According to Chandler, strategy is defined as “…the determination of the long-run goals and

objectives of an enterprise and the adoption of courses of action and the allocation of resources
necessary for carrying out these goals”. There are three elements of the strategy definition – the
long term, direction and the organization.1

 Long term. Strategies are usually developed for the long-term perspective, so that, for
several years or even decades. For example, Jeff Bezos, founder of the Amazon
company, says “We are comfortable planting seeds and waiting for them to grow into
trees… We don’t focus on the optics of the next quarter; we focus on what is going to be
good for customers. I think this aspect of our culture is rare”.2 Importance of long term of
strategy can be stressed by the McKinsey’s three horizons framework which suggests
that organizations should think of themselves as comprising three types of business or
activity, defined by their ‘horizons’ in terms of years. Horizon 1 business are the core
business activities. For Amazon company, for example, that would be e-commerce.
Horizon 2 includes ideas extend company’s existing business and core activities to new
customers, markets, sectors. For instance, Amazon’s Kindle devices provides users to
with wireless network to Kindle store where they can browse, download and buy e-
books. Horizon 3 includes risky research and development projects, start-up ventures,
pilot projects, etc. An example of that could be Amazon Web Services (AWS) which is
cloud computing services.
 Strategic direction. For the years, companies usually follow certain direction or trajectory
in their strategies. Bezos mentions that it is important to "base your strategy on things
that won’t change....Whereas if you base your strategy first and foremost on more
transitory things—who your competitors are, what kind of technologies are available, and
so on—those things are going to change so rapidly that you’re going to have to change
your strategy very rapidly, too". So, "selection, low prices, and fast delivery" is what their
Amazon’s customers want and what is likely not going to change.
 Organization. Organizations involve many relationships, both internally and externally.
This is because organizations typically have many internal and external stakeholders,
i.e., people and groups that depend on the organization and upon which the organization
itself is dependent on. Internally, organizations are filled with people, typically with
diverse, competing and more or less reasonable views of what should be done.
Externally, organizations are surrounded by important relationships, for example with
suppliers, customers, alliance partners, regulators and investors.
Strategy statements should have three main themes: the fundamental goals (mission, vision or
objectives) that the organization seeks; the scope or domain of the organization’s activities; and
the particular advantages or capabilities it has to deliver all of these.
A mission statement aims to provide employees and stakeholders with clarity about what the
organization is fundamentally there to do. This is often expressed in the apparently simple but
challenging question: ‘What business are we in?’. Example can be Procter and Gamble’s
(P&G), one of the leading companies in FMCG sector in the world, mission statement: “We will
provide branded products and services of superior quality and value that improve the lives of
the world’s consumers, now and for generations to come. As a result, consumers will reward us
with leadership sales, profit and value creation, allowing our people, our shareholders and the
communities in which we live and work to prosper”.4

A vision statement is concerned with the future the organization seeks to create. The vision
typically expresses an aspiration that will enthuse, gain commitment and stretch performance.
So here the question is: ‘What do we want to achieve?’. P&G’s vision statement: “Be, and be
recognized as, the best consumer products and services company in the world”.5

Statements of corporate values outline the underlying and enduring core ‘principles’ that guide
an organization’s strategy and define the way that the organization should operate. It is
important that these values are enduring, so a question to ask is: ‘Would these values change
with circumstances?’ And if the answer is ‘yes’ then they are not ‘core’ and not ‘enduring’.

For example, P&G’s corporate values include

 Integrity
 Leadership
 Ownership
 Passion for Winning
 Trust

Objectives are statements of specific outcomes that are to be achieved. These are often
expressed in precise financial terms or quantifiable market-based indicators such as the level of
sales, profits or share valuation in one, two or three years’ time, market share, customer
service, so on. To illustrate, P&G’s core financial objectives include “organic sales growth, core
earnings per share growth and adjusted free cash flow productivity -all while improving market
share and generating leadership levels of shareholder value creation”, each of which was met
or exceeded in fiscal year of 2019.4

An organisation’s scope or domain refers to three dimensions: customers or clients;

geographical location; and extent of internal activities (‘vertical integration’). P&G’s scope can
be observed on the figures below (Figure 1).

Figure 1. P&G scope by business segment and geographic location.2

An advantage part of a strategy statement describes how the organisation will achieve
the objectives it has set for itself in its chosen domain. P&G’s advantages include focused
portfolio of products, competitive superiority (Product, package, brand communication, retail
execution, and value), productivity improvements in cost and cash, constructive disruption, more
focused, agile, accountable organization
operating at the speed of market.

The Exploring Strategy Framework includes understanding the strategic

position of an organisation; assessing strategic choices for the future; and managing
strategy in action.
Figure 2. The exploring strategy framework1
The strategic position is concerned with the impact on strategy of the macro-environment, the
industry environment, the organization’s strategic capability (resources and competences), the
organization’s stakeholders and culture. Understanding these
five factors is fundamental for evaluating future strategy.
Macro-environment. Organizations operate in complex multi-level environments. At the
macro level, organizations are exposed to political, economic, social, technological, ecological
and legal forces (PESTEL). The fundamental question here is “What are the opportunities and
threats available to the organization in complex, changing environments?”

Industry environment. At the industry level of analysis, competitors, suppliers and customers
present challenges to an organization. A fundamental question is “How can an organization
manage industry forces?” Industry environments can vary widely in their
attractiveness and present opportunities and threats.

Strategic capability. Each organization has its own strategic capabilities which comprise of
resources (e.g. machines and buildings) and competences (e.g. technical and managerial
skills). The fundamental question is “Are the organisation’s capabilities adequate to the
challenges of its environment and the demands of its goals?”

Stakeholders. There are many actors who hold a ‘stake’ in the future of every organization - not
just owners, but employees, customers, suppliers and more. The fourth fundamental question
then is “How can the organisation be aligned around a common purpose?” An organisation’s
key stakeholders should define its purpose.

Culture. Organizational culture can also influence strategy. The culture is typically a product of
an organization’s history. The consequence of history and culture can be strategic drift, a failure
to create necessary change. A fundamental question here, therefore, is “How does culture fit
with the required strategy?” Because if it is not in line with the strategy of the company, there
will be worsening performance of an organization as there is a famous saying by Peter Drucker:
“Culture eats strategy for breakfast”.

Some of the questions for P&G raised regarding strategic position: How will P&G cope with
rising market share of its major competitors (e.g., Unilever)? How are P&G’s stakeholders
aligned to the organizational purpose?

Strategic choices involve the options for strategy in terms of both the directions in which
strategy might move and the methods by which strategy might be pursued. Strategic choices for
P&G could be further diversification into new products and hence further strengthening of its
portfolio or entering new international markets, consequently, further enhancing its global
presence or looking for possible strategic acquisitions and alliances. The questions raised for
P&G regarding strategic choices: Where should P&G innovate next? How far should P&G
diversify its product portfolio?

Typical strategic choices include business strategy and models; corporate strategy and
diversification; international strategy; entrepreneurship and innovation; mergers, acquisitions
and alliances.

Managing strategy in action is discussed with regard to how strategies are formed and how they
are implemented. The emphasis is on the practicalities of managing. The key points here are
strategy performance and evaluation; strategy development processes; organizing; leadership
and strategic change; strategy practice. Some of the questions for P&G raised here: How will
P&G’s supply chain change as it will enter more international markets? Does P&G need more
structures or systems?

Reference
1
Johnson, G., Whittington, R., Regnér, P., Scholes, K., Angwin, D., and Johnson, J. (2017)
Exploring Strategy: Text and Cases. 11th edn. Edinburgh: Pearson
2
Forbs (2012) ‘Jeff Bezos Gets It’ [online] available from
https://www.forbes.com/global/2012/0507/global-2000-12-amazon-jeff-bezos-gets-
it.html#68ecb2f255fa [1 May 2020]
3
Jackson, D. (2015) The question that Amazon answers to set its strategy. 20 Feb. [online]
available from https://davidjaxon.wordpress.com/2015/02/20/the-question-that-amazon-
answers-to-set-its-strategy/ [1 May 2020]
4
P&G (n.d.) [online] available from https://www.pginvestor.com/PG-at-a-Glance/Index?
KeyGenPage=1073748355 [1 May 2020]
5
P&G (n.d.) [online] available from https://www.pg.com/translations/pvp_pdf/english_PVP.pdf