Hello to all the constant companions of Sheikh Ali Mohammadi’s website; Thanks for joining us in this article. In this article, we intend to review the importance of the strategy document in the success of businesses and its role as the key to success on the path of progress, and to help you design a targeted and efficient strategy for your business. If you are looking to improve your decision-making process, increase productivity, and achieve long-term goals, this article is for you!

What is Strategy?

Where did the strategy come from?

The word “strategy” was first used in ancient Greece as a military and management concept and its root goes back to the Greek language. Originally, the word is derived from the Greek word “στρατηγία” (Stratēgia), meaning the art of commanding or leading an army.

The historical root of Strategy

1. Ancient Greek:
   
   
   The word strategy was used in ancient Greece, especially during the famous Greek wars, such as the Peloponnesian Wars. Strategos meant “commander” or “military leader” was responsible for planning and directing the army in battles. During this period, the concept of strategy as the “art or science of directing military forces on the battlefield” to achieve victory and dominate the enemy was formed.
2. Use in Military fields:
   
   
   At that time, the word strategy was used more to mean the planning and management of war operations. Strategy allowed commanders to make key decisions to gain superiority on the battlefield and to design a variety of tactics to implement larger objectives. Strategy was defined here as a broad view of the battlefield and the overall direction of operations, while tactics were considered more detailed and operational methods.

Expanding the concept of Strategy

Development of the concept of strategy in the modern world

Strategy in the business world

Why is Strategy important?

Without a strategy, an organization or individual may get lost in the pursuit of their goals and not use resources properly. Strategy helps you understand where you are, where you want to go, and the best path to get there. This helps you make informed decisions, save time and money, and ultimately achieve sustainable success.

Components of Strategy in the business world

In the business world, strategy is a comprehensive, long-term plan that helps organizations set their goals and chart a course to achieve them. It not only sets the direction of the organization, but also guides day-to-day operational decisions. The main components of a business strategy are:

1. Mission Statement:
   A mission statement generally defines the main purpose of an organization and includes what the organization seeks to achieve, such as the services or products it offers. It serves as a guide for making key decisions at all levels of the organization and must be jointly committed to by all members of the organization.
   • Goal: To determine the overall direction of the organization and create a framework for all its activities.
   • Example: As a leading technology company, our goal is to create innovative products to improve people’s lives.

2. Vision Statement: 
   A vision statement represents the future that an organization intends to achieve. It serves as a reference to inspire and motivate employees and stakeholders, focusing on the future and the desired state in the long term.
   • Goal: Motivate the organization to move towards a specific future.
   • Example: As pioneers in the technology industry, we want to be globally influential in changing the way people live.

3. Environmental Analysis: 
   Environmental analysis involves an internal and external assessment of the organization. This analysis helps the organization identify its strengths, weaknesses, opportunities, and threats (SWOT Analysis). Environmental analysis includes the following:

   • Market Analysis: Examining market conditions, competitors, customer needs, and industry trends.
   • Competitor Analysis: Identifying the main competitors, their competitive advantages, and potential threats.
   • PESTEL Analysis: Examining political, economic, social, technological, environmental and legal factors.
   • Goal: Identify the external and internal environment in which the organization operates so that it can make the best decisions to improve its strategic position.

4. Strategic Objectives: 
   Strategic goals are the long-term, major goals that an organization intends to achieve. These goals should be clear, measurable, and aligned with the organization’s overall strategy.
   • Goal: Provide direction and focus on achieving long-term goals.
   • Example: “Increase market share to 30% in the next three years or reduce operating costs by 10% in the next year.”

5. Competitive Strategies: 
   Competitive strategies specifically determine how an organization competes with its competitors. These strategies include the following:
   • Cost Keadership Strategy: The organization seeks to reduce costs and offer products at lower prices than competitors.
   • Differentiation Strategy: The organization seeks to create unique and different features in its products or services that distinguish them from its competitors.
   • Focus Strategy: The organization specifically addresses a specific segment of the market or target customers.
   • Objective: Identify different ways to compete in the market and choose the best strategy, appropriate to the organization’s resources and conditions.

6. Tactics and Action Plans: 
   Tactics and operational plans are the specific, detailed steps that must be taken to achieve strategic goals in the short term. These plans should be written in a precise and operational manner, covering all the details needed to implement the strategies.
   • Goal: Transform long-term strategies into actionable operational activities.
   • Example: Launching an advertising campaign for a new product in the first quarter of the year.

8. Evaluation and Control: 
   Evaluation and control involves the ongoing monitoring of the progress of strategies and objectives. This part of strategy helps managers to know whether the actions taken are directed towards the organization’s goals and to make the necessary changes if there is a need to revise the strategies.
   • Objective: To examine the efficiency and effectiveness of strategies and make necessary changes to achieve goals.
   • Example: Comparing financial performance with projected goals and making adjustments to sales strategy.
9. Innovation and Learning: 
   Innovation means continuous improvement and implementing new changes. Organizations must continually seek out and embrace new ideas and use past learnings to improve their processes and strategies.
   
   • Goal: Maintain competitive advantage and adapt to market and technological changes.
   • Example: Setting up a research and development unit to create new products based on emerging technologies.

9. Organizational Culture: 
   Organizational culture includes the values, beliefs, and behaviors that are prevalent within an organization and informally influence how strategies are executed and implemented. A positive culture can help foster collaboration, creativity, and the achievement of goals.
   
   • Goal: Create an environment that motivates employees to achieve organizational and strategic goals.
   • Example: Creating an open and dynamic work environment where employees can freely express new ideas.

The difference between a principled strategy and a wrong strategy in businesses

In the business world, strategies can have a profound impact on the success or failure of an organization; so we will compare principled and flawed strategies in business and use the theories of world-renowned people in this field to gain a detailed picture of the differences between these two types of strategies.

What does principled strategy mean?

Principled strategy refers to strategies that are designed based on careful analysis, informed decision-making, and long-term strategic planning. These types of strategies are created based on clear, measurable goals that are aligned with the organization’s resources and capabilities. In other words, principled strategies are built from a solid foundation of information and awareness of the organization’s external and internal environment.

Characteristics of a principled strategy:

• Accurate Market Analysis: Principled strategies are usually developed based on careful analysis of the market, competitors, customer needs, and industry trends. One of the most famous theories in this field is SWOT analysis, which was designed by Albert Humphrey. This analysis helps identify the organization’s strengths, weaknesses, opportunities, and threats.
• Precise Targeting: Principled strategies usually have specific, measurable goals. These goals should be defined within a specific time frame and taking into account the organization’s available resources.
• Innovation and Differentiation: Principled strategies usually emphasize innovation and differentiation in the organization’s products or services. According to Michael Porter’s theory, differentiation and offering unique features is one of the keys to success in competition.
• Sustainability and Adaptation:  A principled strategy must be adaptable to environmental changes. Henry Mintzberg’s theory of strategy suggests that strategy should be dynamically and continuously evaluated and modified to remain aligned with environmental conditions.

Which strategy is considered a wrong strategy?

Characteristics of the wrong strategy:

• Lack of Environmental Analysis: One of the most important causes of strategy failure is ignoring detailed environmental analyses. In these types of strategies, instead of using SWOT or PESTEL analysis, decisions are made randomly or based on wrong assumptions.
• Ambiguous or Unrealistic Goal Setting: In many cases, the wrong strategies have vague or unattainable goals. These goals are usually set in general terms without specific details. The SMART (Specific, Measurable, Achievable, Relevant, Time-bound) theory specifically emphasizes the importance of specific and measurable goals.
• Relying on Price Competition: Many wrong strategies focus on price competition and cost reduction instead of differentiation and innovation. Michael Porter states in his book “Competitive Strategy” that focusing solely on price competition can lead to reduced profit margins and damage to the brand.
• Lack of Attention to Environmental Changes: In many wrong strategies, organizations do not pay enough attention to environmental changes and customer needs. For example, as the market moves towards digitalization, organizations still rely on old methods. Clayton Christensen explains in his theory of “disruptive innovation” that companies are easily eliminated from the market if they fail to adapt to change.

Key differences between principled strategy and wrong strategy

1. Analysis and Transparency in Strategy: In a principled strategy, a detailed analysis of the market, competitors, and the organization’s internal capabilities is carried out, while in a wrong strategy, these analyses are either absent or carried out incorrectly.
2. Goal Setting and Criteria: Principled strategies have specific, measurable goals and are defined by considering resources and constraints; in contrast, flawed strategies usually have vague and unrealistic goals.
3. Innovation and Differentiation: In principled strategy, innovation and differentiation are key pillars, while wrong strategy usually focuses on price competition and cost reduction.
4. Flexibility and Adaptation to Market Conditions: Principled strategies are constantly reviewed and modified in response to environmental changes, while flawed strategies usually lack sufficient flexibility and proceed in a rigid manner.
5. Long-term Sustainability: A sound strategy is designed for long-term success, while flawed strategies usually focus on short-term results and lead to failure in the long run. The key differences between principled and flawed business strategies demonstrate that sustained success requires careful analysis, sensible goal setting, flexibility, and innovation. Wrong strategies usually lead to failure due to lack of careful analysis, focus on price, or failure to pay attention to market changes. In contrast, principled strategies that emphasize proper analysis, innovation, and adaptation to the environment can lead organizations to long-term success.

Disadvantages of Lack of Strategy in a Business

Not having a clear and principled strategy in a business can have serious negative consequences that can have profound effects on the performance and sustainability of the business in the market. In this section, we will examine the disadvantages of not having a strategy in businesses.

1. Lack of Clear Direction and Goal Setting: 
   One of the biggest disadvantages of not having a strategy is the lack of a clear direction for the organization. When a business operates without a strategy, team members may not understand what the ultimate goal is and what direction they should be heading in. Without clear and measurable goals, the organization may be headed in the wrong direction and not achieve the desired results.
   Consequences:
   • Decreased employee motivation and commitment due to lack of clarity of goals.
   • Inability to measure business progress.
   • Increased likelihood of deviation from the main path and waste of resources.
2. Inability to Identify and Exploit Opportunities:
   Without a coherent strategy, a business cannot effectively identify market opportunities. The lack of a strategy means that the organization may miss out on new market trends, innovations, or technological changes. As a result, growth and development opportunities will be missed and the business will not be able to exploit competitive advantages.
   Consequences:
   • Missing new opportunities for market development.
   • Competitiveness unable to respond to rapid market changes.
   • Reduced ability to innovate and differentiate products or services.
3. Inefficient Use of Resources:
   Businesses that lack a strategy often use their resources in a scattered and inefficient manner. Without careful and targeted planning, capital, labor, and other resources may be spent on activities that do not create real value for the organization. This will lead to increased costs and decreased profitability.
   Consequences:
   • Waste of financial, human and time resources.
   • Lack of focus on profitable projects and activities.
   • Decreased efficiency and productivity in the organization.
4. Inability to Compete with other Businesses:
   Businesses that do not have a clear strategy often struggle to compete with their competitors. Strategy helps companies gain a competitive advantage and differentiate themselves from their competitors. Without a strategy, a business may lose out to other companies or quickly fade into the background.
   Consequences:
   • Inability to differentiate from competitors.
   • Loss of market share and reduced competitiveness.
   • Increased likelihood of bankruptcy or decreased brand reputation.
5. Inability to Anticipate Problems and Threats:
   Proper strategies allow businesses to identify and plan for upcoming threats and problems. Without a strategy, an organization may overlook important threats such as market changes, intense competition, economic crises, or internal problems and not respond appropriately.
   Consequences:
   
   • Lack of preparation in the face of crises or unexpected problems.
   • Greater vulnerability to external threats such as legislative changes or economic crises.
   • Reduced ability to predict environmental trends and changes.
6. Reduced Innovation and Progress: 
   Businesses without a clear strategy are often unable to quickly identify opportunities for innovation and improvement. In such a situation, the organization may remain in old ways and fail to create new products or services that could drive growth and differentiation.
   Consequences:
   
   • Reduced innovation and inability to update products and services.
   • Reduced attractiveness to customers and loss of customer loyalty.
   • Brand damage and reduced sustainable growth.
7. Lack of Flexibility and Responsiveness to Changes:
   An effective strategy must be flexible so that the business can respond quickly to environmental changes and customer needs. Without a strategy, the organization may not be able to respond to changes in the market, customer demand, or economic conditions in a timely manner, which can lead to the organization becoming stagnant.
   Consequences:
   
   • Failure to adapt to rapid changes in the market environment.
   • Increased risk of losing market share to more flexible competitors.
   • Reduced ability to respond quickly to crises or changes.
8. Weakness in Decision-making:
   Lack of a strategy will lead to inconsistent and unfocused decision-making. In this case, the organization may be faced with different options in different situations and make random decisions without clear criteria for evaluating the options. These types of decisions can not only lead to confusion within the team, but can also have negative consequences for the business.
   Consequences:
   • Irrational and ineffective decisions.
   • Confusion and frustration among the management team and employees.
   • Lack of coherence and coordination throughout the organization.

Lack of strategy in business can significantly reduce efficiency, lose market opportunities, and even lead to the bankruptcy of the organization. Proper and principled strategies help businesses to effectively manage their resources, stay ahead of competitors, and be prepared in the face of challenges and threats. Therefore, strategy is not only an option, but a vital necessity for any business that wants to be successful in the market.

Final words:

Ultimately, it can be said that the strategy document in any business acts as a roadmap for the success and growth of that organization. This document not only specifies the direction and goals of the business, but also helps the management team to allocate resources optimally, identify opportunities and threats, and find a better position against competitors. With a principled strategy, the business can avoid wrong paths and move purposefully towards its long-term goals.

Without a doubt, not having a strategy can cause irreparable damage to your business and hinder its progress. Therefore, having a strong and principled strategy document is essential for any business to survive and grow in today’s competitive world.

If you are looking to create a strategy document for your business and want to take effective steps towards success, Sheikh Ali Mohammadi is ready to help you achieve your goals with expert advice and practical strategies. At Sheikh Ali Mohammadi, we help you design and implement strategies that meet your specific needs.

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