Do businesses really need a strategy? And can businesses really achieve competitive advantage with a strategy?

Article by staff consultant 2020 BSc MSc 

22/10/21

Depending on whom you talk to most proffessionals in the service Industry will argue yes! Strategy does matter to your organization if you want it to be financially successful. Others may argue against and say no! because they rarely work. (Donaldson,1985) argues a primary responsibility of any CEO of any major corporation is to articulate the company’s financial goals as a tangible focus for its business mission and strategies. Horwath 2006, claims companies with strategies can outperform companies without them and provides higher returns to shareholders. Firms with strategies can be expected to gain a 65% increase in revenues than those without. Godwin, (2019) argues businesses without an apparent strategy are older and benefit from barriers to entry often created by regulation and the sizse of investments made which are required to enter the market. Strategy matters to a firm if they want to differentiate products from competitors, eliminate bad costs, become a market leader, and gain a competitive advantage. In his study of strategy Godwin, (2019) showed that firms without strategy are more prone to have an unengaged or uninspired workforce and low profitability compared those with a strategy. The existing argument for strategy is it does matter and having one is key to ensuring the long-term success of the business. ation into day-to-day business activities incorporates all three. 

Are you a business owner and are critical of your strategy? Ask the question "who are we? What business are we in? What makes us unique and relevant? And how sustainable is our business model? (Harney, 2012). Then consider one of these strategies.

Corporate strategy

A corporate-level strategy is a large group of people, or company that has a strategic plan of action designed to achieve a long-term overall aim. A corporate-level strategy is a higher level of strategy and is also about diversifying the organization's activities into other activities. (Johnson, 2019). The second level of strategy is a business-level strategy.

Business strategy

The second level of strategy is a business-level strategy. A business-level strategy is about how different businesses of different industries conduct their commercial activities. A business-level strategy is also about how the business competes or how they are efficient in their market. 

Functional Strategy

The third level of strategy to consider is the functional strategies that are about securing investment. Functional strategies have a special activity, purpose, or task. Functional strategies are designed to be practical and useful rather than attractive and are shaped by corporate and business strategies. 

These levels of strategies apply commonly to large multinational enterprises but can also apply to organizations in the not-for-profit sector. The three levels of strategy can be applied to many different kinds of organizations and institutions but are typically applied to International businesses, multinational organisations, MSE and family businesses. They are typically used in the public sector and can be applied to not for profit organizations.