Meaning Nature, Scope, and Importance of Strategy
Strategy is an action that managers take to attain one or more of the organization’s goals. Strategy can also be defined as “A general direction set for the company and its various components to achieve a desired state in the future. Strategy results from the detailed strategic planning process”.
A strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within the organizational environment so as to meet the present objectives. While planning a strategy it is essential to consider that decisions are not taken in a vaccum and that any act taken by a firm is likely to be met by a reaction from those affected, competitors, customers, employees or suppliers.
Strategy can also be defined as knowledge of the goals, the uncertainty of events and the need to take into consideration the likely or actual behavior of others. Strategy is the blueprint of decisions in an organization that shows its objectives and goals, reduces the key policies, and plans for achieving these goals, and defines the business the company is to carry on, the type of economic and human organization it wants to be, and the contribution it plans to make to its shareholders, customers and society at large.
Nature of Strategy
Based on the above definitions, we can understand the nature of strategy. A few aspects regarding nature of strategy are as follows:
- Strategy is a major course of action through which an organization relates itself to its environment particularly the external factors to facilitate all actions involved in meeting the objectives of the organization.
- Strategy is the blend of internal and external factors. To meet the opportunities and threats provided by the external factors, internal factors are matched with them.
- Strategy is the combination of actions aimed to meet a particular condition, to solve certain problems or to achieve a desirable end. The actions are different for different situations.
- Due to its dependence on environmental variables, strategy may involve a contradictory action. An organization may take contradictory actions either simultaneously or with a gap of time. For example, a firm is engaged in closing down of some of its business and at the same time expanding some.
- Strategy is future oriented. Strategic actions are required for new situations which have not arisen before in the past.
- Strategy requires some systems and norms for its efficient adoption in any organization.
- Strategy provides overall framework for guiding enterprise thinking and action.
Features of Strategy
Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment.
Strategy deals with long term developments rather than routine operations, i.e. it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future.
Strategy is created to take into account the probable behavior of customers and competitors. Strategies dealing with employees will predict the employee behavior.
The Importance of Strategy
Having a clear and focused strategy is critically important to the success of your business, and without a well-defined strategy, yours may stall or even fail.
If you can take the emotion out of your decision making process, you’ll have a business and a team that is more focused, more productive, and more profitable.
A successful strategic plan does the following:
- Provides Direction and Action Plans
It establishes in a clear, concise and strategically sound way the direction for the organization how this will be achieved, including detailed action plans
- Prioritizes and Aligns Activities
Strategic planning is about making choices, establishing priorities, allocating resources to strategic initiatives and coordinating to achieve desired results.
- Defines Accountabilities
It defines clear lines of accountability and timelines for achieving expected results on the agreed strategic initiatives.
- Enhances Communication and Commitment
In clarifying the vision and accountabilities, the strategic plan increases the alignment of all organizational activities and fosters commitment at all levels.
- Provides a Framework for Ongoing Decision Making
Since all decisions should support the strategy, the strategy and the strategic initiatives are the reference point for decision-making.
You have to have a plan for day to day business, but you also need to spend time looking and listening to the changes that are happening in your industry. It is a matter of having both a daily plan to get things done and an overarching strategy to guide those daily plans so you make progress towards your long-term goals.