Strategy development

A company’s strategy is the methods of competition and doing business that are chosen by the company to satisfy customers, compete successfully, and achieve the organization’s global goals.

The strategy is adjusted by adding some parameters and abandoning others in response to changes in the market, consumer needs and preferences, strategic maneuvers of competing companies, acquired experience, new opportunities and threats, unforeseen events, fresh ideas. The conditions for doing business in the future are quite uncertain and unpredictable, so it makes no sense to plan each step; it is better to create an overall plan and adjust it if necessary. The strategy is both active (i.e. thought out and planned in advance) and adaptive (i.e. is adaptive). Moreover, common sense suggests that any activity of the company, both planned and adaptive, should not go beyond the competence of this company and its competitive Opportunities.

As noted above, a company’s strategy is a set of answers to questions like. Each company has its own questions and depends on the position and goals of the company. In any type of business, market conditions allow even close competitors to avoid twin strategies: some choose the path of reducing costs, others – the differentiation of goods or services, others – the maintenance of market niches or the satisfaction of highly specific needs of customers. Some companies compete locally or regionally, others globally. There are many ways of doing business and positioning, so the description of the strategy should be very detailed, reflect the specifics of this company.

Strategy development is a market- and consumer-oriented creative activity that requires such qualities as the ability to use market opportunities and customer needs, a flair for promising innovations, a willingness to take reasonable risks and an intuitive understanding of what is needed to grow and strengthen the business [15 pp.38–42].

The strategy of the organization changes over time under the influence of new management plans and actions taken in response to unforeseen events [15 p.75].

The real strategy of the company usually differs from the planned one, since in response to changes in external conditions, some elements are added, and others have to be abandoned.

When developing a strategy, it is natural and necessary to take into account the reaction to changes in the external environment. Since, opportunities are constantly opening up that require adjustment of individual elements of a detailed strategy. These include new technologies, unexpected maneuvers of competitors, sudden changes in customer needs and expectations, unplanned increases or decreases in costs, mergers and acquisitions of leading industry companies, new laws, the introduction or abolition of trade barriers, etc. Therefore, there is no end to improving the strategy. The company’s strategy combines already performed actions, plans and possible course adjustments in connection with new circumstances.

Usually, the company’s strategy changes gradually and only in rare situations radically – then they talk about the strategy of breaking the rules. This strategy is fundamentally changing the industry – by offering a fundamentally new product or service (for example, disposable cameras and digital cameras), changing the balance of power in the market or the boundaries of the industry. Today, this strategy is widely used by online retailers trying to dictate new rules of trade – anywhere and at any time, while traditional stores can only trade in a certain place and at a certain time. However, consumers also resort to the strategy of violating the rules: they have credit cards, accounts in electronic banks, the ability to receive loans via the Web and make purchases on the Internet instead of going to the nearest store [30 pp.69–82].

Thus, a change in strategy, gradual or rapid, adaptive (in response to new conditions) or active (when new opportunities arise in the external or internal environment) is the norm, even a necessity. Therefore, creating a strategy is a continuous process, not a one-time action.

Changing the strategy is also necessary to strengthen competitiveness and prepare for future market conditions and competition. The active or adaptive nature of the company in preparation for future market conditions determines the nature and speed of change in its strategy.

However, too frequent and radical changes in strategy are suspicious. Of course, their cause may be an unexpected technological breakthrough, a change in the situation on the market or in the preferences of buyers, other unforeseen circumstances, but more often it is a matter of gross miscalculations in the development of the strategy, in other words, in the mistakes of managers. Frequent and radical changes in strategy cause a resonant market reaction, confusion among buyers and employees, and have a bad effect on profits. A well-thought-out strategy can remain unchanged for several years, it is enough to adjust it to changing circumstances.

It is desirable to revise the strategy whenever there is a reason for this, and necessarily – if unforeseen events occur.

Strategy development is not only the task of top management. At large enterprises, corporate management, heads of departments, heads of functional units of the corporation (production, marketing and sales, finance, personnel, etc.), operational management – plant managers, regional sales managers, etc. participate in making key decisions (relating to the future of the company, new programs, etc. In a diversified company, strategies are developed at four organizational levels. The first level is the corporate strategy (strategy for the whole company), the second is the business strategy (for each area of the company’s activities), the third is the functional strategy (for each functional unit within each area of activity), the fourth level is the operational strategy (a narrower strategy for the main structural units within functional units: factories, local and regional sales departments, departments). For obvious reasons, there is no corporate level in a single-profile enterprise.