An organizational strategy is the sum of the actions a company intends to take to achieve long-term goals. Together, these actions make up a company’s strategic plan. Strategic plans take at least a year to complete, requiring involvement from all company levels. Top management creates the larger organizational strategy, while middle and lower management adopt goals and plans to fulfill the overall strategy step by step. This unified effort to can be likened to a journey. Daily challenges such as road conditions must be overcome to complete sequential legs of the journey, which eventually lead to the ultimate destination.
Organizational strategy must arise from a company's mission, which explains why a company is in business. Every activity in the company should seek to fill this purpose, the mission thus guiding all strategic decisions. A company's vision describes what the company will have achieved in fulfilling its mission. From the vision follows the long-term goals of an organizational strategy.
For a strategy to work, it must be converted into smaller, shorter-term goals and plans. Middle management adopts goals and creates plans to compete in the marketplace. These tactical objectives take less than a year to complete, becoming the building blocks of a successful organizational strategy. At the lower levels of an organization, functional managers concern themselves with the day-to-day operations of the company, their objectives and plans taking days, weeks or months to complete.
Elements important to organizational strategy include resources, scope and the company’s core competency. Because resources are finite, allocating them -- people, facilities, equipment and so on -- often means diverting them from somewhere else in the organization. Quantifying a strategy’s scope -- for instance, becoming No. 1 in North American sales -- makes for more focused plans. Finally, competitive advantage refers to what a business is best at -- its core competency -- along with the sum of what it knows through experience, talent and research.
Organizational strategy falls into categories referred to as grand strategies. Grand strategies include growth, diversification, integration, retrenching and stabilizing. A growth grand strategy refers to high levels of growth achieved, for instance, by adding new locations. Diversification means expanding into new markets or adding dissimilar product lines. Controlling supply or distribution channels instead of relying on outside companies is vertical integration. Companies achieve horizontal integration by adding similar products and services to their lineup, making them more competitive. Retrenching prunes a company back to its core competency. Companies staying the course adopt a stability strategy.