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Here are five reasons why strategy plays such an important part of any company’s success.
1. Planning – Creating and tracking progress against an annual operating plan is an essential management tool for any company. What is often missing is the relationship these plans have to the future. Too often annual operating plans are created from the rear view mirror. What happened last year and where should we go in the coming year? These are all good intentions. However, without a clear picture of what you want the future to look like, it will always be more reactive than proactive. A well-articulated 3 to 5 year long term view of the company should serve to inform the annual operating plan. The annual plan then becomes the stepping stone toward the achievement of the longer term goals.
2. Strengths and Weaknesses – At first glance this seems too obvious and you are saying to yourself, “Of course we know what our strengths and weaknesses are!” We cannot disagree. No one knows your business better than you. On the other hand, are you leveraging strengths (competitive advantages) and do you have plans to close capability gaps in your organization (weaknesses)? Strategy creates a higher level of awareness and provides greater focus on activities that will make the organization more successful.
3. Skills & Knowledge – If you know where you want to take your business over the long term, you will have a much better idea of the kinds of capabilities you will need to achieve your goals. Strategy defines and drives decisions in organizational design. Therefore by proactively pursuing new skills and knowledge, you prepare the organization for the intended future state and your odds of success increase.
4. Resource allocation – One thing is clear about any company, large and small—resources are finite. We wish they were infinite, but that will never be the case. Strategy is about making choices. What products, services and markets will be a part of the future and what we should not do? These types of decisions are critical to ensuring that limited resources are being deployed to the most promising opportunities that will provide the greatest return.
5. Environmental Scan – Too many CEOs don’t take the time to truly know the external environment that can have a positive or negative impact on performance. This is not to say that leaders are not in tune with their customers, or not aware of their competition. The question is, how thorough an analysis are they doing? Jack Welch had it right when he asked his division leaders to dig deep to understand how things might change before they really happened. Being aware and prepared for potential shifts in your market or industry provides the opportunity to take action before it happens.
Globally, a company must make strategic management apart of their business routine to succeed in a highly competitive market. It is an important role play as well. Strategic management is the formulation and implementation of the major goals and initiatives taken by a company's top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. According to Porter's Generic Strategies model, there are three basic strategic options available to organizations for gaining competitive advantage. These are: Cost Leadership, Differentiation and Focus.
The purposes of Strategic Management Process. Strategic management basically aims at formulating and implementing effective strategies. Effective strategies of course, are those that help a superior fit between the organization and its environment and the achievement of strategy goals.
Most business owners want to make wise decisions, but they sometimes are at a loss of where to begin. ... An important concept for business owners and managers to grasp, strategic management entails evaluating business goals, objectives and plans in light of your company focus on effectiveness and efficiency.
The Advantages of Strategic Management
This component or phase of the strategic management process (and case analysis process) includes: (1) performing a situation analysis (analysis of the internal environment of the organization), including identification and evaluation of current mission, strategic objectives, strategies, and results, plus major changes.
It is a philosophical approach to business. Upper management must think strategically first, then apply that thought to a process. ... The five stages of the process are goal-setting, analysis, strategy formation, strategy implementation and strategy monitoring.
The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus.
When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage. Michael Porter identified two basic types of competitive advantage: cost advantage.
Profit margin is an important aspect of the company strategy and plans.
It's the most important thing as it tells you the what when and how to do things to achieve the desired results that you are looking for.
Because it mobilizes, combines and commits resources for efficiency, effectiveness and reduction of uncertainty.
Strategic management makes it possible to ensure a close link between strategies and operations ... any operational decision that is not a current management decision is systematically examined from a strategic perspective.
Strategic Management allows:
Hello is important to some of the others, but others are the general direction and the specialized cost of the goals of revenue to .... To achieve the main objective of the existence of the business unit
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