Why is Strategy Important to Business
Management Policy and Strategy MT 460 – 01
The question of why strategy is important to business is compelling to say the least. There are a number of reasons why strategy can and often does determine the success, growth or failure of a business. Without a strategy the business is responding to internal and external circumstances or demands without the advantage of a plan in place to address them. This sometimes leads to wrong decisions or weak decisions and the business loses the opportunity to turn the circumstance into an optimal resolution that results in profits and better business.
Strategy tells where you are, where you want to go, and how you are going to get there. It defines the overall direction for the business based on opportunity and threats in the external environment and identifies the strengths and weaknesses of the business internally. Strategy provides the big picture and shows how each individual activity ties together to achieve a desired end result. Strategy gives insight as to the way the business should compete in the future.
External environmental changes can be customer and/or competitor based, as well as political, economic, social, technological, environmental or legislative. The more the external environment changes the more opportunities there may be for a well prepared company and the more threats to the unprepared. The actions and intentions of competitors change in a stable environment, and if the company is reviewing the market and what is happening they can prepare for any real or potential competitive maneuvers and find new insights into how to create continued value for customers. (Simister, 2007)
Strategy is important as a source of long term profits. As business competes for a fair share in the , with competitors over customers, uncertainty becomes a constantly revolving battlefield for better ways...