The paper “ Strategy and Competitive Advantage” is a cogent example of the literature review on management. The strategy is the outcome of a formal strategic planning process from top management. Therefore, it has limited value in providing the organization with a competitive advantage. " If there is a business in which this statement is believed to be true, its stakeholders ought to be seeking replacements for the top management. ‘ Providing the organization with a competitive advantage’ is the whole point of developing a strategy. In order to understand how this must be the fundamental objective of the strategy, it is necessary to clearly define what strategy is in a business context, what it means to have a competitive advantage, and how the formal strategic planning process leads from the former to the latter. StrategyIn most literature about business strategy, it seems that what strategy is, exactly, is taken for granted and not well-defined, which could be a clue as to why it is sometimes unclear what strategy is supposed to accomplish.
The Business Dictionary defines strategy as “ [an] alternative chosen to make happen a desired future, such as achievement of a goal or solution to a problem, ” and the “ art and science of planning and marshaling resources for their most efficient and effective use. ” (BusinessDictionary. com, 2010) Michael Porter, one of the leading experts in business strategy and planning, defines it as “ an overall plan for a diversified company, ” which “ makes the corporate whole add up to more than the sum of its business unit parts, ” but at the same time he acknowledges that, “ ... almost no consensus exists about what corporate strategy is, much less how a company should formulate it. ” (Porter, 1987: 43) But author Bruce Henderson – writing in a book co-edited by Professor Porter, incidentally – gives a slightly more concise and useful definition of strategy as “ ... a deliberate search for a plan of action that will develop a business’ s competitive advantage and compound it. ” (Henderson, 1991: 5)
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Henderson, B.D. (1991) “The Origin of Strategy”. In: C.A. Montgomery and M.E. Porter (Eds.). Strategy: Seeking and Securing Competitive Advantage. Boston: Harvard Business Press.
Lovallo, D.P., and Mendonca, L.T. (2007) “Strategy’s strategist: An interview with Richard Rumelt”. McKinsey Quarterly, [Internet] November 2007. Available from: https://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/Strategys_strategist_An_interview_with_Richard_Rumelt_2039.
Porter, M.E. (1987) “From Competitive Advantage to Corporate Strategy”. Harvard Business Review, May-June 1987: 43-59.
Rumelt, R.P. (2003) “What in the World is Competitive Advantage?” The Anderson School at UCLA Policy Working Paper 2003-105, 5 August 2003. BNET [Internet], August 2003. Available from: http://www.anderson.ucla.edu/faculty/dick.rumelt/Docs/Papers/WhatisCA_03.pdf.
Shin, N. (2001) “Strategies for Competitive Advantage in Electronic Commerce”. Journal of Electronic Commerce Research, 2(4): 164-171. Available from BNET: http://jobfunctions.bnet.com/abstract.aspx?docid=82912.