What is business strategy?

Published on February 27, 2022   7 min

A selection of talks on Strategy

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Hello and welcome to this series of introductory talks on business strategy. My name is Robert Grant. I'm a professor of strategic management at Bocconi University in Milan, Italy. I'm also the author of Contemporary Strategy Analysis, a leading strategic management textbook used in business programs throughout the world. What is strategy?
The origins of business strategy lie in military strategy. Indeed, the word strategy is derived from the Greek word 'Strategia', meaning the art of the general. However, the history of military strategy extends even further back. The Art of War by Sun Tzu, written in about 400 BC, is considered the first treatise on strategy. During the modern era, the concept of strategy is extended beyond military conflict to almost all fields in which competition takes place, especially business, politics, and sports. Thus, we can define strategy as any plan of action or policy designed to achieve a major or overall aim. Let's look more closely at business strategy. What does it mean for a business enterprise to have a strategy? The answer to that question has changed over the past 60 years. If we go back to the 1960s or 1970s and ask the CEO of a large corporation what the company's strategy was, we will probably be directed to the company's corporate plan. A document, which on the basis of forecasts of market growth and other economic variables, outlined projections of capital investment, capacity additions, human resource plans, new business developments, and programs of R&D, over a period of five years or more. Now, that type of detailed corporate planning fell victim to the increased volatility and unpredictability of the economy where we can't forecast the future. We can't make detailed plans for what we are going to do. Where does this leave business strategy? Even if we cannot predict the future and hence cannot make detailed plans, every business needs an overall purpose. It needs an understanding of how it will compete, it needs a direction for its development. This is what the strategy of a business comprises. It is a statement of what the business is about and its aspirations for the future.