Business strategy is essential to the success of organizations. Given the importance of strategy to organizational success, attempts have been made to study and capture the best approaches to formulate and implement business strategy. Over the years, through different studies, numerous different approaches to developing business strategies have been identified and promoted in the literature. However, there is not much information on the different strategic approaches, particularly in terms of their emphasis, focus as well as scope. Based on the literature review, this paper provides insight into some of the most common approaches adopted to formulate business strategies in organizations.
The success of organizations is often attributed to effective business strategy. It is therefore important for organizations to learn and understand the conditions as well as the process for developing effective business strategy. Understanding what strategy really is and adopting the ideal approach to develop strategy are as useful as learning about how to make organizations successful.
Business strategy has seen so many changes in direction, emphasis and approaches. In particular, its approaches have been characterized as developing, dynamic and applicable to all types of organizations. The various strategic approaches adopted by organizations appear to be influenced by different views concerning not only the importance of organizational as well as environmental factors in the strategy formulation process but also the extent to which these factors are involved in the development of the strategy.
Regarding the strategic approaches, there seems to be agreement among practitioners, consultants and scholars that there is neither one simple nor single best approach to formulating strategy. Many also believed that there is no one-size-fixed way of developing and adopting a business strategy in organizations. This is because among the practitioners, consultants and scholars, each tends to have different ideas about what business strategy is really about. Their views on what the emphasis, focus and scope of business strategy are diverse. For instance, some perceive the development of business strategy as a wide and very complex process. At the same time, others consider the process narrow and have limited focus and scope [1–12].
As a field of study and business practice, business strategy has attracted tremendous amounts of research throughout the years. New findings and new ideas generated from the research have influenced the direction, perspective as well as an emphasis in the area of business strategy. Decades of research on the subject as well as years of practice have not only changed the original nature and meaning of business strategy but have also affected how top managers think and carry out their strategic responsibilities in their organizations [13–18].
Throughout the decades, equipped with new ideas and information, experts from academic and business circles have continued to propose different approaches to developing business strategies. For example, some of them have adopted approaches based on the managerial distinction between the content and process of strategic management. Some scholars would pick on the elements that are used to define the stages in strategy formulation and implementation. Meanwhile, others would use the theoretical approaches borrowed from the managerial literature such as decision theory, contingency theory, resource-based view theory, agency theory, transaction theory and game theory to develop their models.
Although there have been different strategic approaches proposed in the literature, little is known about their relevance and applicability to organizations, especially in terms of their emphasis, focus and scope. Understanding these approaches is worthwhile because they may provide insight into the most ideal process of developing an effective business strategy. For this purpose, this paper reviews the most common strategic approaches as documented in the literature. More specifically, the paper is divided into four sections. The next section provides a brief background on the approaches to business strategy. Following this, the third section focuses on the specific approaches as identified in the literature and previous studies. Finally, the last section presents a short conclusion of the paper.
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