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Management Concepts & Organisational Behaviour - Policies

Appropriateness of Business Strategy - Policies

   Posted On :  17.05.2018 10:32 pm

A business strategy is a pragmatic plan of action to achieve certain objectives. In order to evaluate its appropriateness the following comes in handy:

Appropriateness of Business Strategy
 
 
A business strategy is a pragmatic plan of action to achieve certain objectives. In order to evaluate its appropriateness the following comes in handy:

Internal Consistency: A business strategy in a particular area of business should be consistent with strategies in other areas and objectives and polices of business. Internal inconsistency in any strategy will create problem in its implementation.
 
Consistency with Environment: A   strategy    is    basically    an enterprise’s response to cope with external environmental variables. Therefore, it should aim at meeting the threats and pressures of external forces.

Appropriateness in the light of available Resources: Formulationofastrategyrequiresarealisticassessmentoftheresources of the enterprise-men, money and materials – both existing resources and the resources it can command. The resources of an enterprise also include the skills of management and other manpower, command over sources of scarce raw materials, production facilities, technology, marketing capabilities and image, and so on. It is desirable that the every enterprise formulates its strategy within the limitations imposed by its resources. The objective is to ensure that the enterprise’s resources are not over-stretched or over-strained on the one hand and to utilize the existing and commendable resources in the best possible manner on the other.
 
Acceptable degree of Risk: Any major strategy carries with it certain element of risk and uncertainty because it covers a long future horizon and because it seeks to cope with complex environment. The degree of risk inherent in a strategy should be within the bearable capability of the enterprise. Resources should not be committed irrevocable, nor should they be a concentrated on a single or narrow range of ventures. Also, there should be a match between risk and returns, financial and otherwise.
 
Appropriate Time Horizon: Time is the essence of any strategy. While a reasonably long time span imparts some flexibility, the problem has to be reckoned with, however, of forecasting is ever present. How far in the future can top management predict with credibility is a measure of its capability An optional time span cannot be mathematically determined; it is a matter of environmental conditions, the objectives to be sought and the judgment of management.
 
Workability: A strategy should be feasible and produce desired results within the constraints and parameters known to the management. It should be realistic and relatively simple to understand and implement. Certain quantitative measures like volume of sales and profit, growth rate, asset formation, market share, introduction of new products and so on are to be set. These are to be combined with qualitative criteria like the degree of confidence with which managers implement the strategy, the extent to which major areas of decision situations are handled by reference to the criteria embedded in the strategy, the extent to which opportunities are exploited, threats averted, resources mobilised, and environmental control gained.
 

 

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