Strategy is the field of management that has been developed to help general managers (as opposed to functional managers whose responsibilities focus on one particular function such as marketing, finance, manufacturing, etc.) make better decisions that will improve the long term competitive position of the firm and maximize value creation for shareholders.
The field of strategy is made up of all the theories, concepts, methods and tools that top managers can use to ensure the profitable and long-term growth of the companies they manage. More precisely, "strategy" addresses the following issues:
- What forces drive competition in the industry in which the company operates? What are the "rules of the game" in this industry?
- Is the structure of the industry favorable and does it lead to high average profitability or is it unfavorable, hence leading to low industry profitability?
- What skills, capabilities and resources does the company have and how can it outcompete rivals operating in the same industry?
- Should the company focus on its core business, or should it try to diversify and expand into new businesses?
- Should the company form alliances, engage in mergers, acquisitions or divest from some of its current activities?