Why is this such an important strategic prerequisite

This is information te professor posted with the question,

The more things an organization attempts to do, the more information it needs to have in terms of environmental assessment for the ,purpose of strategy formulation and adjustment. According to Mendelson and Ziegler (1997), firms need to define their businesses in terms of what they do best. This limits the scope of the business and makes for a more focused organization. This does not imply that a firm cannot explore new products and markets.

A firm must look at its strategic success factors and consider those when making decisions about what products/services to provide, customers to serve, markets to enter, and how it will go about doing all that.

What a firm does best is directly related to its core competences. It should consider strategic partners and alliances if considering moves that require competences it does not possess. According to Schermerhorn, Hunt, and Osborn (2005), organized chaos is a good thing when making critical decisions.

First, put as many ideas on the table as possible; second, frame the ideas so that alternatives can be considered; third, look at alternatives from different points-of- view; fourth, make certain all the pieces of the puzzle fit. You should then establish the potential value and application of an idea, and identify costs, benefits, and available resources before deciding to implement (p. 317).

Schmermerhorn, J. R. Jr., Hunt, J. G., & Osborn, R. N. (2005). Organizational Behavior. New Jersey: Wiley

Mendelson, H. & Ziegler, J. (1999). Survival of the Smartest: Managing Information for Rapid Action and World-Class Performance. New York: Wiley.