The Purpose of Strategy

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The Purpose of Strategy
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The Purpose of Strategy
A business aim may be defined as the goal an enterprise intends to achieve. A
fundamental aim of all business organizations is to add value, and for private companies, this
entails making profits. Other strategic aims of businesses include market leadership, expansion
and brand building. Besides Taiwo, Agwu & Lawal (2016, p. 130), explains that the primary
purpose of an organization should be in line with the value and expectations of the shareholders,
and must find answers to two questions- what the business is and for what reason the business
was created. Although a business aim and purpose may be used interchangeably, a business
purpose mainly encompasses a detailed representation of the steps a business plans to take to
achieve a defined aim.
Businesses exist to achieve particular aims and objectives. Therefore, every business
organization must come up with an outline of how it intends to accomplish its purpose. Such a
framework is called a strategy. In his book published in 1994, Henry Mintzberg defines strategy
as a plan, a pattern and a position (Anwar, Shah & Hasnu, 2016, p. 102). As a plan, a strategy
outlines the means used by a firm to get from one state to another. As a position, strategy reflects
the decisions made by a firm to offer particular services or products in specific markets. Besides,
a strategy may be defined as a pattern in actions over time. For example, a firm may adopt a
cost-leadership, differentiation or high-end strategy.
A good business strategy should enable an organization to achieve a competitive
advantage over other firms. Cost leadership is one of the strategies that can allow an organization
to be more profitable compared to its competitors (Anwar, Shah & Hasnu, 2016, p. 105). When a
company adopts a cost leadership strategy, then it will be able to target the low and middle-
income customers, who are passionate about receiving high-quality products at lower prices. For

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example, IKEA is globally known for its low prices and uniquely designed furniture. It adopted a
low-cost strategy, especially in Europe to enable everybody to afford its furniture (Johansson &
Thelander, 2009, p. 199). This has made it remain as the leading seller in the furniture industry.
Besides, I worked as Customer service Assistant at one of the Cole Supermarkets’ stores in
Australia in 2016, and during this time, the company had adopted a “Down Down” low-prices
campaign whereby it was offering its products at discounted prices. This enabled the company to
increase its sale and customer base. By 2016, more than seventy percent of every dollar spent by
consumers in Australia went to Coles and Woolworth's.
The work of the management is to maintain a working and equitable balance among the
claims of the different interested groups in the firm such as employees, stockholders, and the
customers. However, in the 1980s, corporate raiders started mounting hostile takeovers of firms
that were unable to deliver high returns to their shareholders- if they neglected their other
stakeholders (Ingerson et al., 2015, p. 378). The raiders foresaw that profits would be higher if
firms fired their workers or cut their pay, automated as many activities as possible, fought
unions, squeezed their clients and neglected their communities. Despite that the law did not
oblige firms to maximize shareholder value, the shareholders had the legal rights to fire or
replace their directors.
Since then, stakeholder capitalism was replaced with shareholder capitalism. At this
point, a strategy was viewed by firms as a way of achieving shareholder value. Some scholars
argued that shareholder capitalism was beneficial in that it moved economic resources to where
they proved most productive hence making the economy to grow faster (Ingerson et al., 2015, p.
382). However, due to the problems associated with shareholder theory like the growth of
economic insecurity, the decline or flattening of wages and the abandoning of the communities,