What is strategy of the firm? Definition, Nature and Characteristics

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From experimental approach, Alfred Sloan (manager at General Motors from 1923 to 1946) states that strategy is established on the basis of strengths and weaknesses. According to Chandler, “strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (1962). Andrews (1980) defines: “Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or in-tends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities”.

Porter (1985) defined strategy, in terms of competitive strategy, “… is the search for a favorable competitive position in an industry, the fundamental arena in which competition occurs. Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition”. Also, Porter (1980) specified strategy as the “… broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals” (p.xxiv) and the “… combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there” (p.xxiv). He emphasized three basic principles of firm strategy: (i) creating a unique and valuable position in the market; (ii) creating balance through the choice of “not-to-do things”; and (iii) achieving general “suitability” by suitably organizing and coordinating activities within the firm to support the strategy chosen.

Mintzberg (1994) affirms that human use “strategy” by different methods. According to him, there are four main strategic approaches, including: (i) strategy is a plan, a “how”, a means of getting from here to there; (ii) strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a “high end” strategy; (iii) strategy is position; that is, it reflects decisions to offer particular products or services in particular markets; and (iv) strategy is perspective, that is, vision and direction.

By: Firm Strategy & Management
Title: What is strategy of the firm? Definition, Nature and Characteristics
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