Strategic thinking involves making a series of decisions about what actions the company intends to take to become more successful. A company often goes through a strategic planning process once a year, creating a document that is a guidebook for the management team to use in the upcoming year. Companies should strive to make strategic thinking an ongoing, year-round process. At the heart of strategic thinking is the ability to anticipate major shifts in the competitive marketplace and identify emerging opportunities.
The following below are the ways strategic thinking can help with;
Dealing with limited resources of money, people and time is a fact of life for all businesses, even giant corporations. Strategic thinking enables a business owner to determine how to use these resources most effectively and advance the company toward its objectives.
Strategic thinking focuses the management team on markets that are most likely to succeed. Strategic thinking helps the company avoid costly mistakes, such as opening a new retail location before the customer population is large enough to support it.
Every business is affected by change. New competitive threats arise. Change in the national and local economy affect the spending power of a company’s customers. The prices of materials or inventory rise unexpectedly. The environment creates opportunity, too. New markets open. Competitors that falter can create an opportunity to take market share from them.
Strategic thinking is a mindset of preparing for these changes and having plans in place to deal with them. Reacting quickly allows the company to take advantage of opportunities and minimize the damage of unforeseen negative events.
Matching Competitors VS Strengths
Business has been compared to a game of chess, with strategic moves of the chess pieces determining the outcome. The analogy is only partially accurate, because in business each side does not start with the same number of pieces, and the size of the board constantly changes.
Companies proficient in strategic thinking are continually evaluating their businesses strengths and weaknesses versus those of key competitors. They look for the right time and best means to attack stronger, better capitalized competitors. They try to tilt the chess board in their favor by taking a critical look at where they can improve their products, service levels and the message they send to the marketplace.
Need to Grow
Businesses are under constant pressure to grow. Growth means higher profitability and greater returns for the owners. It also means the company is succeeding in the competitive struggle. Strategic thinking forces companies to recognize they cannot afford to stand still. They must be innovative in all aspects of the operation of the business.
A company content to do things the same way year after year usually ends up losing market share to companies that are not afraid of change.
Improved Decision Making
Business owners that make strategic thinking a central element of their management philosophy often become better strategic thinkers as time goes on. They learn how to recognize subtle changes in the business environment that will have a direct impact on their revenues–things they may have missed before.
They become more adept at predicting how competitors are likely to react to the strategies they implement. They begin to view the business as their customers see it and formulate strategies so they do a more capable job of reaching new potential customers. Strategic thinking enables a business owner to make more logical, confident decisions.
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