In the fields of business and management, the term "strategy" is frequently mentioned. It concerns how companies position themselves in competitive markets and achieve long-term goals. But what exactly is strategy, and how is it applied? This article delves into these questions, revealing the core role of strategy in modern business management.

"Strategy" is both a major research topic in business management and academia and a key part of daily operations. It has always played an essential role in the development of human society.

You may have noticed that many professionals in consulting, marketing, branding, and management often speak of "strategy": corporate strategy, brand strategy, pricing strategy, positioning strategy, channel strategy, communication strategy... It seems that without discussing "strategy," one cannot be called an expert. However, this phenomenon raises questions: Has the term "strategy" been overused?

So, what exactly is strategy? What are its origins and development? What kinds of strategies exist, and how are they applied? Let’s take a closer look.

1. What is Strategy? Its Origins and Development

In simple terms, strategy is a high-level plan designed to guide an organization in achieving its long-term objectives in a complex and ever-changing environment.

It is not just about "what to do"; more importantly, it concerns "how to do it"—how to effectively utilize resources, differentiate from competitors, and seize future opportunities. Strategy is the comprehensive and forward-thinking action plan an organization follows to achieve its vision and mission.

While there is some disagreement among scholars about the origins of strategy, they largely agree on one point: strategy originated from the military. Some Chinese scholars believe that the concept of "strategy" began in China, where "战" (battle) refers to warfare, and "略" (strategy) refers to tactics and planning. In ancient China, terms like "韬略" (tactical planning), "方略" (strategic methods), "谋略" (strategic plans), and "兵略" (military strategy) were used to express the meaning of strategy. The Art of War by Sun Tzu is the earliest and most comprehensive theoretical work on military strategy in China, with the first chapter clearly outlining strategic thinking in warfare.

Western scholars generally agree that the term "strategy" comes from the Greek word "strategos," originally referring to a military general or local administrator. Later, it was extended to mean the plan or tactics used by military leaders to win wars. Great military leaders like Alexander the Great and Napoleon Bonaparte demonstrated the power of strategic thinking through meticulous planning and flexible tactics.

The widespread recognition and popularization of strategy in the West can largely be credited to the Prussian military theorist Carl von Clausewitz (1780-1831). His work On War solidified the core position of strategy in the military field and first precisely defined it: strategy, as a guiding principle, directs military organizations to employ tactical actions to achieve specific war goals. This landmark work helped elevate "strategy" from a military term to a key measure of military art and wisdom.

Although strategy originated in the military, over time its application expanded to other fields. In the early 20th century, U.S. military strategy began influencing business management. In 1911, Frederick Winslow Taylor's book The Principles of Scientific Management is seen as the beginning of strategic management. Entrepreneurs like Henry Ford realized that maintaining competitiveness required a more systematic approach, and they successfully applied Taylor's strategic management ideas.

In 1962, Alfred Chandler published Strategy and Structure: Chapters in the History of the American Industrial Enterprise, which first introduced the concept of strategy into business management, laying the foundation for modern business strategy theory. Later, the work of scholars like Igor Ansoff, with Corporate Strategy in 1965, and Michael Porter’s Competitive Strategy in the 1980s, further developed the theory and practice of business strategy.

In modern society, strategy is not just limited to the military but is widely applied in business, politics, economics, and other fields. It is a plan that articulates an organization or company’s vision, mission, and goals, and outlines a series of actions, policies, and measures necessary to achieve these objectives.

2. What Are the Types of Strategy?

In modern business management, strategy can generally be divided into three levels: corporate-level strategy, business-level strategy, and functional-level strategy.

Corporate-level strategy focuses on the overall direction of the company, including decisions like which industries to enter and how to diversify.

Business-level strategy targets specific product lines or service departments and focuses on how to establish and maintain a competitive advantage in chosen markets.

Functional-level strategy addresses the operational strategies of specific departments like marketing, human resources, and finance, supporting the broader strategic goals.

These strategies are interrelated and together form a complete strategic management system.

1. Corporate-Level Strategy

Corporate-level strategy, also known as overall strategy, is the highest level of strategic planning within a company. It focuses on the company’s overall development and growth, including its vision, mission, long-term goals, and the optimization of resources. Corporate-level strategy determines how resources are allocated across various business units to maximize overall benefits.

Key features of corporate-level strategy include:

• Long-term focus: Corporate strategy generally involves long-term planning (e.g., 5, 10 years or more).

• Holistic view: It focuses on the company’s overall interests, not just those of specific departments or business units.

• Resource allocation: Corporate strategy decides how resources are distributed across business units and functional departments.

The main contents of corporate-level strategy include defining the company’s vision and mission, managing business portfolios, and formulating resource allocation strategies. The vision and mission provide long-term direction and core values, serving as the foundation for strategy formulation. Business portfolio management involves decisions on which industries to enter, how to diversify, and which unprofitable businesses to divest. Resource allocation specifies how resources are distributed across various business units and functional departments.

At the corporate level, companies may adopt strategies like diversification, concentration, internationalization, or cooperation.

• Diversification strategy involves expanding into new markets or developing new products. For example, Siemens successfully diversified into areas like medical devices, transportation systems, and energy management, thereby reducing market dependency and enhancing overall competitiveness and risk resilience.

• Concentration strategy focuses on a specific business area to achieve market leadership, often through mergers and acquisitions. For example, China Resources Snow Beer used a concentration strategy by acquiring regional beer brands and expanding its presence in the national market, further consolidating its control over the Chinese beer market through cooperation with SABMiller.

• Internationalization strategy involves selling products or services outside of the home market to expand market share and influence. Companies like Coca-Cola, Nike, Huawei, and Haier have successfully implemented internationalization strategies, tailoring products to local needs and building strong global brand images.

• Cooperative strategy involves collaborating with other organizations (suppliers, customers, competitors, research institutions, etc.) to share resources, technology, and knowledge to develop new products, enter new markets, or improve efficiency. A good example is the collaboration between Walmart and JD.com, which combined Walmart’s global supermarket brand with JD.com’s e-commerce platform to enhance the retail experience.

2. Business-Level Strategy

Business-level strategy, also known as competitive strategy, focuses on how a company can gain a competitive advantage in a specific market or industry. It involves defining how the business will compete and succeed in a specific area.

The main characteristics of business-level strategy include:

• Focus: It targets specific markets or business areas.

• Competitiveness: It focuses on gaining an edge in a competitive market.

• Adaptability: Business-level strategies must be continually adjusted to respond to market changes.

Business-level strategies are influenced by the broader corporate strategy and aim to achieve specific competitive goals. Strategies here might include cost leadership, differentiation, focus, and innovation-driven strategies.

3. Functional-Level Strategy

Functional-level strategy refers to the plans and actions taken by specific departments within an organization (e.g., marketing, human resources, finance, operations) to support corporate and business-level strategies.

The main features of functional-level strategy include:

• Specialization: It focuses on specific departments like R&D, production, marketing, HR, etc.

• Coordination: It emphasizes cooperation between different functional areas.

• Operational focus: It deals with day-to-day operations and specific details.

Each department contributes to achieving the organization’s broader strategic goals by optimizing resources, improving efficiency, and ensuring smooth cooperation between departments.

3. Conclusion

From its military origins to its modern business applications, strategy has become one of the key factors for organizational success. It is a multi-level, multi-dimensional concept that encompasses everything from high-level corporate strategies to detailed business-level implementation and functional-level support.

With effective strategic planning and execution, companies can find their position in a complex, changing market environment and establish long-lasting competitive advantages.

It’s important to note that strategy is not only the responsibility of senior management. Its formulation and implementation involve every level and member of the organization, impacting the development of the entire organization and all its members.

Whether for large multinational corporations or small startups, having a clear strategic framework to guide development is essential. Through continuous learning and practice, companies can improve their strategic management capabilities, achieve their goals, and embark on a path to long-term success.