Role of Strategy

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Role of Strategy

Strategy Role

1. Framework for Operational Planning.

Strategy Role

Strategies provide the framework for plans by channelling operating decisions and often deciding them. If strategies are developed carefully and understood properly by managers, they provide a more consistent framework for operational planning. If this consistency exists and applied, there would be the deployment of organisational resources in those areas where they find a better use. Strategies define the business area both in terms of customers and geographical areas served. Better the definition of these areas, better will be the deployment of resources. For example, if an organisation has set that it will introduce new products in the market, it will allocate more resources to research and development activities which are reflected in budget preparation.  [ Strategy Role ]

2. Clarity in Direction of Activities.

Strategies focus on the direction of activities by specifying what activities are to be undertaken for achieving organisational objectives. They make the organisational objectives more clear and specific. For example, a business organisation may define its objective as profit earning or a non-business organisation may define its objective as a social objective. But these definitions are too broad and even vague for putting them into operation.
They are better spelt by strategies, which focus on operational objectives and make them more practical. For example, strategies will provide how profit objective can be sharply defined in terms of how much profits is to be earned and what resources Of how much profit is to be earned and what resources will be required for that. When objectives are spelt out in these terms, they provide clear direction to persons in the organisation responsible for implementing various courses of action. Most people perform better if they know clearly what they are expected to do and where their organisation is going. [ Strategy Role ]

3. Increase Organisational Effectiveness.

Strategies ensure organisational effectiveness in several ways. The concept of effectiveness is that the organisation is able to achieve its objectives within the given resources. Thus, for effectiveness, it is not only necessary that resources are put to the best of their efficiency but also that they are put in a way which ensures their maximum contribution to organisational objectives. In fact, this can be done by taking strategic management which states the objective of the organisation in the context of given resources. Therefore, each resource of the organisation has a specific use at a particular time. Thus, strategies ensure that resources are put into action in a way in which these have been specified. If this is done, organisation will achieve effectiveness. [ Strategy Role ]

4. Personal Satisfaction.

Strategies contribute towards organisation effectiveness by providing satisfaction to the personnel of the organisation. In the organisation where formal strategic management process is followed, people are more satisfied by definite prescription of their roles thereby reducing role conflict and role ambiguity. If the decisions are systematised in the organisation, everyone knows how to proceed, how to contribute towards organisational objectives, where the information may be available, who can make decisions, and so on. Such clarity will bring effectiveness at the individual level and consequently at the organisational level. Strategies provide all these things in the organisation through which everything is made crystal clear.
Looking into the role of strategy, Ross and Kami have suggested that “without a strategy the organisation is like a ship without a rudder, going around in circles. It is a tramp; it has no place to go.” They ascribe most business failures to lack of strategy, or the wrong strategy, or lack of implementation of a reasonably good strategy. They conclude from their study that without appropriate strategy effectively implemented, failure is a matter of time. [ Strategy Role ]