“strate Is Really A Response To Risk” Discuss
An investor is only willing to invest his or her money into a project that is perceived to yield high returns. An investor would be foolish to inject his or her money into an organisation that is destined to fail. Organisations use strategy to avoid failure and to potentially yield a high return on investment. Strategy is one of the most commonly used words in management, and over time a tangible definition has been distorted. Chandler (1962) argued that a basic definition of strategy is considered “the determination of the basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” (p.13) Business Strategy is still very much about the achievement of goals using the organisation’s available resources. Nowadays, with the highly competitive business environment, an organisation’s strategy should be about gaining a competitive advantage through effective resource allocation. These resources are referred to as core competencies (such as cheap labour, alliances, etc). Competitive advantage is achieved in many ways, including economies of scale, product differentiation, etc. Achieving competitive advantage allows an organisation to potentially yield high profits, or higher than average returns. The amount of risk that an investor has about a particular investment can determine whether or not the investor chooses to partake in that investment. Kuratko & Hodgetts (2004) argue that risk involves the probability of a financial or economic loss (or gain) from a particular investment. Risk involves the measurement of investor uncertainty. Often the investments with the most risk can yield the highest return, and therefore an organisation will develop an effective strategy to ensure the investment is successful.
Competitive Advantage is the basis for every successful organisational strategy. There are several methods in which an organisation can...
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