It is the implementation of policies that anticipate problems and deal with them before they occur.
Proactive Strategy Details
A proactive strategy is designed to meet those future challenges which a business might face. Of course, no company can expect to anticipate all future possibilities. Nevertheless, those businesses that do encourage a proactive stance are generally better able to deal with those eventualities which arise.
Proactive strategies allow a business to design its plans in its own time and use its resources and strengths to combat upcoming problems. By having a proactive strategy in place, a business might be able to smoothly ride out new market conditions. A company that encourages proactivity will tend to engage the skills of its staff and thereby foster engagement with the company's plans. On the other hand, a company that solely employs a reactive strategy responds to events as they arise and often will have little time to consider the outcome of its reaction.
Having a proactive strategy is like having a fire drill in an office building. If the exercise is effective, everybody will know what to do should a fire break out. Having only a reactive strategy would mean that, in the case of fire, everybody would run for the exits and get out of the building as and when they can.
Example of Proactive Strategy
A well-known chain of pizza restaurants is planning to open a new branch in Clayton in three months. The chain has a large budget for promotion, and its brand is popular with young people and families because it offers good quality pizza at a reasonable price in its modern, scrupulously clean restaurants. There are two other pizza restaurants in Clayton. Both are well-established and have found that the local pizza market is large enough for each to make enough money to survive, but the opening of the new chain restaurant will present serious competition that could pose a threat to the existence of the established businesses.
Before the new restaurant opens, Maria, the owner of one of the existing future rivals, starts a Facebook group, offers discounts, extends her opening hours, and introduces a loyalty scheme. She redecorates her restaurant and emphasizes the traditional Italian cuisine which she provides. Carlos, the owner of the other restaurant, decides that he can rely on his loyal customer base and does nothing extra to ensure that the customer base stays loyal. Any future problems which the competition causes can, Carlos believes, be dealt with as they arise.
Maria's proactive strategy is likely to prove more successful than the reactive strategy, which Carlos favors. Maria cannot be sure that her policies will work, but she is attempting to meet a challenge before it becomes a threat. Carlos might well discover that his reactive strategy will involve his business in last-minute, desperate measures which will fail to convince his customers. Maria and Carlos should both be employing proactive strategies and be ready to implement reactive strategies to counter those challenges which they have not foreseen.