identifies and states a company's vision of its long-term objectives.
Grand Strategy Details
Any business, whether it is large or small, may formulate a grand strategy to describe its aims. Since it is a statement of long term objectives, a grand strategy does not go into detail. An example might be: 'increase sales in Asia by twenty percent in five years.' It is then up to the relevant sector to decide exactly how this can be achieved.
Grand strategies generally focus on three areas:
- Expansion or growth: The company aims to expand its market share by selling more products, moving into new markets or expanding its product range; to achieve its objective, it may decide to do all three or concentrate on just one area.
- Retrenchment or cutting back: The company may decide to focus on one area of its business and cut its investment in areas which show less profitability or which may, in future, become less profitable.
- Stability or maintenance: The company aims to hold its place in the market, which may require investment in new machinery or systems.
A grand strategy may use aspects of all three of the above tactics; they could expand in one area but cut back in another while maintaining its market share in a third.
Grand Strategy Example
Helena and Josh have opened a bar in a town where there is a lot of competition. At first, Josh is solely concerned with making as much money as possible, but Helena convinces him that they should think about what they really want from their business. The first grand strategy that a business has is often not explicit because it is a necessary condition. The business' need to survive is its first and most important grand strategy.
Helena and Josh seem to have achieved this fundamental strategy; business is good, but the two of them are working very long hours and have no time for themselves. Helena persudes Josh that they need to think about what they want from the business. Eventually, they formulate this grand strategy: 'to create a space in which we feel at home.' They talk about the sort of music they will play, the decoration, and the opening hours, and they finally decide to close on one of the slower days in the week and only open in the evenings.
As a result, the volume of trade drops. They lose the customers who used to drop in for a coffee in the morning, and others do not like the music and prefer to eat elsewhere. However, by defining their grand strategy, Helena and Josh create a friendly space with a loyal customer base, are happy working in their bar, and have more free time to themselves.
Significance of Grand Strategy
In order to be successful, a grand strategy needs to be realistic. While it might be a simple statement, achieving it requires careful thought and consideration. It is necessary to know if a business has the capacity to achieve the stated objectives and to understand what will be required to meet them. Once a grand strategy has been formulated and communicated, it motivates the staff to work towards it and meet the challenges it implies.