What Is Strategy? And How to Formulate One

Alberto Sadde
CTO & Founder
Reading time:
14 min
Published on:
May 14, 2023
Updated on:
August 1, 2023

Surely you have heard for a long time the importance of having a strategy. But have you ever wondered what exactly is a strategy? What is the essence of strategy in a business environment? Did you know that there are several types of strategy and they are all equally important for the development of your business?

Prepare your pencil and paper because we are going to tell you everything you need to know about strategy, its importance and how to develop a successful business strategy.

What is strategy

Michael Porter (American academic), defines business strategy as the way in which our company is going to differentiate itself from the rest, creating a unique and valuable position in the market and providing a differential value that is perceived as superior by the public.

In business, success is mostly linked to strategy, but there is no single strategic direction that guarantees that a project will work. For example, some people believe that to make decisions or to be strategic it is necessary to take into account the present and anticipate changes. Others think that strategic decision-making works better by organizing projects organically or more spontaneously, since the future is very difficult to predict.

Effective business planning is key in this changing environment. Organizations need to take advantage of all the opportunities at hand and prepare at all levels.

Characteristics of a good business strategy

While there are different definitions of strategy, they all share fundamental properties:

  • Measurable: a business strategy cannot have vague or poorly defined objectives, since in this way you cannot reach the goal and you will not know if what you are achieving corresponds to what your company requires. 
  • Multidisciplinary: a single strategy can influence many functional areas of a company, for example: marketing, sales, finance, human resources and operations.
  • Clear: the strategy must be clear so that all members of the company can understand exactly the mission they have, according to their activity or position. It also serves as a guide to execute decisions and actions.
  • Stable: business strategies provide stability and evolve as a company grows. Therefore, it is important to establish what works and what does not. When you are clear about this, you can try new approaches.

Strategy vs.: Objectives, Goals, Tactics and Targets

Photo business and marketing concept with wooden blocks on wooden table side view

While objectives, goals, tactics, and targets are all important parts of business planning, they should not be confused with the overarching strategy. The strategy answers the question of what we want to achieve and why. The GOST Model (objectives, goals, and tactics) provides a solid starting point for developing an action plan and strategy to reach our desired outcomes. Let's take a closer look at each of these components.


Objectives are measurable steps the company takes to achieve a strategy.

We can also understand the objectives as the results we pursue with strategy development. For Richard Rumelt, an influential thinker on business strategy and management, objectives comprise a set of coherent and measurable actions in the short term

Example: Retain 60% or more of the active Latino market for cell phone processors, according to the latest internal reference report.


The goal is defined as a broad primary outcome.

Goals are the concrete and measurable results that are expected in the long term. It is recommended that organization’s goals be established for one to three years. 

Example: Make our phone processors category leaders in sales revenue by 2024.


A tactic is a tool used by companies to pursue an objective associated with a strategy.

Tactics are all those activities that are carried out to achieve the objectiveswithin the business environment. Tactics often appear on a project roadmap. 

Example: Through our creative messaging, we will take the opportunity to tell our customers about our software update. 


While the goals and objectives respond to the "what" in the GOST model, the strategy is the first to respond to the "how". In other words, the strategy is the approach that is adopted to achieve an objective.

Strategies provide solutions to specific problems. We can see the strategies embodied through to-do lists and action plans that teams and departments can follow. 

Example: Persuade potential buyers that our processors are the best in the Latin market by partnering with large, well-established phone manufacturers.

Different approaches to strategy

Strategy is a critical component of any organization and plays a vital role in many areas of business. Given its importance, there are various approaches to developing a strategy. In this section, we will explore some fundamental strategies used in business models.

Strategic planning

Strategic planning is a process in which leaders define what the vision of their organization is. During strategic planning, the goals and objectives of the company are also established.

The planning process must have an effective strategy that establishes the steps to follow to achieve the proposed objectives.

This type of planning usually represents objectives in the medium and long term, this time can be from three to five years, but there are occasions when it can last longer.

Strategic management

Strategic management is responsible for managing the resources of an organization to achieve the goals and objectives that have been established.

Strategic management involves several things:

  • Setting goals
  • Competitive environment analysis
  • Analysis of the internal organization
  • The evaluation of strategies
  • Ensuring that strategies are implemented.

Team strategy

The team strategy identifies how a team will help the organization achieve its goals.

To successfully execute your strategies and have a competitive advantage, you need teams across your organization to work together. Each team is key, and each of them should have their own strategy at the team level.

The team strategy must not only align with the business unit, but also with corporate strategies. Once all the stakeholders are also aligned, a good future for the organization is in sight.

Now we are going to know two levels of strategy in very important commercial frameworks today:

Corporate strategy

As the name implies, corporate strategy is the overall strategy of an organization. It is made up of multiple business units. In simpler words, it is a company within a larger company.

This type of strategy determines how the company supports and improves the value of the business units, that is, it makes sure that all its parts generate more value together than they would individually.

Business strategy

When examining strategy at the business unit level, there are two perspectives that we can consider.On the one hand, this type of strategy is concerned with successfully competing in individual markets. On the other hand, this strategy is linked to the objectives established in the corporate strategy.

How to develop a business strategy and why it’s important

Photo business people meeting

Coming up with an effective strategy in business is hard, but the rewards are worth it! Having a strategy allows you to plan the company's objectives in the short and long term.

Once you have a strategy in place, you can better understand your company's strengths (competitive advantages) and weaknesses. Knowing this you can go one step further and discover what makes your company different.

For a strategy to be truly successful, it must outline the vision of the business, define objectives and establish how the company will grow and compete over time.

Here are the steps you need to follow to build a strong and competitive strategy:

Define your vision

As we saw earlier, for a strategy to be successful and have a competitive position in the marketplace, the company's core values ​​and how you want it to be positioned it in the future must first be considered.

Set your top-level goals

We then move on to establishing the top-level goals of an organization. These goals focus on increasing the sales and profits of a company, as they ensure its existence and improve its value within the market.

Analyze your business and the market

Now we must think about what are the strengths and weaknesses of our business and what are the opportunities and challenges present in the market.

Define how to gain a competitive advantage

A level strategy should always answer the question of how the established objectives are achieved. For an industry to compete with others, it must have established how it is going to compete in the market, what is the best way to create demand and increase sales.

Now we do have everything to formulate a generic business strategy! 

How to avoid mistakes when building a strategy 

Remember that making mistakes is totally normal. However, when we talk at the business level, the situation is taken a little more seriously. That is why we share some tips that will help you make the most of your business strategy and avoid (if possible) big mistakes.

  • Remember that strategy is not the same as tactic, goal or objective.
  • Plan a strategy that is consistent. Check with your team the aforementioned concepts and apply them to the company plan as appropriate.
  • Build your strategy on data. A strategy that is not built upon a well made investigation is most likely sure to fail. 
  • Establish clear goals. Strategy should always go arm in arm with goals, short and long term.

Now that you know what a strategy really is and all its approaches, you are ready to take that leap and formulate your own business strategy!

Alberto Sadde
CTO & Founder

Over 10 years in tech. Alberto has a diverse background including roles as the Lead Engineer at Akorda, an AI-powered contract management service for Fortune 100 companies,  Research Engineer and Manager at AiFi, a global provider of self-checkout technology for brick-and-mortar retailers.

Before startups Alberto focused on compiler optimization at Oxford and did research on genetic algorithms at BAE Systems.

He's known to have strong and sometimes esoteric opinions. Writes regularly on his blog at