Johnson and Scholes (Exploring Corporate Strategy) define strategy as follows: "Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations". In other words, strategy is about:
* Where is the business trying to get to in the long-term (direction) * Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope) * How can the business perform better than the competition in those markets? (advantage)? * What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)? * What external, environmental factors affect the businesses' ability to compete? (environment)? * What are the values and expectations of those who have power in and around the business? (stakeholders)
Organizations undertake strategic planning to define the direction in which they want to proceed. Management first identifies the company's long-term goals and vision and then devises strategies to attain them. Before an organization draws up its strategic plans, it first understands the external and internal environments it operates in. A well-drawn strategic plan does well for at least five to seven years. Continuous monitoring is required to see that no deviations creep up.
Strategic plans always are documented on paper so that management can refer to them from time to time. There are several benefits of this typing of planning mechanism.
Strategic plans let managers know the direction in which they are proceeding. Management is able to decide on what product it will manufacture in the future. Management makes this decision after considering factors such as the current market scenario, the firm's...