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    Three Forms of Strategy: General, Corporate & Competitive

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    Three Forms of Strategy: General, Corporate & Competitive

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    Three Forms of Strategy

    General, Corporate & Competitive


    Fred Nickols
    5/13/2010

    This paper examines three forms of strategy based on the different ways in which that term is
    used in the business world: (1) strategy in a general sense; (2) corporate strategy; and (3) com-
    petitive strategy.
    Three Forms of Strategy: General, Corporate & Competitive

    Objectives
    Keep one ear open in almost any business environment and the term "strategy" is sure to crop up
    on a regular basis. Unfortunately, those using the term frequently fail to define the way in which
    they are using it. Nor do those hearing it bother to check to see how it is being used. As a result,
    conversations about strategy can become confusing.

    There are at least three basic forms of strategy in the


    business world and it helps to keep them straight. The ob- General
    jectives of this brief paper are to clarify the general con- Strategy
    cept of strategy and draw attention to the importance of
    distinguishing among three forms of strategy: (1) general
    strategy (or just plain strategy) (2) corporate strategy and
    (3) competitive strategy (Figure 1). Corporate Competitive
    Strategy Strategy
    The Concept of Strategy
    The many definitions of strategy found in the manage-
    ment literature fall into one of four categories: plan, pat-
    tern, position, and perspective. According to these views,
    strategy is: Figure 1 - Three Forms of Strategy

    1. A plan, a "how," a means of getting from here to


    there.
    2. A pattern in actions over time; for example, a company that regularly markets very expensive
    products is using a "high end" strategy.
    3. A position, that is, it reflects decisions to offer particular products or services in particular
    markets.
    4. A perspective, that is, a vision and direction, a view of what the company or organization is
    to become.

    As a practical matter, strategy evolves over time as intentions accommodate reality. Thus, one
    starts with a given perspective, concludes that it calls for a certain position, and sets about achiev-
    ing it by way of a carefully crafted plan. Over time, things change. A pattern of decisions and ac-
    tions marks movement from starting point to goal. This pattern of decisions and actions is called
    "realized" or "emergent" strategy.

    Strategy in General
    Strategy, in general, refers to how a given objective will be achieved. Consequently, strategy in
    general is concerned with the relationships between ends and means, that is, between the results
    we seek and the resources at our disposal. Strategy and tactics are both concerned with formulat-
    ing and then carrying out courses of action intended to attain particular objectives. For the most
    part, strategy is concerned with deploying the resources at your disposal whereas tactics is con-
    cerned with employing them. Together, strategy and tactics bridge the gap between ends and
    means (see Figure 2).

    © Fred Nickols 2010 www.nickols.us Page 2


    Three Forms of Strategy: General, Corporate & Competitive

    “Bridging the Gap”

    Means Ends

    Strategy & Tactics


    Deploy & Employ

    Figure 2 - "Bridging the Gap"

    Although it is not my aim to draw definitive distinctions between strategy and tactics, it is next to
    impossible to say something about one without also saying something about the other. The table
    below summarizes some of the more important differences I’ve noted in my studies and observa-
    tions of strategy and tactics.

    Strategy Tactics

    Scale of the Grand Limited


    Objective

    Scope of the Broad & General Narrowly focused


    Action

    Guidance General & Ongoing Specific & Situational


    Provided

    Degree of Adaptable but not hastily Fluid, quick to adjust and


    Flexibility changed adapt in minor or major ways

    Timing Before Action During Action

    Resource Focus Deployment Employment

    Strategy and tactics are both terms that come to us from the military. Their use in business and
    other civilian enterprises has required little adaptation as far as strategy in general is concerned,
    however, corporate strategy and competitive strategy do represent significant departures from the
    military meaning of strategy.

    © Fred Nickols 2010 www.nickols.us Page 3


    Three Forms of Strategy: General, Corporate & Competitive

    Corporate versus Competitive Strategy


    Corporate strategy defines the markets and the businesses in which a company will operate.
    Competitive or business strategy defines for a given business the basis on which it will compete.
    Corporate strategy is typically decided in the context of defining the company’s mission and vi-
    sion, that is, saying what the company does, why it exists, and what it is intended to become.
    Competitive strategy hinges on a company’s capabilities, strengths, and weaknesses in relation to
    market characteristics and the corresponding capabilities, strengths, and weaknesses of its com-
    petitors. According to Michael Porter, a Harvard Business School professor and the reigning guru
    of competitive strategy, competition within an industry is driven by five basic factors:

    1. Threat of new entrants.


    2. Threat of substitute products or services.
    3. Bargaining power of suppliers.
    4. Bargaining power of buyers.
    5. Rivalry among existing firms.

    Porter also indicates that, in response to these five factors, competitive strategy can take one of
    three generic forms: (1) focus, (2) differentiation, and (3) cost leadership.

    Other Factors Affecting Corporate and Competitive Strategy


    Other writers on the subject of strategy point to several factors that can serve as the basis for for-
    mulating corporate and competitive strategy. These factors include:

     Products-services offered  Natural resources


     Sales-marketing methods  Production capacity-capability
     Users-customers served  Size/growth goals
     Distribution methods  Technology
     Market types and needs  Return/profit goals

    Recently, "value disciplines" have been suggested as the basis for settling on strategy (corporate
    or competitive). The three basic "value disciplines" are:

    Operational Excellence Strategy is predicated on the production and delivery


    of products and services. The objective is to lead the
    industry in terms of price and convenience.

    Customer Intimacy Strategy is predicated on tailoring and shaping prod-


    ucts and services to fit an increasingly fine definition
    of the customer. The objective is long-term customer
    loyalty and long-term customer profitability.

    Product Leadership Strategy is predicated on producing a continuous


    stream of state-of-the-art products and services. The
    objective is the quick commercialization of new ideas.

    © Fred Nickols 2010 www.nickols.us Page 4


    Three Forms of Strategy: General, Corporate & Competitive

    Some Fundamental Questions


    Regardless of the definition of strategy, or the many factors affecting the choice of corporate or
    competitive strategy, there are some fundamental questions to be asked and answered. These in-
    clude the following:

    Related to Mission & Vision  Who are we?


     What do we do?
     Why are we here?
     What kind of company are we?
     What kind of company do we want to become?
     What kind of company must we become?

    Related to Strategy in General  What is our objective? What are the ends we seek?
     What is our current strategy, implicit or explicit?
     What courses of action might lead to the ends we seek?
     What are the means at our disposal?
     How are our actions restrained and constrained by the
    means at our disposal?
     What risks are involved and which ones are serious
    enough that we should plan for them?

    Related to Corporate Strategy  What is the current strategy, implicit or explicit?


     What assumptions have to hold for the current strategy
    to be viable?
     What is happening in the larger, social, political, tech-
    nical and financial environments?
     What are our growth, size, and profitability goals?
     In which markets will we compete?
     In which businesses?
     In which geographic areas?

    Related to Competitive Strategy  What is the current strategy, implicit or explicit?


     What assumptions have to hold for the current strategy
    to be viable?
     What is happening in the industry, with our competi-
    tors, and in general?
     What are our growth, size, and profitability goals?
     What products and services will we offer?
     To what customers or users?
     How will the selling/buying decisions be made?
     How will we distribute our products and services?
     What technologies will we employ?
     What capabilities and capacities will we require?
     Which ones are core?
     What will we make, what will we buy, and what will
    we acquire through alliance?
     What are our options?
     On what basis will we compete?

    © Fred Nickols 2010 www.nickols.us Page 5


    Three Forms of Strategy: General, Corporate & Competitive

    Summary
    The preceding discussion asserts that strategy in general is concerned with how particular objec-
    tives are achieved, with courses of action. Corporate strategy is concerned with choices and
    commitments regarding markets, business and the very nature of the company itself. Competitive
    strategy is concerned with competitors and the basis of competition. These basic points are illu-
    strated in Figure 3.

    Corporate Competitive
    Strategy
    Strategy Strategy

    Courses of Choices & Competitors &


    Action Commitments Competition

     The relationships  Businesses PORTER


    between ends  Markets  Cost
    and means  Products  Differentiation
     Services  Focus

    TREACY & WIERSEMA


     Operational
    Excellence
     Customer Intimacy
     Product Leadership

    Figure 3 - Basic Points about Strategy

    Recommended Reading
    Much of the preceding discussion is drawn from many well-known sources. To list them
    all would entail inserting an extensive bibliography right about here. Instead, I’ve chosen
    to list what I consider some "essential" readings.

    1. Competitive Strategy (1986). Michael Porter. Harvard Business School Press.


    2. The Concept of Corporate Strategy, 2nd Edition (1980). Kenneth Andrews. Dow-
    Jones Irwin.
    3. "Customer Intimacy and Other Value Disciplines." Michael Treacy and Fred
    Wiersema. Harvard Business Review (Jan-Feb 1993).
    4. The Discipline of Market Leaders (1994). Michael Treacy and Fred Wiersema.
    Addison-Wesley.
    5. The Rise and Fall of Strategic Planning (1994). Henry Mintzberg. Basic Books.
    6. Strategy (1967). B. H. Liddell Hart. Basic Books.
    7. Strategy: Pure and Simple (1993). Michel Robert. McGraw-Hill.
    8. Top Management Strategy (1980). Benjamin Tregoe and John Zimmerman. Si-
    mon and Schuster.
    9. "What is Strategy?" Michael Porter. Harvard Business Review (Nov-Dec 1996).

    © Fred Nickols 2010 www.nickols.us Page 6


    Three Forms of Strategy: General, Corporate & Competitive

    Contact the Author


    Fred Nickols can be reached by e-mail at [email protected]. Other articles of his can be found on
    his articles web site at www.skullworks.com.

    © Fred Nickols 2010 www.nickols.us Page 7

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