What is a Business Strategy?

A Strategy in principle is basically a mean or a plan to achieve the medium and long term objective of a business organization, both profit and non-profit organization, where the objectives is related to competitiveness and sustainability of the organization.

Some key words need to be clarified before we continue our discussion on the meaning of strategy defined above.  First, on the meaning of “business”.  The following is the meaning of business from Online Oxford Learners Dictionary: “the activity of making, buying, selling or supplying goods or services for money.” From this definition we can see that business is an activity or set of activities (on producing, buying, selling – these are all processes – hence business process) related to goods and services that have values (here it is said “money”; money does not have to be bank-notes, but anything that has value that can be traded with other goods or services, of course, that also have value).  Words profit and non-profit indicate that government organization (including military organization) and Non-government organizations (NGOs) and any social organization also could have strategy; not only those with objectives of making profit.

The word organization means a system that has goals of purposes; an entity composed of many interdependent components, themselves could be other systems (sub-systems), with their respective functions, working holistically and in an integral manner to achieve the determined goal.

Since strategy is a mean – mean to achieve the predetermined goal, chosen from several alternative means – therefore, strategy is basically an action plan, medium to long term plan.  Such plan is called Strategic Plan, and since this is defined only at business level, then it is called Business Strategic Plan.

Here is a definition of a strategy cited from Thomson, A. A. Jr., A. J. Strickland IV, and John E. Gamble (2008)1:  “A strategy is basically Consists of competitive moves and business approaches used by managers to run the company.  It is an action plan to grow the business, to attract and please customers, to compete successfully, conduct operations, to achieve the targeted levels of organizational performance”.

In conclusion, a strategy should have the following four characteristics:

  1. It has to do with competitiveness of the business – it is about how to compete.
  2. It relates to medium and long term – the issue of sustainability and growth.
  3. It should be holistic – meaning it should be about the whole company/business or it should not be partial. There is no such a division strategy (e.g., IS/It Strategy).  What you have is business strategy (the word strategy can only applicable at business level), since it is the business that compete with other businesses, not IS/IT division for example. Here, the rule “that the total is greater than the sum of all its components” applies.
  4. The approach should be integral – i.e., in trying to asses any aspect or division in the business, it should be done with respect to other aspects or division in the business integrally. (Ir. Togar Alam Napitupulu, MS., MSc., PhD)