Significance of strategy

Significance of strategy stems from the fact, that managers try to prepare and plan organization's activities over a longer period of time. It includes reactions to any changes which may occur both in the external environment and inside of the organization. It concerns actions crucial for competitive advantage. Any company operating in the market, regardless of its size, type of business, the competitive position should develop proper strategy.

By using well-developed strategy a company can not only gain a competitive advantage, but also it can become the market leader.

The strategy is basis of the company's success. It should be developed, implemented and continuously improved, to be adequate to the changing environment. Effective strategy creates unique companies, allowing both its employees and stakeholders to set a clear distinction between company and its competitors.

Fig.1. Significance of strategy

Determinants of effective strategy

• effective strategy uses mainly positive attribute which are understandable to customers,
• significant strategy gives a sense of otherness, not only to customers but also employees,
• strategy is present in every action the company everyday,
• It is consciously implemented and executed by each employee,

An effective strategy gives uniqueness in two ways:

• company is perceived differently than other companies in the industry,
• employees have a sense of uniqueness.

The strategy is generally regarded as main method of achieving the desired objectives. Poorly formulated strategy can be an obstacle in implementing and achieving the goals of the company.

Examples of Significance of strategy

1. A strategic plan can help a company identify opportunities and threats in their external environment, as well as strengths and weaknesses in the organization. Strategic plans can then provide guidance for how to capitalize on the strengths and opportunities, while addressing the weaknesses and threats.

2. Strategic planning can help an organization set long-term goals and objectives. It can also provide a framework for monitoring progress towards those goals and objectives.

3. A strategic plan can help to ensure that a team or organization is working towards a common purpose and understanding of why their work is important. This can help to increase efficiency and effectiveness of operations.

4. Through strategic planning, an organization can identify and prioritize the resources (e.g., people, money, technology) required to achieve the goals. This can help to ensure that the organization is using its resources in the best way possible.

5. A strategic plan can also help an organization to focus on the most important initiatives and projects, as well as to manage change. This can help to ensure that the organization is staying on track and not wasting resources on activities that are not helping to meet its goals.

Advantages of Significance of strategy

The significance of strategy is evident in its many advantages. These include:

• Improved focus on the organization's goals and objectives. This allows managers to make decisions that are aligned with company's vision and mission and ensure that the company is on track to achieve its goals.
• More effective use of resources. By focusing on the most important areas of the business, resources can be allocated more efficiently and effectively to maximize their effectiveness.
• Improved customer service. By understanding the needs of customers, companies can better meet their needs and provide a higher level of service.
• Increased competitiveness. A well-defined strategy can help companies gain a competitive edge in the marketplace by gaining a better understanding of their competitors and the industry.
• Increased profitability. Companies can use strategic planning to identify areas where they can reduce costs and increase revenue, allowing them to maximize profits.

Limitations of Significance of strategy

The significance of strategy is undeniable, however, it has certain limitations. These include:

• Strategy formulation is complex and time-consuming process. It requires a substantial amount of resources and commitment from top management, and involves a lot of analysis and forecasting.
• It is prone to errors, since it relies on assumptions and predictions of the future, which can be wrong.
• It requires a great deal of flexibility in order to respond to changes in the external environment.
• It is difficult to measure the effectiveness of strategy and assess its results.

Other approaches related to Significance of strategy

• The significance of strategy can be seen in its ability to help managers plan for the future and respond to changes in the external and internal environment. It is also important for creating a competitive advantage. In addition, there are several other approaches to understanding the significance of strategy:
• Strategy can be seen as a tool for improving organizational performance by setting goals and objectives and creating plans to achieve them. It can also be used to allocate resources more efficiently and create a system for measuring progress.
• Strategy can also be viewed as a way of positioning a company in the market, determining its competitive advantages and setting a vision for the future. It can provide guidance on how to compete in the industry and how to differentiate the company from its competitors.
• Strategy can also be seen as a way of responding to the changing environment. It can help managers anticipate potential risks and develop strategies to mitigate them. It can also provide a framework for making decisions and adapting to market conditions.

In conclusion, strategy is an important tool for managers to understand and respond to changes in the external and internal environment. It can be used to create competitive advantages and improve organizational performance. It can also provide a framework for positioning the organization in the market and making decisions.

Significance of strategy — recommended articles

Benefits of strategic management — Organizational planning — Strategy — Planning process — Strategic decision — Importance of strategic management — Strategic option — Strategic priorities — Importance of swot analysis

References

• Bateman T.S., Snell S.A., (2004), Management: the new competitive landscape - 6th ed., McGraw-Hill Irwin, New York.
• Pearce, J. A., Robinson, R. B., & Subramanian, R. (2000). Strategic management: Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill.
• Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.
• Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
• Mintzberg, H. (1990). The design school: reconsidering the basic premises of strategic management. Strategic management journal, 11(3), 171-195.
• Porter, M. E. (1981). The contributions of industrial organization to strategic management. Academy of management review, 6(4), 609-620.