A Brief Overview of the Firm’s Strategy

This chapter provides a high-level overview of strategy by discussing the historical account of strategy, followed by a discussion aimed at understanding the concept of strategy. It further outlines and discusses processes that firms ought to engage in as they formulate strategy. From the discussions, it is apparent that strategy has long existed within living organisms. Strategy as a concept emanated from the need of the people to defeat their adversaries. The concept of strategy can be traced back to the period between 200 B.C. and 400 B.C. The first text that emphasised strategy was The Art of War by Sun Tzu, which was written between 400 B.C. and 500 B.C. From the business perspective, strategy refers to a way in which firms explain to their stakeholders how they will be moving forward. The firm strategy is generally viewed as a course of action that can help the firm in attaining their objectives. There are three aspects of strategy formulation. These are the corporate-level strategy, the competitive strategy (sometimes called the business strategy) and the parenting strategy. The growth or directional strategy outlines the growth objective of the firm and mainly on how to achieve this growth. The portfolio strategy outlines the portfolio of the lines of the firm, which assist in the diversification that the business should engage in. The parenting strategy explains how resources are allocated and managed, especially on areas to put more emphasis on. Strategy consists of three phases, namely, the diagnosis, formulation and implementation.