What are the Characteristics of a Good Strategy?

Strategy can be defined as a means to achieve desired objectives of a firm. Managers

are responsible of making the strategy for the organization and they wish to make good
strategies as the outcome of the strategic planning process of the business. Therefore a
manager needs to know the characteristics of a good strategy.  Characteristics of a good
strategy are summarized below:

 Novelty-
Strategy should be a outcome of innovative and creative thinking. It should include a
new/novel area which were not practices before. If the strategy does not include any
novel aspect in it there is a high tendency that competitors will be already having
detailed knowledge about the strategy employed. Therefore strategy should include a
novel/creative aspect into to make it unique and differentiate from competitors.

 Secretly Devised-
Strategy should involve some confidential element in it which should only be known to
the management of the organization. The secret element of the strategy will always keep
the competitors curious about the strategy. When developing the strategy it is
considered to be a confidential activity where the management team has to keep
the business secrets and should not reveal.

 Intelligent-
Strategy should be design in a clever and smart manner. If the strategy fails to obtain
this characteristic it will not be a strategy as only the smart strategies will be able to
achieve desired objectives.

 Deceptive-
Strategy should involve a an element of the deceive and should be able to cheat the
target audience in an ethical manner. When incorporating the deceiving element the
care should be drawn not to go beyond the limits and cheat people in unethical manner.

 Cost Effective-
The strategy should be able to break even and recover the investment/cost incurred. In
other words, benefits received by the organization by executing the strategy has to be
higher than the cost incurred in executing the strategy.

Differences Between Strategy and

Policy
The following are the major differences between strategy and policy

1. The strategy is the best plan opted from a number of plans, in

order to achieve the organisational goals and objectives. The policy is a
set of common rules and regulations, which forms as a base to take the
day to day decisions.
2. The strategy is a plan of action while the policy is a principle of
action.
3. Strategies can be modified as per the situation, so they are
dynamic in nature. Conversely, Policies are uniform in nature.
However, relaxations can be made for unexpected situations.
4. Strategies are concentrated toward actions, whereas Policies are
decision oriented.
5. The top management always frames strategies, but sub-strategies
are formulated at the middle level. In contrast to Policy, they are, in
general, made by the top management.
6. Strategies deal with external environmental factors. On the other
hand, Policies are made for internal environment of business.

Read more: http://keydifferences.com/difference-between-strategy-
and-policy.html#ixzz4liGFDfUH

The Origins and Meaning of the Word Strategy 

According to Lewis (1999), " the term strategy derives from the Greek 
word 'strategos', meaning 'the art of the general'. Chandler (1962) 
defines strategy as " the determination of the basic long term goals 
and objectives of the enterprise and the adoption of courses of action 
and the allocation of resources necessary for carrying out these 
goals". Strategy can be viewed as the identification of ends and the 
means to achieve those ends, thus providing the foundation for 
approaches to strategic management. According to Mintzberg (1994), " 
strategy is a plan, ploy, pattern, position, and perspective; strategy 
is a process of sensing, analysing, choosing and acting." The strategy 
formulation has to complement the environment of operation and the 
available resources. 
Benefits of strategic management: The major benefit of strategic management is to
facilitate organizations to devise viable policies through the use of a more systematic,
logical, and rational approach to strategic choice. Communication is main factor to
successful strategic management. The chief aim of the communication process is to
accomplish understanding and commitment throughout the organization. It results in
huge benefit of empowerment. More and more organizations are decentralizing the
strategic-management process.

Financial Benefits: Numerous management Researches have revealed that

organizations using strategic-management concepts are more gainful and successful
than those that do not. Successful firms tend to do methodical planning to prepare for
future fluctuations in the external and internal environments. Firms with planning
systems more strongly resembling strategic-management theory generally exhibit
superior long-term financial performance relative to their industries.

Non-financial Benefits: Strategic management provides other tangible benefits, such as

an enhanced wakefulness of external threats, better understanding of competitors'
strengths, increased employee productivity, reduced resistance to change, and a clearer
understanding of performance-reward relationships. In addition to empowering
managers and employees, strategic management often brings order and discipline to an
otherwise struggling firm.

According to Greenley, strategic management has following benefits:

o It allocates for identification, prioritization, and exploitation of opportunities.

o It provides an objective outlook of management problems.
 o It characterizes a framework for improved synchronization and control of
activities.
o It reduces the effects of adverse conditions and changes.
o It allows major decisions to better support established objectives.
o It allows more effective distribution of time and resources to identified
opportunities.
o It permits fewer resources and less time to be devoted to correcting erroneous or
ad hoc decisions.
o It generates a framework for internal communication among personnel.
o It helps integrate the behaviour of individuals into a total effort.
o It provides a foundation to clarify individual responsibilities.
o It promotes forward thinking.
o It provides a cooperative, integrated, and enthusiastic approach to tackling
problems and opportunities.
o It encourages a positive attitude toward change.
o It gives a degree of discipline and formality to the management of a business

Different Types of Business Strategies

A small company can use a number of business strategies, depending on its
situation. For example, new companies may face different challenges than
companies that are more established. Therefore, the business strategies they
implement may be different from those of key competitors. Four types of
business strategies include the growth, product differentiation, price
skimming and acquisition strategy.
Growth Strategy

A growth strategy entails introducing new products or adding new features to

existing products. Sometimes, a small company may be forced to modify or
increase its product line to keep up with competitors. Otherwise, customers
may start using the new technology of a competitive company. For example,
cell phone companies are constantly adding new features or discovering new
technology. Cell phone companies that do not keep up with consumer
demand will not stay in business very long. A small company may also adopt
a growth strategy by finding a new market for its products. Sometimes,
companies find new markets for their products by accident. For example, a
small consumer soap manufacturer may discover through marketing research
that industrial workers like its products. Hence, in addition to selling soap in
retail stores, the company could package the soap in larger containers for
factory and plant workers.

Product Differentiation Strategy

Small companies will often use a product differentiation strategy when they
have a competitive advantage, such as superior quality or service. For
example, a small manufacturer or air purifiers may set themselves apart from
competitors with their superior engineering design. Obviously, companies use
a product differentiation strategy to set themselves apart from key
competitors. However, a product differentiation strategy can also help a
company build brand loyalty, according to the article "Porter's Generic
Strategies" at QuickMBA.com.

Price-Skimming Strategy

A price-skimming strategy involves charging high prices for a product,

particularly during the introductory phase. A small company will use a price-
skimming strategy to quickly recover its production and advertising costs.
However, there must be something special about the product for consumers
to pay the exorbitant price. An example would be the introduction of a new
technology. A small company may be the first to introduce a new type of
solar panel. Because the company is the only one selling the product,
customers that really want the solar panels may pay the higher price. One
disadvantage of a price-skimming is that it tends to attract competition
relatively quickly, according to the Small Business Administration.
Enterprising individuals may see the profits the company is reaping and
produce their own products, provided they have the technological know-how.

Acquisition Strategy

A small company with extra capital may use an acquisition strategy to gain a
competitive advantage. An acquisition strategy entails purchasing another
company, or one or more product lines of that company. For example, a small
grocery retailer on the east coast may purchase a comparable grocery chain
in the Midwest to expand its operations.

Breakdown: The Difference between Strategy and Tactics

Strategy Tactics

Purpose To identify clear broader goals that To utilize specific resources to

advance the overall organization and achieve sub-goals that
organize resources. support the defined mission.

Roles Individuals who influence resources in the Specific domain experts

organization. They understand how a set that maneuver limited
of tactics work together to achieve goals. resources into actions to
achieve a set of goals.

Accountability Held accountable to overall health Held accountable to specific

of organization. resources assigned.
 Scope All the resources within the organizations,
as well as broader market conditions
including competitors, customers, and
economy.  Yet don’t over think it, to
paraphrase my business partner Charlene
Li, “Strategy is often what you don’t do”.
A subset of resources used in
a plan or process. Tactics are
often specific tactics with
limited resources to achieve
broader goals.

Duration Long Term, changes infrequently. Shorter Term, flexible to

specific market conditions.

Methods Uses experience, research, analysis, Uses experiences, best

thinking, then communication. practices, plans, processes,
and teams.

 Outputs Produces clear organizational goals, plans, Produces clear deliverables

maps, guideposts, and key performance and outputs using people,
measurements. tools, time.
Strategy and Tactics Must Work in Tandem
These two must work in tandem, without it your organization cannot efficiently achieve
goals.  If you have strategy without tactics you have big thinkers and no action. If you
have tactics without strategy, you have disorder.  To quote my former business
partner, Lora Cecere, she reminds me that organizations need big wings (strategic
thinking) and feet (capability to achieve).

Examples:
To illustrate, here’s some specific examples across different industries of how strategic
goals can be communicated with clear tactical elements, in a linear and logical order:

 Strategy: Be the market share leader in terms of sales in the mid-market in our
industry. Tactics: Offer lower cost solutions than enterprise competitors without
sacrificing white-glove service for first 3 years of customer contracts.
 Strategy: Maneuver our brand into top two consideration set of household decision
makers. Tactics: Deploy a marketing campaign that leverages existing customer
reviews and spurs them to conduct word of mouth with their peers in online and real
world events.
 Strategy: Improve retention of top 10% of company performers. Tactics: Offer
best in market compensation plan with benefits as well as sabbaticals to tenured top
performers, source ideas from top talent.
 Strategy: Connect with customers while in our store and increase sales. Tactics:
Offer location based mobile apps on top three platforms, and provide top 5 needed use
cases based on customer desire and usage patterns.
 Strategy: Become a social utility that earth uses on an daily basis. Tactics: Offer a
free global communication toolset that enables disparate personal interactions with your
friends to monitor, share, and interact with.
Action: Using Strategy and Tactics to advance your Organization
First, educate your staff and colleagues on the differences of terms and how they vary.
Next, ensure that all tactics align to business strategy, and all strategies take into account
tactics on how they will be achieved.  Finally, cascade in all communication how strategy
and tactics work in tandem, advancing how your organization can see the larger goals,
and better utilize resources to achieve.