Business Environment Impact the Five Broad Approaches to Strategy
The business environment influences how a company should plan, develop, and deploy strategies. Large firms often are faced with multiple business environments simultaneously or across time in different units of the organizations. As such, the company strategist cannot just settle on one of the strategic approaches and stick with it—all the five variables must be managed and deployed across the corporate units on a case basis.
An adaptive strategy is vital in less predictable business environment, where the business is expected to experiment and adapt faster to the unpredictable shifting conditions and identify opportunities associated with the changes. Classical processes work best in a predictable business environment, when the focus becomes actionable plans. The visional strategy process works best when the market is malleable to a specific company. In this case, the company focuses not only on responding to the market conditions but also on shaping the market by creating transformative offerings. In this case, the strategy process is to enhance imagination and development of visionary business models and products or services. When the environment is malleable and uncreditable at the same time, the approach then becomes a collaborative one aim at shaping the uncreditable environment to the benefit of the company. On the one hand, the renewable strategy process applies when the business environment is harsh, threatening its visibility. The strategy process here is to facilitate immediate interventions and make pragmatic business decisions amid the pressure to find the path for growth (Reeves, Legrand, & Fuller, 2018).
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However, sometimes the business may simultaneously face multiple business environments, requiring more than one process. When the business environment’s diversity is high and dynamism his low, it is advisable for the company to run different strategy processes in parallel, administered by corporate leadership. A high diversity environment is where the business is faced with different environments simultaneously, while low dynamism environments is a condition where a set of the business environment remains the same. When the business environment’s diversity is low, but dynamism is high, the organization faces only one environment, which keeps over time (Reeves, Legrand, & Fuller, 2018). It is imperative to switch the strategy process, along with the significant changes in the business context.
Why Strategic Planning Impact the Competitive Advantage and Sustainability of Organizations
Strategic planning entails defining the business direction or strategy and deciding on resource allocation to pursue the plan. The business priorities are set at this stage. Strategic planning helps the business organization keep pace with the rapidly evolving market environment and remain competitive amid the changes. Many businesses today seek to respond and adapt to the rapidly changing world and many challenges, including fierce competitions, global markets, scarcity or lack of resources, the evolution of information and communication technology, short product lifespan, the continuous shift in customer needs, tendencies and desires, and many other dynamics. Keeping up with these unstable business environments requires high flexibility from adapting contemporary management strategies such as strategic planning (Rajnoha & Lorincová 2015).
One of the fundamental qualities that a business requires to compete effectively is understanding the customer and market needs and responding appropriately. This is a vital component of a company’s long-term strategic planning. Understanding the market and customers is a constant process and should form part of the firm’s strategic culture, as the bedrock of any organization’s mission is to satisfy customers. Strategic planning begins by defining the company mission enabling the management and workers to align their actions and decisions with a clearly defined direction (Teixeira & Junior, 2019).
The strategic objectives are evaluated according to the best information at hand at the time of reassessment, enabling the company to realign according to the market changes. For instance, when a company plans to grow the business by 30% annually, but a formidable competitor comes in, a reevaluation of the objectives becomes necessary.
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Rajnoha, R., & Lorincová, S. (2015). Strategic management of business performance based on innovations and information support in specific conditions of Slovakia. Journal of Competitiveness.
Reeves, M., Legrand, J., & Fuller, J. (2018). Your Strategy process needs a strategy.
Teixeira, G. F. G., & Junior, O. C. (2019). How to make strategic planning for corporate sustainability?. Journal of Cleaner Production, 230, 1421-1431.