Framing Strategic Risk and a Look at the Calf Retention Decision

A business strategy is a plan of action designed to achieve specific goals and objectives using available resources. For most businesses, profitability is a primary objective. When a farm or ranch develops a business strategy to increase profits, it creates a roadmap that informs future decisions for financial success. But when does a business strategy become a risk? At first glance, this may seem like a trivial question. However, in the unpredictable world of agriculture, understanding how uncertainty affects the achievement of strategic goals is fundamental to managing an operation successfully. This is the essence of managing strategic risk. Strategic risks arise from uncertainties that can derail a business strategy. Internal uncertainties, such as poor communication or financial challenges, are common culprits. Communication breakdowns often hinder the implementation of strategies within agricultural operations. Similarly, financial uncertainties, especially low cash flow, are a leading cause of business failure. Even the best ideas cannot succeed without adequate financial resources.