Why Is Strategy Important to Business Essay Example for Free

Why Is Strategy Important to Business Essay 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 of doing business. A Chinese general and military strategist Sun Tzu said it best It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle. â€Å"Strategy is how you get to know your enemies, yourself and the terrain on which you will fight.† And finally this great strategist says what fits here best â€Å"Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. (Brainy Quotes, n. d.) Other reasons for business strategy are changes in customer needs and wants, sudden poor business performance, and lack of growth or stability in the business. We have laid out the importance of strategy, now the components are what will make the plan a success or not. Before we can make a plan, the goals and mission statement of the business must be defined. Without a clear mission and goals you will not know who, what, when, where, and how of your business. The alternative is like feeling the way in the dark. I once read a book entitled â€Å"If you do not know where you are going, you may it up somewhere else†. This would be the reason for charting the course with purpose and destination in mind. Once we know what the goal is and defined our mission, then we look at the internal strengths and weaknesses within the business. This will help identify what strategies to build the strengths of the business and correct the weaknesses of the business to take advantage of external opportunities. Then we must look at the political, economic, social and technological as they are strategic drivers because of how they can influence outcome. This leads us to the critical issues directly and indirectly impacting the business. With all of this done, now we combine this information to create the SWOT that will generate a picture of both external and internal conditions present and future, good and bad that will give us realistic and attainable goals. The SWOT will allow us to make short term plans and long term goals and put in place the tactical initiatives necessary to achieve the defined mission goals with a timeline, necessary resources, and where each initiative fits and in what priority. These steps will make the success of strategic planning successful.