26 August 2021
What is strategy?
Strategy is defined as decision making
The key concept about making a decision is to not just decide what you will do, but to also decide what you are not going to do.
Only by rejecting all available options (with good reason) can you be satisfied that the chosen strategy is your best option.
Strategy as it applies to business
Businesses make strategic decisions all of the time (or should). These decisions are high-level corporate directions (as distinct from minor day-to-day decisions making).
The development of a business strategy is usually a quest for achieving competitive advantage and/or to dominate a profitable market niche where you can be clearly distinguished by potential customers as different from your competitors.
Without this deliberate difference strategic planning is more properly called business planning.
Example of minor business decisions
- Deciding what printer to buy
- Should we upgrade to faster broadband?
- Should we hire candidate X over candidate Y?
These decisions are typical managerial decisions. While not strategic, often they are guided by business strategy. This is one of the values of high-level strategic decision making; day-to-day decision making has a frame of reference.
Example of high-level strategic decision making
"We will target defence as a market segment to replace the declining automotive industry."
The decision by the Australian Federal Government (under Tony Abbott) to no longer provide subsidies to overseas car manufactures was a precipitating factor that ended the car industry in Australia. For many parts suppliers (whose only customers were automotive manufacturers) they were forced to make a strategic decision; shut-down (go out of business) or find a new market and develop new products? Such dramatic changes in the market demand strategic response.