In the new business environment customers are not just demanding but they also have infinite options. Competition is not just intensifying but there are new sources of competition. Resources too are not just limited but they are fluid and move fast. Investors are impatient and look at above average returns consistently and constantly. Huge opportunities coexist with massive risks. An organization must think and act differently and smartly to face the new environmental context. Strategy derived through the strategy process is what makes the organization stand apart from ”also rans” and perform differently.
Strategic decisions are Context specific and indicate long term direction of an organization. These decisions define the context specific sustainable competitive advantage of the organization. It establishes the scope of the organization and the strategic fit between resources, activities, and environmental contingencies. Strategic decisions aim to exploit existing capabilities or explore new opportunities and requires major resource commitments and is irreversible in the short run. It affects all organizational decisions and is shaped by values and expectations of key stake holders with the primary aim of wealth creation. It specifically helps answer three questions for each business in the portfolio namely
1. Where to Compete? (Market selection)
2. How to win orders? (Build Competitive advantage)
3. How to deliver? (Value delivery process)
Strategic decisions are complex in nature and require a vision for the future. It demands an integrated approach to managing an organization. It requires a change within the organization and management of relationships and networks outside the organization.
There are different types of strategy namely
1. Corporate / Portfolio Strategy: Portfolio strategy also called corporate strategy involves portfolio selection considering synergy and risk return criterion. It decides resource allocation (Organizational, Financial, people etc. ) across businesses.
2. Business Strategy: Business strategy is a set of decisions that helps a business position itself uniquely and distinctly.
3. Functional Strategy: Functional strategies includes strategies and programs at functional level to operationalize the overall strategy and align them to each other.
4. Operational Strategy: Operational strategy includes action plans and programs at the frontlines of an organization where strategy gets operational.