Origin of Strategy
The origin of strategy can be traced back to Sun Tzu’s book on military strategy called the “The Art of War” which was written in 600 BC in China. It was the very first document about the planning and execution of military operations to win war (Pars, 2013), applying this in parallel to the business world; strategy would be about the planning and execution of business operations to win business competition.
What is strategy in the business world ?
Tolbot (2003) described strategy as “the direction and scope for organization through its configuration of resources within a changing environment to meet the needs of markets and fulfil stakeholder expectation”.
This description implied strategy is about preparing an action plan and a path of journey; within an unpredictable environment; to reach a destination of desire in future.
Strategy is an essential part of management because the environment in future is unpredictable, a general plan or strategy is needed to manage the resources through the changing environment to reach the desirable destination. Henri Fayol (1841-1925) who was the founding father of administration school of management; considers management to consist of six functions; forecasting, planning, organizing, commanding, coordinating and controlling (Hindle 2008), according to Henri Fayol it seems strategy is under the forecasting and planning functions which implied strategy is the antecedent of all management activities. It can be argued that the management of business starts with an essential management component; a strategy.
How to establish a business strategy ?
Thompson et al. (2014) written a book on “Crafting and Executing Strategy” which illustrates strategy is developed and implemented by the following process:
1. Developing a strategic direction with vision, mission and values.
2. Setting objectives
3. Crafting a strategy
4. Implementing and executing the chosen strategy
5. Evaluating performance and initiating corrective adjustments
The illustration suggested that strategy is developed and executed through by the application of the six management functions described by Henri Fayol (1841-1925) which are forecasting, planning, organizing, commanding, coordinating and controlling. The steps involve the management function of forecasting where is the sweet spot which the company desired to be in; that is the vision and objectives. It involves planning a course of actions (crafting strategy) required to realize the vision. It involves organizing, coordinating and commanding the resources to implement the chosen strategy. It also involves controlling and the resources and priorities to correct the deviation from the performance objectives.
Thompson et al. (2014) also illustrate crafting strategy involves the below steps:
- performing an external and internal analysis of the company
- form a strategic vision of where the company needs to head
- identify strategic options of the company
- select best strategy for the company
Thompson et al (2014) advocated that manager can chose options from Michael Porter’s generic strategies which include broad cost leadership, broad differentiation and narrow market focus.
The criticism of Porter’s generic strategies is that it limits the manager to react to changing environment when stuck in one strategy, and multiple strategies are required to respond to any environment effectively in a feedback and control management process.
The literature review revealed that good business management start with strategic management, and strategy is an essential component of management. The above steps are the guiding frame work to jumpstart strategic planning.
A good business management should start with external and internal analysis of the environment to determine its strategic position and evaluate which generic strategies is the best course of action to create the competitive advantage to win business for the company. The business environment is dynamic and manager cannot take the initial analysis for granted and assumed competitive force is constant, this implication is strategic management is a continuous improvement process so feedback and control is required.
Pars, Matthijs (2013), Six Strategy Lessons from Clausewitz and Sun Tzu, Journal of Public Affairs (14723891). Aug2013, Vol. 13 Issue 3, p329-334. 6p
Talbot, Philip A (2003), Corporate Generals : The Military Metaphor of Strategy, Irish Journal of Management. 2003, Vol. 24 Issue 2, p1-10. 10p. 3.
Hindle, Tim (2008), Henri Fayol, Guide to Management Ideas & Gurus. 2008, p237-238. 2p
Thompson, AA, Peteraf, MA, Gamble, JE, & Strickland, AJ (2014), Crafting and Executing Strategy: The Quest for Competitive Advantage Concepts and Cases, 19th edn, McGraw-Hill, New York