We think strategy is just another word for a plan. Though they seem to carry the same meaning, they are not same. Google defines strategy as “a plan of action designed to achieve a long-term or overall aim”. Before we go ahead with strategy making and its relevance, let us understand the meaning of a strategy and a plan. Planning is ideating an action SEQUENCE; we create a timeline of events as to which goes first & then prioritize others accordingly. It also means creating a sketch or blueprint for a particular event/model.
Now, strategy is also a plan that has few extra additions to it. Let us see these additions one by one. We are speaking about strategies for business.
Strategy is long term
A plan is for a short term and can be changed anytime. For Eg., you plan to sell your products using different methods giving more importance to online shopping rather than showroom sales. Now, this can be changed any time; if you find that showroom sales are more than online sales, then, you can immediately chance the plan to accommodate more sales in showroom. You can change plans every month or even every week. But strategy is something that cannot be changed on a short term basis. It would result in instability of the company, along with unwanted chaos and miscommunication. So, strategies are made for long term.
Strategies are oriented on the lines of the company’s mission and vision. If your company’s vision is to achieve green technology but your strategy is to make low cost technology. Then we have some problem here. Low cost technologies may or may not be environment friendly. If you have a mission to achieve green technology, but operate otherwise. Then there is a conflict. So, it is always mandatory to base your growth strategies close to the firm’s mission.
Inclusion of calculated risks
Calculated risks are very important to a firm. For Eg., a stock broking firm needs to take huge risks to gain profits. But these are calculated risks, pre-determined and expected during the course of business. A plan might be to execute something, but strategies take care of calculated risks. If your strategy neglects this part, then surely your company would face unexpected shocks at various periods.
Culmination of Plans
A strategy is also a culmination of various plans. A sales plan, a marketing plan and a production plan combined together, pooling resources and staff. Now, that is the kind of strategy we are talking about. Failure options and backup plans are also included in a strategy.
A good strategy is one which is economically feasible and is backed by the numbers. Initial capital inclusion, overhead expenses, bad debts, Break-even analysis, etc., should be mandatorily considered to create a perfect strategy. The newly formed strategy should not dry the bank balance. Keep in mind, any growth strategy cannot be a success if the current operations are poorly taken care of.
A strategy should have clear timelines. Time is the most precious asset. So, no time should be wasted. Deadlines and delay points are clearly mentioned in a strategy.
Risk & Failure factors
A strategy is unbiased. It clearly shows a forward path, that is what strategies are for, but it should also make sure the company does not suffer losses. The company should not land in a poorer position than it was before. So risk factors and failure factors are included so that even if there is a loss, it is being taken care during the long run.
So, next time you are making a strategy, keep in mind the points discussed in this article. It will surely help you.
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