Policies are general statements which guide managers' thinking to take decision. They provide a broad boundary within which decisions should fall. Therefore the essence of policy is discretion. Strategy, on the other hand, concerns the direction in which human and material resources will be applied with a view to increasing the chance of achieving selected objectives. The key function of strategies and policies is to unify and give direction to plans. But if one of them stands alone, can hardly ensure that an organization will reach its goal.
Apparently strategic planning seems to be a simple exercise; analyses the current and expected future situation, decides the direction of the firm, and develops means for achieving the goal. In reality, it is a very complicated process that demands a systematic approach to identify and analyze factors external to the organization and matching them with the firm's capabilities.
Features of Strategic plansThe following are some of the most important characteristics of strategic plans:
- They are long-term in nature and place an organization within its external environment.
- They are comprehensive and cover wide range of organization activities.
- They integrate guide and control organizational activities for the immediate and long-range future.
- They set the boundaries for managerial decision making. Since strategic plans are the primary documents of an organization all managerial decisions are required to be consistent with its goals. Strategic plans, thus, set forth the long-term objectives, intermediate objectives and main purpose or basic role of an organization.
Types of Strategic AlternativesMost businesses today also develop strategies at two distinct levels. The two general levels are;
Business-level strategyBusiness-level strategy is the set of strategic alternatives from which an organization chooses as it conducts business in a particular industry or market. Such alternatives help the organization to focus its efforts for each industry or market in a targeted fashion.
Corporate-level strategyCorporate-level strategy is the set of strategic alternatives from which an organization chooses as it manages its operations simultaneously across several industries and several markets. Companies today compete in a variety of industries and markets. So; as they develop business-level strategies for each industry or market, they also develop an overall strategy that helps define the mix of industries and markets that are of interest to the firm.
These levels provide businesses a rich combination of strategic alternatives.