why do we need strategy in business

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Delivering a strategic plan is one of the most important things any organization, regardless of size can undertake. A well-formulated and executed strategy establishes the foundations against which the organization can create, monitor and measure their success. And yet many people find strategy and its purpose difficult to articulate. Why is strategy important? 1. Understanding your company and industry
Strategy allows organisations to develop a clearer understanding of their own organisation and what s required for them to succeed. It helps organisations understand their core capabilities, identify and address weaknesses and mitigate risks. It can help organisations better design themselves so that they are focusing on the right things that are the most likely to deliver the best performance, productivity and profit both now and in the future. 2. Growing in a changing world Understanding what is taking place within the external environment is important to preparing a strategy that will ensure long-term profit and growth. Understanding changes that are taking place in your industry, or with your market place is important. Because if you don t adapt you die.

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Even successful businesses need to realize that what made them successful today is not what will make them successful tomorrow. With the rate of change becoming faster every year, it s increasingly important that we understand what trends are going to impact on our business and our industry, and how we re going to respond to them. Whether political, social or technological, we need to what changes are going to affect our businesses. And we need to know how our organisation can respond to them. It enables us to find opportunities for growth and sustained profitability and it can help us identify and respond to changes that could make us extinct. In the same way that the motor vehicle put many horsewhip makers out of business, it s important that you understand what can affect you and your business both short term and long term. 3. Creating a vision and direction for the whole organisation All organisations and their staff need to understand their purpose, their destination and the course they re taking to get there. A company without a strategy is akin to sending your staff into the desert and leaving them to follow mirages in search of water.

Without a destination and focus in mind your staff will wander aimlessly from one activity to the other never knowing what to focus on or how to prioritise. Providing an organisation with a common purpose, goals and a set of actions to reach the goal ensures that everyone is working for the same outcome (your organisations success) and that time and resources are being allocated to the same goals and objectives. Simply it streamlines your business and ensures every dollar and minute you spend on the business is in the direction of your sustained success. While strategy is can be difficult for many organisations to commence, its benefits are far-reaching and many. From creating new business opportunities, to streamlining the operations and engaging staff, a well-formulated strategy will enable increased growth, productivity and profit both now and into the future. БStrategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stockholder expectationsБ Johnson et al (2008) Without a strategy an existing business can drift away from its customers and become uncompetitive within its environment and eventually stops making profit, this is known as Strategic Drift.

Therefore having a strategy is a way to remain competitive or a way of forcing a strategic change when an organisation has drifted away from its environment and is starting to fail. Most small businesses have a strategy in the form of a business plan; this is usually a standard document generated to convince either an advisor or a bank they have a good idea and have thought about it. The UK governmentБs (Business Link 2010) business advice recommends at least some SWOT analysis and financial forecasting within its business plan template. This type of strategic business plan is then used to secure funding from the stakeholders. Strategy has a military history, going back at least to 600 b. c. with The Art of War by Sun Tzu, and as such has been mostly concerned with competitiveness. How to win a battle with your competitors has been the main stay of strategic literature for many year, with positioning of products (Strategic choice) aim to make the business better than the competition.

More recently, strategic tools are being used in the creation of vision and mission statements; to be communicated to the stakeholders. These have a number of uses: Firstly, to help sell the idea of the company to its investors to secure resources for expansion. Secondly, the move to culture based management; where the organisation rely on its culture to inform the employees choices, enabling them to make the correct decisions at all levels without strict supervision. Johnson G, Scholes K Whittington R. (2008) БExploring Corporate StrategyБ Person Education Limited [ Handy C. (1989), БThe Age of UnreasonБ, Hutchinson [ [ Huczynski A. A. Buchanan D. A. (2007), БOrganisational Behaviour sixth editionБ, Pearson Education Limitedб p623 [ Three ways to create a new strategy – Entrepreneurial, Emergent. Building on the literature review the author has proposed the. A list of Strategy tools and a brief description of. This section contains a worked example that follows the ReconstructionistБs. Review and synopsis of the book Blue Ocean Strategy by.

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