Key elements of a strategy: a review

According to Johnson, Scholes and Whittington (2008), "Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations'.

I would like to share my view on some of the key elements in this definition:

a. Direction: Direction means the the adoption of certain strategy options such as market penetration, consolidation, product development. It can also be depicted in the form of a strategy clock, or the adoption of a specific strategic position. Change from one strategic position to a new strategic position also reveals information of a company's strategic direction (because we can always connect two points (two strategic positions) with a line; and a line indicates direction).
b. Long term: Strategy involves long time frame of planning (first aspect of long-term) and strategic decisions often commit a company's resources for the long-term, e.g. in the form of fixed investment, and such resource commitment decisions are irreversible (second aspect of long-term); strategic decisions aim at building strategic capability of a company to achieve sustainable (i.e. long-term)competitive advantage (third aspect of long-term).
c. Resources and competences: Such resources can be tangible or intangible resources; competencies are mainly about capabilities at the department and corporate levels. The focus here is on strategic capabilities that enable a company to achieve sustainable competitive advantage. The main theory to consider is resource-based view in strategic management (re: http://en.wikipedia.org/wiki/Resource-based_view)
d. Advantage: a more relevant concept is sustainable competitive advantage; such advantage can be achieved by offering products of high customer value and performing more cost-effectively than competitors. It is also important to trace the "root causes" of a company's competitive advantage, and ensure that such advantages will not be eroded fast. The discussion of the "root causes" of sustainable competitive advantage is complex and intellectually controversial. (Also refer to competitive advantage: http://www.quickmba.com/strategy/competitive-advantage/)
e. Scope: This covers product range, geographical scope and business scope (including related and unrelated businesses). When a company' scope of business and/or territory is broadened, the business becomes more complex, thus more costly to run; on the other hand, the company probably will grow larger as a result of broader scope, thus gaining more market power as well as becoming less risky with diversification.
f. Stakeholder expectations: A company's strategic vision should be formulated in such a way that it is appealing to a company's stakeholders. It appears that when a company's vision and, subsequently, its strategy is endorsed by its stakeholders, it should be more competitive and viable. A company should formulate strategy that meet stakeholders' "legitimate" expectations with an appropriate balance of interest. The balancing act itself can be complex and controversial.

There are a number of ways to interpret these key elements of a strategy; and the brief discussion here is a quite personal view on these elements of strategy.

References

1. Johnson, G., Scholes, K. and Whittington, R. (2008) Exploring Corporate Strategy, Prentice Hall
2. On competitive advantage: http://www.quickmba.com/strategy/competitive-advantage/
3. Stakeholder management: http://en.wikipedia.org/wiki/Stakeholder_management