Essay on Strategy: A Fundamental Element in an Organization's Performance

Words: 1312
Pages: 6

Strategy is fundamental in an organization's overall performance. The strategy selected depends upon numerous factors. The environment has a direct influence on the relationship between strategy and performance. The combination of several factors contributes to the strategies chosen and influence the performance of an organization. The current dynamic and competitive business environment influences companies to survive, grow and be profitable as an essential goal for all industries. Organizations are challenged by identifying the benefits and limitations of Porter's Five Forces and Kaplan's and Norton's Balanced Scorecard. These powerful strategic management tools can be linked to interact with each other. Porter's work can facilitate …show more content…
It does not mean that Porter's theories are invalid, but when the model is adopted there must be an understanding of its limitations to use it as part of the management techniques, tools and theories. Kaplan's and Norton's Balanced Scorecard however, is an organizational framework for implementing strategies at all company levels combining strategy objectives and measures. Integrating key performance indicators with financial measures the scorecard can provide an enterprise view of an organization's overall performance. The balanced scorecard purpose is to provide a measuring tape by which someone can determine whether the goals have been met or exceeded. Balanced Scorecard allows companies to bridge the gap between mission statement and how the day to day activities support the company's mission and objectives. The balanced scorecard can also provide a visual mean of demonstrating how different goals are related, it is a beneficial tool to assist management to better communicate the strategy, to motivate and prioritize the team to common and long term goals. By using the balanced Scorecard approach, the immediate future is not the only thing being evaluated, it allows stakeholders determine the health of short, medium and long term objectives at glance. The balanced scorecard methodology helps leaders move from reactive to proactive mode. A good scorecard contains not only outputs or result metrics, but also metrics that provide insight about