Importance of Corporate Strategy Term Paper
Even with the rapid development of the modern world the universal key to great success in business stays unknown. Of course, there are some checkpoints that have to be achieved in order to attain success. At the same time, there is no simple list of things that lead to success of the business entity. Thus, it means that every business has to figure out its steps to success itself. However, in my paper I would like to talk about the tool for achieving heights that I find rather universal and on the whole applicable that is – having a strategy. In my paper I would like to describe the concept of strategy in the company as well as verify the thesis that without a strategy a company can never achieve success.
To begin with it must be said that there are two major types of strategy that should be present in the company. Firstly, it is the corporate strategy. Corporate strategy helps the business decide which line or lines of business to take part in. The second type of strategy is business strategy that it is also sometimes called competitive strategy. This type of strategy sets the outline (the framework) for achieving success in a particular business. It is important to point out that the business strategy is often considered to play a more important role than the corporate one that is, in fact, wrong. As a result, it is very important for a business to remember that both forms of strategy are equally important and on the same level involve such functions as planning, analyzing, setting of the objectives, and monitoring (Business Encyclopedia).
Now, having made the concept of two types of strategy clear, I would like to move to describing how the strategy brings success to the company. To begin with, the formulation of a realistic and functional strategy facilitates a number of actions and wanted results that would be difficult otherwise (Business Encyclopedia). When there is a strategic plan pointing out the goal that is presented to all the employees it is much easier for them to stay motivated and achieve goals outlines in the plan. What is more, figuring out the strategy makes the businesses ready not only to face the happenings of today but also try to foresee the close future. Thus, when the foreseen positive/negative changes come to existence the organization is ready to react to them in a sound and earlier prepared way (Hosskisson, Hitt, Wan, Yiu, 1999).
Another point that is should be stated is that formulating of the company’s strategy allows the business to plan its capital budgeting. This makes the businesses able to analyze their financial situation and allocate the financial resources in the most effective way. Also, it is very important to mention that having a strategy makes the firm competitive in the market. One reason for it is that when having a strategy a business does not accept the status quo but questions and changes it. Thus, it is at all times ready to accept changes and adapt to them. On the other hand, a business that does not have a strategy simply tries to maintain the status quo and finds itself unable to keep abreast of the changes (Johnson, 2002).
According to the Business Encyclopedia there are six strategic steps to achieve wanted results for the business. It is important that each of these six steps is well thought out and no step is omitted. When moving through these steps it is very important that the employees and not only management participate in the process (Encyclopedia of Business).
Lower I would like to present these six steps that lead to success. The first step is to choose the business or businesses to work in (the corporate strategy). Then it is vital to create vision and mission statements. The importance of these documents should not be ignored because it is not simply some pathos words about the business. These documents tell the business where it is going and why in particularly this field. This first strategic step insures that firstly everybody in the organization is familiar with the company identity and that the vision for the future is clear (Encyclopedia of Business).
Having completed the above the business should develop strategic objectives or goals as well as set performance objectives. Thus, every single person working for the organization is familiar with the objectives that are supposed to be achieved and what the reasons are for trying to achieve them. Following to developing goals and objective the organization should analyze internal and external factors. Having done that, it is time to create a business/competitive strategy that will be suitable for fulfilling the corporate goals that have been defined. The next step for the organization is to implement business strategy by taking specific steps. Of course, everything depends on the successfulness of the implementation because even the best strategy on the paper does not always prove itself perfect in life. As a final point, an organization needs to review and evaluate how effective the chosen strategy is as well as how good the performance is. Naturally, in case when the performance is satisfying the strategy of the company should be reconsidered possibly modified by repeating some or all of the above five steps (Encyclopedia of Business).
In conclusion I would like to say that even though earlier it was mentioned that good strategy is a ticket to the world of success, sometimes even the best strategy does not survive in the thorny world of business. Still, each and every organization should make it its main goal to create a strong and realistic strategy that will guide the business all through its life, being modified and adjusted at different stages. It ought to be understood that the strategy should not rely too strongly on objectives. Also, it must be remembered that the strategy should not focus only on the competition, even though this process is very important. When making its strategy an organization needs to build it on more fundamental concepts and see the big picture of the current, past, and future matters. Thus, as it was made clear in the presented paper that without a strategy a company can not function (Johnson, 2002). Every company/business/organization should create strategic and operational plans that achieve results and not some not thorough business plan that is only capable of collecting dust in the cellar.
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