself in the eyes of the customer, about adding value through mix of activities different from those used by competitors. Porter defines competitive strategy as a combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there.
In top management Strategy, strategy is also defined as the framework which guides those choices that determine the nature and direction of an organization. This can be interpreted as selecting products (or services) to offer in the markets in which to offer them.
The notion of restricting the basis on which strategy might be formulated has been carried one step farther. ompanies achieve leadership positions by narrowing not broadening their business focus. Three value disciplines are identified that can serve as the basis for strategy: operational excellence customer intimacy and product leadership. With driving forces, only one of these value disciplines can serve as the basis for strategy. Three value disciplines are briefly defined below:
1) Operational Excellence – Strategy is predicted on the production and delivery of products and services. The objective is to lead the industry in terms of price and convenience.
2) Customer Intimacy – Strategy is predicted on tailoring and shaping products and services to fit an increasingly fine definition of the customer. The objective is long term customer loyalty and long term customer profitability.
3) Product Leadership – Strategy is predicted on producing continuous stream nod state of the art products and service. The objective is the quick commercialization of new ideas.
Each of the three value disciplines suggests different requirements. Operational excellence implies world class marketing manufacturing and distribution processes. Customer intimacy suggests staying close to the customer and entails relationships. Product leadership clearly hinges on market focused R&D as well as organizational nimbleness and agility.
What, then, is strategy? Is it a plan? Is it method of doing business? Is it a position taken? Strategy is all theses – it is perspective position plan and pattern. Strategy is the bridge between policy or high order goals on the hand, and tactics or concrete actions on the other. Strategy and tactics together bridge the gap between ends and means.
Strategy is a general framework that provides guidance for actions to be taken and, at the same time, is shaped by the actions taken. This means that the necessary precondition for formulating strategy is a clear and widespread understanding of the ends to be obtained. Without these ends in view, action is purely tactical and can quickly degenerate into nothing more than a failing about.
While creating a strategy, it must be remembered that every business has its distinctive way of organizing the very many activities that are involved in delivering its product or service to the end consumer. In retail parlance, one would term it as the format adopted by the retailer to reach his consumer. Over a period of time, as business grows, changes occur in the environment, the customer and geographies in which the business is conducted. Companies are confronted with new information and communication technologies, shorter product life cycles, global markets and tougher competition. In this hostile business environment, firms should be able to manage multiple distribution channels, complicated supply chains, expensive IT implementations and strategic partnerships and still stay flexible enough to react to market changes. This requires that companies have dynamic business which can evolve with the changes in the environment and the marketplace.