Strategic Fit

The word ‘strategy’ derives its meaning from a Greek term ‘strategia’ which denotes the capability to utilize the available resources or opportunities to achieve something. Other terms which can be used to refer to strategy include perspective, position, pattern, and plan. It is simply the ideal organization of the organs in a business enterprise. A strategy is, therefore, the scope and direction of a business firm over a long time, which matches its available resources to its business environmental changes especially when its customers, markets, and clients are concerned. When the organs of a business organization work together on the available resources to certainly achieve the organization’s objectives, we call it a strategic fit. It is a situation in which there is no deficit, lack or discrepancy in the organs of the business towards the realization of the organization’s objectives. For an organization to function well to achieve its goals and objectives, there must be a perfect match between the overall resources available and the objectives of the organization. For instance, in most cases, when a company wishes to expand its territories, it is likely to look for another company which provides a good strategic fit with their own company. The concept is therefore applicable well when there are acquisition and merger operations. This paper expounds on the definition of the expression ‘strategic fit,’ importance and the role of the strategic fit and its advantages and disadvantages in a business organization.

Strategic fit can be defined as the scenario in which a specific business organization, a product or a company’s operation is considered appropriate with regard to the organization’s general overall goals and objectives (Prajogo, 2016).  It can also be defined as the extent to which the operations of different sub-sections of a company or a business or different companies working together complement and support each other to attain the required competition in the market and the success of the firm (Akter et al, 2016). Strategic fit can also be the extent to which the opportunities in the external market of a business organization matches the resources and capabilities available for its operation. (Popli et al, 2017). In the three definitions, there are the key terms which are the business organization or business, the resources and the business organs and the organization’s objectives or success. Therefore, the strategic fit should ensure that a business organization utilizes the available resources to achieve its set goals in the changing and competitive business environment.

One of the importance of attaining strategic fit is that the business organization will be able to identify the perfect supply chain. Planning is one of the activities contained in a strategic fit. It is one of the strategies the business has. Therefore, having adequately planned means that all the plans are put in place, including the sources of the raw materials. For instance, in the case of a textile company, before the start of the business, one will have to come up with strategies on how the company will run, including where to get the supplies in terms of labor and raw materials (Collins & Kehoe, 2017). However, this plan may not be effective during the actual running of the business. Therefore, the management will work up a plan to achieve the strategic fit, a situation whereby the available resources will match the organization’s objectives. This company can do this by merger operations whereby it can merge with another similar company with better access to raw materials supply. By doing this, the company will have used the strategic fit to recognize the perfect chain of supply (Collins & Kehoe, 2017).

Another importance of attaining the strategic fit is that one will be able to identify the discrepancy between the supply chain and the customers. In this case, the firm might have an adequate supply in terms of labor and raw materials but the inadequate market as a result of the current competition. This is so especially when there is another similar firm producing the same product. Since this competition is stiff and unhealthy, it will interfere with the effective realization of the objectives of the firm. In this case, one has to come up with strategies to deal with this completion, to achieve the strategic fit.  Again, the firm can do this by first working on maximizing the supply of raw materials to ensure that there is continuous supply. Then, the firm could look for another firm, and this time around, a competitor who forms a perfect strategic fit with this firm and merge with it as a strategy to acquire market economies. In this, case, the other firm will also enjoy the resources economies, and therefore the two similar firms will complement each other by solving the problem of the discrepancy between the supply chain and the customers (Prajogo, 2016).

The other importance of the strategic fit is that it brings about the equality between the effects the skills supply chain has in the business and the uncertainty of the supply and the demand of the commodities. In the case of skills, we are merely talking about the labor supply. There can be an adequate supply of labor in an organization which means that the skills needed are there inadequate. However, demand and supply may not be certain or probable. Therefore, there is need to bring about the balance or the equality between the skills force and the uncertainty of the demand or supply (Collins & Kehoe, 2017). For instance, supply or enough raw materials is needed so that the skills can be applied in working on this adequate supply to produce finished goods. Again, the products must be in high demand for the balance to be there so that the firm can market the products they have already produced through the labor force. Therefore, there must be a strategy to ensure that this uncertainty is catered for just in case it occurs. This is done through working towards the achievement of strategic fit. The strategic fit will ensure that there are ways to deal with this uncertainty to ensure the smooth running of the organization whatsoever.

One of the advantages of the strategic fit is that it enables the discharge of the responsibilities of the board of directors. The board of directors can have a cumbersome burden to ensure the smooth running of the business organization. The directors are relieved of this challenging task when the organization achieves the strategic fit since when this happens, almost all the challenges pertaining management are catered for at a higher level (Prajogo, 2016). Therefore the board of management will not have to bear the heavy responsibility of managing the firm.

Strategic fit also brings about the objective assessment of the business organization. Strategic fit instills discipline to the senior management and the board to temporarily dissociate themselves from the day-to-day activities of the organization and think about its future. It is crucial for the directors to have this discipline so that they will not be consumed so much with the immediate tasks within the organization to the extent that they will end up thinking the future of the organization (Hill, 2018).  If this happens, the organization is likely to lose focus since the future of any business organization defines the organization’s goals and objectives. Therefore, the strategic fit enables the organization to remain focused on its long term goals.

Strategic fit provides a framework for deciding on an organization. Strategic fit arises from the strategic plan. When this happens, the direction of the business organization will be clearly formulated in details and every member of staff will be aware of the direction the firm is taking and therefore decision making will be simple at any level of management since the decisions to be made are meant to move the organization towards a single direction as stipulated in the strategic plan (Jenkins & Williamson, 2015). Otherwise, it will not be realistic for the board of management to be aware of all the decisions the Chief Executive Officer will have to make or for the Chief Executive Officer to know all the decisions the other members of staff will have to make. With the appropriate strategy, the mission and the vision of the future will be clearly defined, the values and the purpose of the organization will be confirmed, the opportunities and the threats of the organization will be clarified, the objectives set, the methods to uphold the strengths and mitigation of weaknesses (Im et al, 2016). Therefore, when this happens, any member of the staff, whether senior or junior can make a decision without much consultation. This will ensure that all members of the management work towards the success of the organization.

Also, the strategic plan has an effect of enhancing understanding among the members of the organization’s staff. This advantage of the strategic fit is based on the fact that human beings are not the same. For instance, there are those who will be comfortable having been told about something. Others will only support you after gaining a full understanding of the decisions one has taken. Therefore, through a strategic plan where all members will participate, will ensure that every member of staff understands how and why the decisions were made the way they were made and the reasons behind the decisions (Wang et al, 2016).  This way, the strategic fit will ensure a smooth working environment.

Strategic fit has several disadvantages as well. First, it can be very expensive, hence economical. The process of achieving strategic fit is not entirely complex, and therefore one may require some external consultants to help them with expertise ideas on the nature of the strategic plans to put in place to enable them to achieve the strategic fit (Wang et al, 2016). Even after consulting and getting advised accordingly, strategy development becomes another challenge which might chip in it quite a lump sum of cash. Some of the activities that require a lot of money when developing a strategy include the steps to be taken to ensure that before implementing a strategic plan, the plan must be in consistence with the objectives of the organization. Therefore, the process can be expensive and challenging especially for small organizations.

Also, the strategic fit especially the one which involves acquisition and merger operations can be a very complex one. This is because the critical components are continuously assessed. These include the internal and external business environment, organizational structure, long term, and short term objectives as well as strategic control. For example, in a situation where the company may need to change its management structure, it could be very complex due to the many processes involved in establishing such an arrangement (Hill, 2018). This is the case especially in merger operations where more than one related companies join in one unit and work towards similar objectives.

Strategic fit is meant to address the long term problems in organizations. It is therefore not appropriate to solve short term crises. For instance, if there are two companies which merge to achieve strategic fit to enhance marketing economies, they are likely to take long before reaching this. This is as opposed to when the individual firms sell their products to the only available market where the firms are likely to make profits within a short time (Im et al, 2016). Therefore strategic fit needs time for its benefits to be realized.

Lastly, strategic fit hinders creativity and innovativeness. When an organization achieves a strategic fit, it means that all systems in that organizations are working in harmony with each other and that everything is running towards the right direction and therefore it doesn’t encourage any change. When this happens, the company might reject some opportunities available for it and thus lead to a kind of frustration. Again, the innovativeness and creativity can be hindered by the formality of the systems in the strategic fit, since all that is required is spelled out in the strategic plan. For instance, this kind of organization has already addressed its staffing, board, performance, structure and reward systems.  In this case, the strategic fit inhibits the ability of the company to adapt and change with the changing business environment such as economic crises in the country where the business operates. This can, therefore, bring about the eventual collapse of the business (Jenkins & Williamson, 2015).

In conclusion, it is clear that the strategic fit is essential and very necessary for business organizations. However, we have seen that it has its advantages and disadvantages as well. Therefore, one needs to be very careful while trying to establish a strategic fit. This is because many disadvantages are as a result of the inappropriate application of the strategic fit especially when it comes to the issue of the rigidity of the vital fit system. Therefore, as much as the organization has achieved the strategic fit, the management should leave room for invention and innovation. Otherwise, it is recommended that individual firms should establish the strategic fit which will suit their purpose and objectives.



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