The Importance Of Skills And Capabilities In Business Strategy

Strategy is an essential piece making business. There are many approaches that may help business develop their strategies. And with the help of employees unique skills, capabilities and knowledge, business have their culture. This paper will discuss certain approaches of strategy. It will also point out the differences, the challenges, and the benefit of each approach.

Skills and Capabilities in Business Strategy

People are the heartbeat of sustainable competitive advantage. Sustainability of the competitive advantage of an organization is embedded in the people work in it. This is true at two different dimensions. The first dimension is the single employee; employees are bringing into organization their unique set of knowledge, skills,

First its objective setting; when setting objectives the business will take the expectations of different stakeholder s into consideration. The primary objective of a business is to increase the wealth of the business owners. This objective can increase the share price hence the inventors make capital gains on the shares or by paying out dividends (Leitner, 2014). Yet, this may encourage other problems such as clashes between principal and agent. Managers might expect higher salaries and other remuneration, and the result is, lower profit. It is clear how this conduct conflict between owners and managers is. Moreover, there are many conflicts may arise between stakeholders. A good example of this is when Ma’aden, Saudi company which work in development of mineral resources, was trying to escape emanations plans. It was trying to escape its responsibility to reduce cost and increase profits (Tilley, 2012). Second is forecasting, strategies are developed to achieve long-term success. But the world is changing, faster than ever before. This makes it very difficult to predict what will happen in the market in a few months’ time. Therefore, it is very difficult to develop strategies a year before its implementation. Also, availability of data is a problem too. Some data is very expensive to obtained, and other are not reliable. In the same time, forecasting on competitor actions and reactions is also very difficult despite having several mathematical models for this purpose (Leitner, 2014). Moreover, short term pressures, although the business owners are seeking long term success of the business, the managers will have short term expectations. Some of the business owners may secrecies short term profits and dividends expecting long term growth in the business. But cutting down on remunerations of the management can de-motivate them. Also, there can be short-term