Chapter 1 – Introducing Strategy
- Strategy is about the key issues for the future of organizations, or in other words, the long term direction for an organization. The description of strategy in the book has two advantages: 1. It can include deliberate, logical strategy and incremental, emergent patterns of strategy; 2. It can lay the focus on differences and competition as well as on recognizing the roles of cooperation and imitation.
The long term: As strategies are often measured over years or even decennia, the importance of strategy is big. This can be easily explained in the ‘Three Horizons Framework’. The Three Horizons Framework is a figure which aims for a company to excist out of three businesses or activities, these are defined by horizons. (figure 1)
Horizon 1: Basically the current core activities of a company. Horizon 2: Where companies are creating new possibilities to gain profit. Figure 1. The three horizons framework Horizon 3: Were a company create viable options, where nothing is sure. For example, research and development project and start-up ventures. Cannot predict what is coming. In short it can be said that companies should focus on the long term strategy instead of only on the short term issues.
The strategic direction: Strategies follow always a kind of path or pattern. Therefore, strategies are set according to long term objectives. Most of the times, the objectives are set in order to increase maximum profit for the stakeholders.
The organization: Organizations involve different, complex relationships with shareholders. These are internal as well as external. * Management is a critical factor in establishing and implementing a strategy.
Levels of strategy
There are three levels of strategy
1. Corporate level strategy: Has to do with the overall scope of the company and how value is added...