The definition of strategy in the context of business varies amongst academics. Different definitions have been put forward since the early 1900’s. Swamidass and Newell (1987) suggest that strategy is primarily action based such as the process of internal operations carried out by a company to achieve a specific goal. Mintzberg (1987) sees strategy as a management terminology where actions (especially in a corporate structure) become a series of decisions made by senior management based on facts and data. Alfred D. Chandler (1963), defined strategy as the determination of the basic long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals in order to gain or maintain a competitive advantage. According to Johnson (1999), strategy process examines how strategies are formed and implemented through four steps of action – identifying, diagnosing, conceiving, and realising. Strategy process highlights the structural features of processes of strategy and must consider a multitude of factors including cognitive, political and social factors (Chakravarthy, 2003). Strategy context deals with the set of circumstances and parameter that strategy process must fall under. Strategy context centres on the environmental surroundings a firm is situated in. It is heavily dependent on the understanding of how environments affect the formation of strategy and how different actors in strategic planning impact upon that environment and the consequent formation of strategy (Marx, 2004). Businesses rely on a clearly defined strategy which is based on effective content. However whether it is strategy process or strategy context that ensures the best outcome for strategy content is heavily debated (Eden, Williams and Ackermann, 1998).
The strategy process is an important part of determining strategy content and can be best described as models. Hutchinson (1999) identifies three such models: the rational process model, the stakeholder’s model and the decision process model. The rational process model is typically guided by top management members with occasional consulting input from a spectrum of external experts. Hutchinson (1999) identifies that the rational process determines the allocation of funds to projects leading to the formulation of strategy becoming its major output. The stakeholder model assumes that all stakeholders are promptly considered in discussions regarding strategy and highlights any conflicting areas of concern. This initiates negotiations between the firm and stakeholder to reach a mutual agreement. Pun (2017) emphasises the importance of the stakeholder model as he states that ‘an organization’s strategy will only be effective if it meets the needs of its stakeholder groups’. The decision model aims to answer the following questions: “Where are we going? How do we get there? What actions do we take? And how do we know if we are on track?”) (Hutchinson, 1999).
Arguments can be made whether strategy can be emergent, planned or both. Chakravarthy (2003) suggests that the degree of planning strategic approaches is dependent on the firm and its environment. If the strategy process can be planned in a functional and structural way, Chakravarthy (2003) states that it is an effective way in determining content. Chakravarthy (2003) also proposes that an effective structural process upheld with clear direction by senior management of the firm produces clarity in the process. This means that every member of the firm is fully aware of their role in the process while also understanding the broader processes in action this ensures a smooth approach to strategy implementation.
Sadler and Craig (2003) highlighted the issue of a lack of diversity in strategy content for firms that relied solely on a top-down strategic process. Depending on the complexity of a firm, strategies could become biased and conceptualised by an individual or a very small group of people, therefore, limiting opportunities for collaboration and creating an unbreakable glass ceiling for actors within the company. Sandler and Craig (2003) concluded that strategy process is important for determining strategy content only when the process is founded on a broad and encompassing basis.
A generalised comment on strategy process by academics is that it is extremely complex and diverse. To the extent that it is difficult to put processes into action in a concise and effective manner. (Jensen and Szulanski, 2005) highlights this by emphasising that there is little agreement amongst the academic fraternity in regards to strategy process. Therefore it is difficult to see what exactly strategy process is, what point it starts and what point it ends.
Strategy process has been a hallmark of business whereas strategy context is a recent concept (Marx, 2004). Strategy context can be broken into two basic elements: internal and external environmental strategy context elements. The internal strategy context of a firm is the way that it constructs itself in order to achieve its strategic goals. These internal constructs are often integrated into the firm’s strategic development. Where strategy process has often debated this idea of strategy context is fully supported by numerous published business literatures (Hutchinson, 1999; Richter and Schmidt, 2005; and Pun, 2017). Examples of internal strategy context element include administrative framework, power distribution, and the management team characteristics (Richter and Schmidt, 2005). The external environment strategy is a key explanatory variable of a firm’s external environment where the strategy content is defined by the parameters set by external factors (Muralidharan, 2004). Aspects identified with the external environmental strategy context include uncertainty, complexity, munificence (Richter and Schmidt, 2005).The context in which a firm’s strategy is generated, formulated and applied is dependent on the assurance that there is a detailed level of understanding of the specific environmental factors. Strategy context is also subservient on the measure of sociological understanding on how different actors interact with each other within the firm. Effective human communication and interaction are crucial in all firms regardless of size, therefore it is understandable that a thorough understanding of the context where the strategy takes place would be valuable for the firm (Marx, 2004). This supports Eden, Williams and Ackerman’s (1998) suggestions that it is difficult to see how the content of a strategy can be adequately determined without some clarification of the context where the strategy is taking place.
The practicality of the implementation of strategy context, in terms of strategic management, is vulnerable to collapse in large complex firms. In instances where an individual who is responsible for the context setting within a firm decides to leave abruptly puts the firm in a conflicting position. An important player leaving their positions also has the possibility of completely changing the external environment in an industry forcing firms to adapt thus creating another degree of competition which leads to the opportunity of innovation (Eden, Williams and Ackermann, 1998).
Pettigrew and Whipp’s (1993) model refer to the content of strategy as “the assessment and choice of products and markets, setting objectives and targets with some evaluation”. Their view is that strategy content should focus on key issues such as business support, environmental improvement and inward investment. A number of forces that act as the principles of strategy content, also coined as the ‘trinity of forces’, are identified as strategy process, context (internal and external and content (Pettigrew and Whipp, 1993; Hutchinson, 2001; and Pun, 2017). Strategy process greatly contributes to strategy content through various elements such as strategic management, models of change and strategy formulation and implementation. Firms focusing on issues underlining strategy context become more business oriented. This is because a firm with a thorough understanding of its strategy context improves multiple variables such as its overall efficiency and its economic impact on the external environment.
The discussion has highlighted the essential differences between the concepts of strategy process and strategy context. It is clear that the degree of discrepancies between the two approaches with each having benefits and pitfalls in terms of effectiveness in determining a content strategy. While there are both positive and negative aspects of each approach it is easy to see the possible benefits of adopting a dual approach to strategic management. It is clear that strategy process is important but without some measure of recourse to the internal and external environmental factors, the strategy process wouldn’t be as effective causing a lack of efficiency. Thus a conclusion can be drawn that a level of duality between the two approaches acts as the most effective way of determining strategic content. As with any approach, a dual approach has its own hindrances. For example which approach would be the starting point of strategy? How should the allocation of resources be distributed amongst the approaches? Should one approach be given more importance in terms of determining an eventual content? While these matters to require attention, it does little to draw away from the fact that there are numerous benefits from utilising both process and context in the formulation and implementation of strategy content in strategic management.