Strategy enables businesses to evaluate the external opportunities and threats that effect their success and competitive advantage in the market. This paper explains the importance of strategy in business, and analyzes the main components of the strategic management (three-tier) process. It also discusses the significance of having a future oriented plan by defining an organization’s vision, mission statement, purpose, philosophy, and goals. In addition, the paper expounds upon the strategic process as an input for future business decision-making.
The Importance of Strategy in Business
Pearce and Robinson define strategy as “large-scale, future-oriented plans for interacting with the competitive …show more content…
4). Hence, strategy is a “large-scale, future-oriented plan” that mirror a firm’s consciousness “of its purpose and how, when, where that purpose should be executed” (“Strategic Planning”, n.d.). Having a future oriented plan is important for defining a company’s mission statement, purpose, philosophy, and goals. It is also critical to the development of a business based upon its strengths, weakness, opportunities, and threats. In addition, a future oriented plan is important to the formulation of strategy, selecting long-term goal objective, short-term objectives, budgeting, and distribution of resources, relating information to functional level employees, monitoring and controlling the success of the entire strategic process (“Strategic Planning”, …show more content…
11). It also identifies “the company’s product, market, technological areas, and social responsibility” (Pearce & Robinson, 2013, p. 11). Defining a company’s mission is a critical element of the strategic management process, which becomes the foundation of all its operations.
The purpose of an organization identifies why their products or services are important. It also provides employees with inspiration and motivation to perform and produce on their behalf. Through purpose, employees gain higher levels of job satisfaction, and Job retention. In addition, purpose increases the moral in the organization and its competitive edge in the job market. Moreover, purpose is the center of organizational culture, which defines its contribution to society (Margolis, n.d.).
An organization’s philosophy is defined by its ethical values and ideas, which are marked throughout the vision and mission of the company. It also explains “the systems of beliefs, concepts, and principles that determine how a mission or a purpose is to be achieved” (Nursing management,