Company strategy - is it needed?

Service Business

Large corporations have separate organizational units that deal with strategic management. The managerial staff creates long-term plans for the development, survival and modernization of the entire enterprise. Individual functional areas (marketing, production or finance departments) undertake the formulation of their own strategic plans and setting goals to be achieved within a precisely defined time horizon. The entire process of formulating a strategy in a large organization is quite formal. For this reason, small entrepreneurs often give up making plans for the future. They work here and now without worrying about tomorrow. However, it should be taken into account that planning is important, especially when you think about development and success first locally, then nationally, then internationally. Is the company's strategy needed?

What is the company's strategy?

This concept is defined variously in the management literature. In the simplest terms, a strategy can be defined as a long-term plan, containing the main goals and tasks of the organization, directions of action, allocation of funds necessary to achieve defined goals. The company's strategy is therefore a document indicating what is to be achieved by the company in the near future, how it will be implemented and what resources will be necessary for the entire undertaking to be successful.

The company's strategy consists of several elements. First, a vision is created, that is, the direction in which the organization will go. It is an undefined dream that an entrepreneur is striving for. Secondly, there is also a mission, i.e. the overarching goal of the organization. It is responsible for setting the directions of all activities. Third, an overall strategy is formulated that defines the ways of development of the entire organization. Fourthly, the company also has strategic functional plans that indicate goals for individual business areas - marketing, finance, and production.

There is a dispute as to the period for which the strategy should be created. Usually, the perspective is 2-5 years, but it all depends on the conditions in which the organization operates. For example, in mining, strategic plans are defined for at least 10 years, as there are no rapid changes in the mining market.

Example 1.

A strategic plan for a company dealing in the sale of cosmetics

Vision: To provide cosmetics that will bring out the natural beauty of every woman.

Mission: Become a leader in the production of organic cosmetics on the European market within 3 years.

Overall strategy: Expand the sales network to 1,200 stores in Poland. Enter the European markets: German, Russian, Czech and French within 2 years.

Functional strategy for the marketing department: Carry out an effective promotional campaign. Increase sales by 10% per year.

Functional strategy for the finance department: Implement a cost reduction of 20% within 3 years.

Company strategy - is it needed by small enterprises?

Small businesses - sole proprietorships as well as micro and small enterprises are specific economic entities. Their advantage over large corporations lies primarily in the fact that they are close to customers and can react quickly to changing needs. Therefore, they should operate flexibly, adapting to changes in operating conditions.

The company's strategy, unfortunately, precludes flexibility. The creation of a formalized plan introduces a certain rigid framework in action. Employees begin to focus on the implementation of specific guidelines, forgetting about paying attention to customer expectations. A small company should focus on consumers.

On the other hand, many studies show that companies that formulate and implement a strategy in the long run are doing much better. The strategic plan is based on forecasts and trends that are to occur in the environment. Enterprises implementing it are able to better prepare for changing conditions.

To strategy or not to create, that is the question!

Dr. Aleksander Kisil believes that small companies employing up to 30-40 employees should not bother creating strategies. In such enterprises, teamwork, a good working atmosphere, the personality of the boss, creativity and innovation are what count. Business entities employing more than 50 people should be interested in formulating a strategic plan. The company's strategy will be the element that will bind a larger organism - an expanding organization.

Small businesses may therefore opt out of a formalized strategic plan. However, they should ensure that the mission and vision are formulated. The overarching goal indicates the direction to which the organization is to go. The actions of employees are subordinated to it and thanks to this, a small enterprise can develop and transform into a well-managed business unit. If employees know what their actions are to serve, they will work more effectively and efficiently. Responsibilities are much more effective when undertakings are guided by an ambitious but feasible goal.