Strategic Flexibility

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Definition: Strategic Flexibility

The strategic flexibility of a firm is its capability to adapt to changes in the external environment. The organization has to identify major changes in the environment, quickly change commitment of resources to new courses of action to counter the change, and to identify markers in order to restore to previous commitments when the external environment is back to the initial state.

It is considered a multi-dimensional concept as the measures can be conceived both before and after triggering of events. Also, strategic flexibility can be an offense as well as a defence mechanism.

There are four types of strategic flexibility and vary in terms of –

  1. the time to respond to the change in external environment
  2. the range of options available
  3. the perspective
  4. the focus area of the flexibility created

Example: Decline in margins or entry of a new player in the market with a substantially better product is an example of a major change in the external environment. To counter these changes, the organisation will have to redirect their resources to different areas such as R&D, sales force, etc. in order to maintain its current position in the market.

Hence, this concludes the definition of Strategic Flexibility along with its overview.

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