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Functions of Strategy

Strategy provides several key functions for a firm. It gives management perspective to consider both present and future opportunities and problems, and how to effectively exploit opportunities and confront issues. Strategy also offers a way to think about and manage changes, allowing management to anticipate, respond to, and influence the firm's destiny regardless of business world developments. Additionally, strategy provides a dual approach to problem solving by exploring the most effective means to overcome difficulties and face competition, while deploying limited resources among critical activities to maximize profits.

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Prasanna Sharma
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370 views

Functions of Strategy

Strategy provides several key functions for a firm. It gives management perspective to consider both present and future opportunities and problems, and how to effectively exploit opportunities and confront issues. Strategy also offers a way to think about and manage changes, allowing management to anticipate, respond to, and influence the firm's destiny regardless of business world developments. Additionally, strategy provides a dual approach to problem solving by exploring the most effective means to overcome difficulties and face competition, while deploying limited resources among critical activities to maximize profits.

Uploaded by

Prasanna Sharma
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Functions of Strategy

The basic advantage of strategy is that it provides a tool with which a firm can
overcome difficulties and subdue competition. This is because strategy performs the
following functions:
1. Strategy furnishes the management with a perspective whereby the latter gives
equal importance to present and future opportunities and problems, and endeavors'
to exploit the opportunities and confront the problems effectively. The management
has not only to
state the purpose and objectives of the firm but also the means by which the
objectives are to be reached.
2. Strategy offers a way to thinking, a discipline and a technique to manage
changes. The management is totally prepared to anticipate, respond and
influence the firms destiny regardless of the developments taking place in the
business world. By constant surveillance of various external forces and a
through capability analysis, the management can discern the new opportunities
to be exploited and impending threats to be minimised, and modify or revise the
existing product-market strategy.
The major thrust of corporate strategy is on predetermination what must be done in
advance of taking any action. This enables the management to formulate the
firms future through innovation and creativity and take advantage of favourable
conditions.
3. Strategy provides a dual approach to problem solving: (i) exploration of the most
effective means to overcome difficulties and face competition; and (ii) the
deployment of limited resources among critical activities with the intention of
maximising profits. It furnishes the most scientific technique with which the
management can make investment decisions in order to achieve the objective
of maximum return with minimum loss.
4. Another function of strategy is that it provides the right direction in which the
firm should progress. It provides a broad framework within which the firms
operations should be planned and controlled. In the absence of strategy, the
management does not have rules to search for new opportunities, both inside
and outside the firm. Internally, for instance, the research and development
department has no guidelines for its contribution towards diversification.
Similarly, without strategy the external acquisition department lacks focus.
Thus, the firm as a whole either passively waits for opportunities come by a
back shot search technique.
5. Finally, strategy focuses attention upon changes in the organisational set-up,
administration of organisational processes affecting behaviour and the
development of effective personal leadership. Successful implementation of
strategy requires the top management to shape the formal structure of the
organisation, its formal relationships and processes of motivation and control,
bearing in mind the nature of corporate strategy. He must bring about the
commitment to the organisational goals and policies of all those executives who
are assigned responsibilities for activating the strategic plans.

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