What is strategy?

When reading the book, “The Supply-Based Advantage” by Stephen C. Rogers,  the word “strategy” keeps coming up and I got to thinking, just what is strategy and how does it impact our works as procurement professionals?”Strategy is the direction and scope of an organization over the long-term; which achieves advantage for the organization through its configuration of resources within a challenging environment to meet the needs of markets and to fulfill stakeholder expectations”, according to Johnson and Scholes’ book Exploring Corporate Strategy.

According to their text, strategy is about:

Where is the business trying to get to in the long-term? (direction)

Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope)

How can the business perform better than the competition in those markets? (advantage)

What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)

What external, environmental factors affect the businesses’ ability to compete? (environment)

What are the values and expectations of those who have power in and around the business? (stakeholders)

Strategic Analysis - This is all about the analyzing the strength of businesses’ position and understanding the important external factors that may influence that position. The process of Strategic Analysis can be assisted by a number of tools, including:

PEST Analysis - a technique for understanding the “environment” in which a business operates

Scenario Planning - a technique that builds various plausible views of possible futures for a business

Five Forces Analysis - a technique for identifying the forces which affect the level of competition in an industry

Market Segmentation - a technique which seeks to identify similarities and differences between groups of customers or users

Directional Policy Matrix - a technique which summarizes the competitive strength of a businesses operations in specific markets

Competitor Analysis - a wide range of techniques and analysis that seeks to summarize a businesses’ overall competitive position

Critical Success Factor Analysis - a technique to identify those areas in which a business must outperform the competition in order to succeed

SWOT Analysis - a useful summary technique for summarizing the key issues arising from an assessment of a business “internal” position and “external” environmental influences

Rogers discusses many of these in his book in his Sourcing Strategy Chapter 5. His remarks on the use of these tools, “The point here is that all of these tools are ways to structure your ability to think-they do not just spit out the answer, nor are they a replacement for thinking.

Some of the thinking in our field today is that you don’t have to think, you push a button and it tells you what to order, when to order and from whom. We have so called reports for everything, but what good are these reports if you don’t have time to work them.

We are all faced with downsizing, layoffs, or cutbacks, what ever you choose to call it, which limits our time even more to review and analyze the information that is given to us that could make an impact on our results.