Why Firms Need to Implement Strategies for Developing Their Business - Essay Example

Different businesses have different strategies depending on what they are trading in the market (Speculand 2009). Therefore setting strategies is among the high priorities that a firm should make. According to Growth Online (n.d.), the strategy in the case of a firm includes market strategy, product and services strategies, organizational strategies; people Strategies, and Financial Strategies. After a firm has spent so much time and resources planning, and formulating strategies, the firm should figure out how to implement them. This is because:

• Their implementation leads to the realization of the firm objectives (NIH 2011).
• Strategy implementation brings all the people involved in the firm from management to mid-level and frontline personnel on board (Edinger 2012).
• It allows an opportunity to evaluate if the stakeholders are still active and committed to the course of business (Birnbaum 2009).
• It allows management to adapt to the dynamic and ever-changing economy (Miyake 2002).
• The strategies act as a guide toward acquiring new leads into the business (Sankar & Rau 2006).
• The implementation process tries to solve some priority issues that emerge in the course of business development (NIH 2011).
• The implementation of a people strategy encourages commitment, incentives, and acknowledgment of efforts (NIH 2011).

For these strategies to succeed there are some essential steps to take. First, a firm needs to create an environment that can carry out the strategies successfully, second, allocate enough resources to strategy essential activities, third, create policies that will encourage strategy implementation, fourth, employ the policies, fifth, tie rewards to results, and finally utilizing strategic leadership (Rothwell & Kazanas 2003).

Explain in particular why strategies are not needed in perfect competition

Strategies are only applicable in the imperfect completion sort of an environment. When an environment turns perfect, the idea of strategies no longer works since there is free entry, perfect communication, and firms deal in the same products (Kazmi 2008). Perfect competition provides a standard for measuring market behavior in terms of price and production (Gale & Sabourian 2005). Each firm in the market is so small that its operations do not affect the prices in the market (Williams n.d ). The market price is standardized due to the many competitors dealing in the same product hence there is no room for a firm to make super-profits (Klein 2007). The firm will operate within the earlier set standards to be able to remain in the market. This makes it hard for individual firms to set their strategies when they enter a perfectly competitive market (Gale & Sabourian 2005).

Which imperfections cause strategic interaction to arise.

Perfect competition however is a rare occurrence. The highly probable event is that the market is imperfect allowing room for individual firms to set strategies to enhance profitability. The firms have room to create distinctive assets and capabilities hence creating imperfections that are explicit to them (Hall & Lieberman 2009). This allows the firms to set their prices either higher or low. An imperfect competition creates an environment for a firm to utilize and defend its specific imperfections against the competitors to be able to make a profit. This makes individual firms see the market in their interest hence making each one of them create strategies that interact in the course of doing business (Santerre & Neum 2009). Some of the imperfections created are the distinction in information on product promise, buyer unawareness on product benefit, premises rents, blockade entry to the market, product difference, and branding, access to fundamental cost components, and controlled distribution and customer access (Manning 2003). Such imperfections cause firms to create distinct positions in their preferred markets to make profits higher than their competitors. The firm may also make a different product that cannot be copied by any other firm. This creates a firm-specific imperfection that gives the firm a competitive advantage over other firms.