6 Universal Strategic Issues;How To Identify Them

Strategic issues require top management decisions. Strategic decisions overarch several areas of a firm’s operations. Therefore, top management involvement in decision making is imperative since only they have the perspective to understand and anticipate broad implications and ramifications, and only they have the power to authorize necessary resource allocations needed for implementation.

Strategic issues have six identifiable dimensions.

Strategic issues involve the allocation of large amounts of company resources. Strategic decisions characteristically involve substantial resource deployment. These people, physical assets, or monies must be either redi¬ rected from internal sources or secured from outside the firm. In either case, strategic decisions commit a firm to a stream of actions over an extended period of time thus involving substantial resource support

. Strategic issues are likely to have a significant impact on the long¬ term prosperity of the firm. Strategic decisions ostensibly commit the firm for a period of approximately five years; however, the time frame of impact is often much longer. Once a firm has committed itself in a major way to a particular strategic option, its competitive image and advantages are usually tied to that strategy. Firms become known in certain markets, for certain products, with certain characteristics. To shift from these markets, prod¬ ucts, or technologies through the adoption of a radically different strategy would jeopardize the progress which they had previously made. Thus, strategic decisions have enduring impacts on the firm—for better or worse.

Strategic issues are future oriented.

A major distinguishing feature of strategic decisions is they are made based upon what managers anticipate or forecast rather than know. Emphasis is placed on the development of projec¬ tions which will enable the firm to select the most promising strategic options. In the turbulent and competitive free enterprise environment, a successful firm must take a proactive stance toward change. Strategic issues usually result in major multi-functional or multibusi¬ ness consequences.

A strategic decision is a coordination one.

Decisions about such factors as customer mix, competitive emphasis, or organizational structure necessarily involve a number of a firm’s strategic business units (SBUs), functions, divisions, or program units. Each of these areas will be affected by the allocation or reallocation of responsibilities and resources related to the decision. Strategic issues necessitate consideration of factors in the firm’s external environment. All business firms exist within an open system. They impact and are impacted by conditions external to the firm and largely beyond their control. Therefore, if a firm is to be successful in optimally positioning itself in future competitive situations, its strategic managers need to look beyond the limits of the firm’s own operations. They must consider what relevant others are likely to do, e.g., competitors, customers, suppliers, creditors, government, and labor.

by Abdullah Sam
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