Understand Business Strategy

Business Strategy is important at every level in every organization. That’s why you and your team need to understand what strategy is, how to create it, and how to implement it.

What is strategy?

To be successful, your organization needs to set a clear, sound strategy. Strategy is how your organization chooses to deliver its products or services to meet your customers’ needs. It’s the unique way that your organization carries out its purpose and separates itself from the competition.

A good strategy consists of two major elements:

The value proposition—what makes your organization’s products or services distinctive so customers want to do business with you instead of your rivals

The value chain—the combination of organizational activities that makes your unique value proposition possible


A large financial services company sees an opportunity to offer financial advice and products to middle-income individuals—potential clients who can’t afford the fees typically charged for asset management and financial planning. It creates a strategic plan around serving this group of customers.

The company forms a new unit that offers a combination of activities, including free web-based planning tools to help people budget and save, access to low-cost phone-based financial advisors, and a streamlined portfolio of inexpensive investment products.

Why is strategy important?

No matter how good you are at producing products or services, excellent execution is not enough to remain successful. Eventually, other organizations will be able to offer customers what you provide—often better or cheaper.

Your organization can set itself apart from your competitors by having a sound strategy and skillfully carrying it out. Strategy provides the information that you and managers at all levels need to define your work—and help your organization continue to thrive.

Your role

You may play a number of different roles in planning and executing your organization’s strategy:

You may be asked to analyze information that senior managers then use to develop an organization-wide strategy. Units hold tremendous knowledge about an organization and can recommend what it should be doing and where it should be going.


The senior management team at a large enterprise software company directs the regional sales groups to gather data from customers about the new features they anticipate needing over the next two to three years.


You and your unit may create and execute action plans aligned with the organization’s strategy. Units are the implementation centers of an organization. They have the leadership, people, skills, and money needed to put plans into action.


Senior managers identify a priority issue that focuses on developing a more efficient supply chain. They delegate this issue to appropriate units, including the Manufacturing division. Manufacturing then incorporates this priority issue into its planning.

You may initiate your own strategic planning process—without direction from senior managers—regarding unit-level priority issues. At times, you might need to develop a strategy and plan for your unit that aligns with, but is not directly a part of, the organization’s strategy.


Your unit is losing key staff members to other companies, increasing costs and reducing productivity. You make reducing attrition in your unit a strategic priority.

Creating strategy

Strategy is usually developed through a strategic planning process. Strategic planning helps ensure that:

  • A strategy is sound
  • All units are aligned with the strategy
  • Strategy implementation is effective
  • The result of the planning process is a strategic plan.

Strategic plans vary, but they usually contain:

  • Direction statement—a summary of the organization’s vision, mission, and values that guide the strategy
  • Strategic objectives—goals and outcomes that represent achievement of a strategic vision *
  • Priority issues—key issues (weaknesses to be addressed or opportunities to be seized) that the organization needs to tackle to be successful
  • Action plans—specific steps the organization needs to take to accomplish its priority items and reach its objectives

Your organization may use different terms for these elements of a strategic plan. However, most organizations document their strategy and, in broad terms, explain how they plan to achieve it.

The strategic planning process

Strategic planning involves:

  • Understanding what you currently do
  • Determining what you want to become
  • Planning how to get there


A technology company builds proprietary mobile apps for financial services companies. It decides that one of its top priorities is to extend its brand presence globally. The company’s strategy therefore focuses on developing a unique way to expand its business in the United States and Asia over the next three to five years.

Strategic planning is a blend of art and science. It is an art in that it requires creative thought, an ability to identify different potential outcomes, and strong communication skills to engage those who will implement it. It is also a science in that it requires managers to collect and analyze information that they can then turn into action.

A typical strategic planning process looks like this:

The strategic planning process.

Senior managers in your organization generally begin strategic planning by gathering data and researching the world in which your organization operates. They then narrow in on the top three or four priority issues that the organization needs to tackle to be successful in the long term.

For each priority issue, units and teams create high-level action plans. Senior managers use these action plans to further clarify the organization’s strategic objectives. Senior managers and units go back and forth several times to examine, discuss, and refine the plan. The overall strategy then feeds into planning at different levels in the organization.

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