Formulation of a strategy for an organization starts with making the intended plan in advance, based on assumptions about the future and how the organisations wish to respond i.e. proactive approach.
However, the future may not respond as expected. Hence a modification in plan is highly desirable to make the best use of the situation i.e. reactive approach. Hence, we can say that a company’s strategy is typically a blend of the following:
(1) Proactive actions on the part of managers i.e. creating a proactive, intended or planned strategy, and
(2) Reactive actions i.e. adapting it as circumstances change or better options emerge to form a reactive or adaptive strategy as a response to unanticipated changes.
The biggest portion of a company’s current strategy flows from the established and tested business plans that are working plus managerial initiatives to strengthen the company’s overall position and performance. This part of management’s game plan is planned, deliberate and proactive.
However, things may happen in a way that cannot be fully predicted. When market and competitive conditions take an unexpected turn, some kind of strategic reaction or adjustment is required.
Hence, a portion of a company’s strategy is always developed on the fly, coming as a reasoned response to unforeseen developments like the following:
(i) Strategic changes by rival firms,
(ii) Shifting customer requirements and expectations,
(iii) New technologies and market opportunities,
(iv) A changing political or economic climate,
(v) Other unpredictable happenings in the surrounding environment.
Besides, there is also a need to adapt strategy as new learning emerges about which pieces of the strategy are working well and which aren’t and as management hits upon new ideas for improving the strategy.