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Strategy is the set of choices that determines a firm's long-run direction — what it will do, what it will not do, and how it intends to create value in a competitive environment.
Strategy is distinct from tactics (short-run operational decisions) and from goals (desired outcomes). Strategy is the *means* by which a firm pursues its goals. "Grow revenue by 20%" is a goal; "expand into the German market by acquiring a regional distributor" is strategy.
Three levels of strategy within a firm: - Corporate strategy: which industries or markets to compete in. "Should we diversify?" "Should we acquire Company X?" "Should we exit this business unit?" - Business strategy: how to compete and win *within* a chosen industry. This is where competitive advantage lives. - Functional strategy: how marketing, operations, HR, and finance each support and align with the business strategy.
Most exam questions on strategy focus on the business level — industry analysis, competitive advantage, resources.
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Exam strategy
Porter's Five Forces analyses the industry; generic strategies (cost leadership, differentiation) sit at the firm level. Don't mix them.
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