Strategy: Types and Significance

Strategy  
A process where an organization envisions its future and develops  strategies to achieve that vision.

Definition:

The determination of the mission or purpose and the basic long term objectives of an enterprise, followed by the adoption of courses of action and allocation of resources necessary to achieve these aims.

Policies:
General statement or understandings that guide managers' thinking in decision making.

Levels of strategy:

• Corporate Strategy
• Business Strategy
• Functional level strategy

Strategic Management:

It is a systematic approach to a major and increasingly important responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises.

Features of Strategic Planning:

SIGNIFICANCE OF STRATEGIC PLANNING:

1. Enhances the likelihood of business survival and enables opportunities for individuals in the company
2. Clarifies objectives of the organisation.
3. Facilitates the implementation of policies and long range plans.
4. predict the outcome
5. Fight competition in the market
6. Facilitates environment scanning. Identifying key factors for success.

Strategic Planning process:

1. Inputs to the organisation
2. Industry Analysis
3. Enterprise
4. Orientation Values and Vision
5. Mission or purpose
6. Present and future external environment
7. Internal environment
8. Development of alternative strategies.
9. Evaluation and choice o strategies.
10. Contingency testing and contingency planning
11. Medium and short range planning and implementing.

Disadvantages

1. Costly to perform for small and medium businesses. Strategic planning, the same as marketing or proper human resource management, adds a lot of expenses to an organization. Managers or strategic planners have to be hired, additional efforts are required towards analysis of external and internal environments and some tools have to be designed to properly implement strategic planning process.

2. The process is very complex. Strategic planning process consists of many steps that are connected to each other and must be constantly adjusted. Some unexpected factors also appear that may change the whole strategy and as a result, strategic planning process.

3. Low rate of successful implementation. Due to its complexity and heavy commitment to strategic goals, strategic planning is rarely implemented successfully. Often, the poor implementation is the reason for failure, although it is more often the case of misaligned operational and strategic goals. 

Types of STRATEGIES:

• Stability
• Growth
• Intensive growth
1. Market penetration
2. market development
3. product development
• Diversification
• Combination
• Backward integration
• Forward integration
• Conglomerative growth
• Joint venture
• Retrenchment

• turnaround
• divestment
• liquidation