Business Strategy








What role does strategic management play in the 21st century where environmental analysis expects an element of stability, competencies take time to develop, and competition requires flexibility that would make strategic planning an everyday task?


Type the words “corporate strategy” or “business strategy” into any search engine or embark on a book search in a library and you become confronted with a vast array of opinion, definitions, business solutions and business strategies currently or previously used by organisations.


Usually when researching a topic this would wonderfully helpful however, in this case due to the broadness of the term and the unclear meaning and necessity of corporate strategy all the information does not lead to any definitive answer as to whether business strategy has played and important role in business of previous years or has a role to play in the 21st Century.


What is business strategy?


In business, strategies give company leaders a clear image of what success is and provide a set of plans with clear, measurable actions to attain it. Strategies outline the specific qualities and characteristics that define a business and set it apart from others in the industry. It is a set of “integrated actions in pursuit of competitive advantage”.


It is thought that without a clear plan executives, managers, customers and other key stakeholders can easily understand and embrace, it becomes increasingly more difficult for an organization to operate at levels necessary to be effective and or competitive. Additionally, it is understood that strategy is just the first important step. Strategy linked to implementation is an extremely important aspect that must be paid close attention too in order for strategy to prove successful.


If strategy can be defined as easily as this then why is the topic so difficult to pin down? The answer to this lies in the varying success of organisations using different strategies, if at all, in order to become market leaders.


Sun Tzu’s The art of War has proved to be a classic work on strategy which was initially interpreted in military terms two millennia ago and has since been applied to business solutions. It is divided up into six strategic principles that work together and can be knitted into the world of business.


SHAPE * MERGEFORMAT

o Win all without fighting
Capturing your market without destroying it






o Avoid Strength / Attack weakness
Striking where they least expect it



o Deception and Foreknowledge
Maximizing the power of market information



o Speed and preparation
Moving swiftly to overcome your opponents



o Shape your opponent
Employing strategy to master the competition



o Character based leadership
Providing Effective leadership in turbulent times


An example of this type of strategy can be seen when looking at Kmart trying to take on Wal-Mart in the 1990’s. Kmart had invested $3 billion in re-vamping and opening stores in order to take on Wal-Mart who were expanding out from rural areas into Kmart’s urban territories. Kmart, in response, lowered its prices on thousands of products in order to increase their competitiveness. Five years later the direct attack strategy had not worked. Kmart’s new store sales per sq foot fell from $167 to $141. This was simple because Wal-Mart Lowered their prices too. A Wal-Mart manager was quoted as saying “it’s very simple. We are not going to be undersold”


The cost of the CEO’s attack on Wal-Mart caused their market share to decrease from 35% to 23% whilst Wal-Mart’s doubled to 40%. The principle of avoiding strength and attacking weaknesses is apparent here. Kmart took on Wal-Mart at its strongest point, its cost structure, and lost. Avoiding strength and attacking weaknesses achieves the maximum return for the least expenditure on resources, thereby maximising profits.


The example above shows the pit falls of direct aggressive attacks on other organizations in a particular industry and how the use of an age old strategic thought could have resulted in a different outcome. Unfortunately however, it seems that pitting strength against strength is a favourite approach to competition among many Western companies.


This is one of the reasons why strategies existing in companies today have evolved to suit individual requirements and why, increasingly, there are many different schools of thought on the subject of strategy.


Since the 1960’s business strategy consultants have been lining their pockets by convincing business that having a set strategic