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The competitive advantage

Dynamic Concept

A strategy is a set of goals and major policies. The definition is as simple as that. But while the notion of a strategy is extremely easy to grasp, working out an agreed-upon statement for a given company can be a fundamental contribution to the organization’s future success.

In order to develop such a statement, managers must be able to identify precisely what is meant by a goal and what is meant by a major policy. Otherwise, the process of strategy determination may degenerate into what it so often becomes—the solemn recording of platitudes, useless for either the clarification of direction or the achievement of consensus.

Identifying Goals

Corporate goals are an indication of what the company as a whole is trying to achieveand to become. Both parts—the achieving and the becoming—are important for a full understanding of what a company hopes to attain. For example:

  • Under the leadership of Alfred Sloan, General Motors achieved a considerable degree of external success; this was accomplished because Sloan worked out a pattern for the kind of company he wanted it to be internally.
  • Similarly, the remarkable record of Du Pont in the twentieth century and the growth of Sears, Roebuck under Julius Rosenwald were as much a tribute to their modified structure as to their external strategy.1

Achieving.

In order to state what a company expects to achieve, it is important to state what it hopes to do with respect to its environment. For instance:

Ernest Breech, chairman of the board of the Ford Motor Company, said that the strategy formulated by his company in 1946 was based on a desire “to hold our own in what we foresaw would be a rich but hotly competitive market.”2 The view of the environment implicit in this statement is unmistakable: an expanding overall demand, increasing competition, and emphasis on market share as a measure of performance against competitors.

Clearly, a statement of what a company hopes to achieve may be much more varied and complex than can be contained in a single sentence. This will be especially true for those managers who are sophisticated enough to perceive that a company operates in more external “systems” than the market. The firm is part not only of a market but also of an industry, the community, the economy, and other systems. In each case there are unique relationships to observe (e.g., with competitors, municipal leaders, Congress, and so on). A more complete discussion of this point is contained in a previous HBR article