So essentially

Picking a good strategy in an organization is necessary for that organization to be effective.

What is strategy:

Strategy may be defined as the determination of the basic long term goals and objectives of an
enterprise. Plus, the actions and the allocation of resources necessary to achieve the organizations
goals. These strategies always have an end, the goals, which the company want to eventually
succeed with. Strategy is the road to those ends, the goals.

There are different approaches as how strategy should be determined:

Which are the planning mode and the evolutionary mode.

Planning mode: The planning mode translates to a plan or set of guidelines developed in advance.
Managers identify where they want to go, then develop a structured plan to get there.

Evolutionary mode: The evolutionary mode is the exact opposite of the planning mode. Here they
view strategy as a stream of important decisions evolving over time, instead of a well-thought-out
and systematic plan. Some examples are unanticipated actions of competitors and technological
improvements in the economy so that the company’s products are not advanced enough anymore,
they have to adapt to that change.

Levels of strategy:

Corporate level strategy: This strategy works to answer the question: In what set of business should
we be. It determines the role that each business in the organization will play. If you have a
multinational organization, corporate level strategy will revolve around which country to invest in.

Business level strategy: This strategy works to answer the question: How should we compete with
other organizations? If you have a organization which invests in multiple businesses, these business
will have their own strategy, which is business level strategy.

Alfred Chandler did research on the relationship between an organizations strategy and its structure.
His research concluded that changes in corporate strategy preceded and led to changes in an
organizations structure. So if an organization thought of a new strategy, they need to also need a
new structure, or inefficiency follows.

As follows from this study, strategy and structure are related. There are 4 different strategic types. To
run an effective organization, you have to decide beforehand what strategy you want to use and
make that clear to all people involved in the firm.

Defenders: Their strategy is to produce a limited amount of different products so that they can focus
on those products exclusively. An example of this is Woolworths, they focus only on grocery retailing,
they keep their share to compete with competitors with very low prices.

Prospectors: Those who implement this strategy are the exact opposite of defenders, their strength
lies in finding and exploiting new product and markets opportunities, examples of this strategy is
NVidia, they always strive to create new technologies which make their products technologically
more advanced than their biggest competitor AMD.
Analyzers: This strategy is a very safe one, organizations who use this strategy tend to minimize risk
by using technologies that are new, after they have been proven by others, so they move into new
products or markets only if others proved that their improvement is viable.

Reactors: This strategy is essentially the label of a poorly performed strategy of the ones I just
mentioned. This arises when a management failed to make to organizations strategy clear to the
ones involved.

So as you can see here on the board, the strategies are ranked from the smallest change/uncertainty
to the fastest change but with that comes high uncertainty because they cannot know how people
will react to the new technologies for example.

Next to the strategic types are the competitive strategies:

Firstly we have the cost leadership strategy: this is essentially like I mentioned before what
Woolworths does. They strive to keep the costs or their products low and compete with other
organizations that way.

Secondly we have the differentiation strategy: This strategy is used by companies to excel on a
service or product that justifies a higher price compared to other companies. So for an organization
to be effective by using a well-thought strategy is apple, they ask a way higher price then lets say
Huawei for their products, but they can justify this because they differ themselves from Huawei by
having their own operating systems that people apparently love.

Next up is the focus strategy: this is a strategy that aims at a cost- or differentiation advantage in a
narrow segment, so for example a grocery truck who aims to supply only people who live relatively
far from the city to just go to a big grocery store.

last up we have the stuck in the middle strategy: this is a label which is given to organizations that
are not able to gain a competitive advantage by using the mentioned strategies. If an organization
gets stuck in the middle it’s mostly because they reach beyond their competitive advantages

So for an organization it is really important to look through all the strategies provided and to make
sure that everyone involved in the firm knows this strategy so that the firm operates at its highest
effectiveness.