importance of strategic management

Here you'll find all collections you've created before. The employer may make a compensation claim against the insurer to recover the compensation that the employer is obliged to pay. Thus, the necessity of strategic management has increased in all spheres of industry and commerce. An incorrect strategic decision may ruin a company, whereas incorrect operating or administrative decisions can usually be weathered. Strategic management benefits all business ventures, including small business, for-profit, nonprofit and Fortune 500 companies. This will enable the organisation to implement the strategy successfully and to achieve the desired results. It is also associated with leveraging the business resources for maximum gains to be made. Diagnosis of Business Environmental Threats, 5. The concept of ‘global village’ has had a critical impact on the way companies work. Strategy is the means to achieve the organisational ends. Today, companies are increasingly run by professionals who focus on changing goals like market reach, market leadership, global trade, future economic growth, social power, global leadership, social expectations fulfillment, protection of natural environment, social fairness, ethical values, reorienting customer values, corporate success and image, internal strength, public accountability, etc. Globalisation has created a real challenge for the managers of business firms. To do so, the business processes need to be analysed and understood in order to be able to manipulate them. Hence, companies must learn to balance the risks and rewards of new technologies through strategic management process. Managers would need to acquire skills to maximize shareholder value. If the KPI is less than that of the industry standards, then the business will be able to improve through the comparison. The operating decisions, however effectively made and implemented, cannot ensure long-term success. It integrates all types of business learning into one subject. Abbass F. Alkhafaji writes, “Strategic management is designed to develop an awareness of the processes by which organisations can achieve synergies of the whole through the effective cooperation and interaction of the many departments within an organisation.” Researches have also proved that a strong correlation exists between strategic management and corporate success. The compensation is calculated based on the time that the employee was unable to work during the period the employee was injured. Prohibited Content 3. Therefore, each resource of the organization has a specific use at a particular time. This step involves identifying the facts and information needed to accomplish the objective. It gives managers something very precious —the ability to perceive reality. 5. Employees: Objectives should address the needs of employees that enhance their welfare and their ability to grow as valuable assets to the organization. It allows an enterprise to make its decisions based on long range forecasts, not spur-of-the moment reactions. Shaping Organisation’s Destiny and 17. It describes the plans and actions necessary to achieve the overall business objective or goals. Forward Thinking 6. Focus strategies on highest priority objectives. However, firms need not just react to change, they can pro act or even make changes happen. Managing and understanding Information Technology, which is changing the face of business. For example, often we take profit as the objective of a business organization. This would save the business if future results are better than expected. A KPI should be able to contribute to the improvement of the business. The net present value of the investment is the present value of the cash flows of the investment. Today many changes are happening in the environment. These models have changed the landscape of business. To summarise, the business which perform formal strategic planning have a higher probability of success than those which do not. A business needs to analyse the cause of a KPI. Throughout the world, their ability to manage the affairs of the corporation is being called into question. It offers a methodology by which the firm could anticipate and project the future and be internally equipped to face it. Will 5G Impact Our Cell Phone Plans (or Our Health?! The importance of strategic management in the financial crisis. It ensures that decisions are taken in a systematic and purposeful way. Strategy as an area of management is concerned with the general direction and long-term policy of the business as distinct from short- term tactics and may by defined as its long-term objectives and the general means by which it intends to achieve them. This ensures that every level is working together toward the same goals. Business strategy is a plan of action designed to achieve commercial objectives. Strategic management is widely practiced. To set up the Key Performance Indicators, there must be a clear definition of the purpose and the level of the objectives of the business. This is important because the business will be able to use this information in order to achieve the business objectives. Thus, it is said that the purpose of strategic management is many fold. Increasingly, the success of companies depends on its people, thus people management would be a requirement of management. 7. Before uploading and sharing your knowledge on this site, please read the following pages: 1. Strategic management is the process of strategic analysis of an organization, strategy-focused objective-setting, strategy formulation, strategy implementation, and strategic evaluation and control. Effective strategic managers should have the knowledge, the skills and the vision necessary to (i) understand the total company i.e. A business can either analyse the KPIs itself or outsource the analysis of the KPIs. The company: Objectives should enhance the capabilities of the firm to strengthen its financial standing. Thus, the desired scenario could be to accept the trend, and close the business down. What the steps are depends on what the objective is. Strategic management helps to formulate a suitable strategy systematically after analysing the business environment, the industry, the firm and to implement it successfully and to control it effectively. The compensation should be reduced if the employee is able to work in a suitable alternative employment or if the employee has a workplace injury for which the employee is entitled to compensation. As soon as an objective is established, it should be implemented. Strategic management is widely practised in Indian industry nowadays by most large and medium-sized firms and also by the more sophisticated smaller firms. This will enable a business concern to maximise its profits. For example, if the Key Performance Indicators concern customer service, and sales is a key performance indicator, then there should be metrics to illustrate the customer service. By that, strategic HR makes the organization more competitive. They would have to create capability for initiating and managing change through leadership and personal qualities of patience, commitment, and perseverance. But the majority of the studies suggest that there is a relationship between better performance and formal planning. The advancement of web-based technology and e-commerce models have also created the need for strategic management. It is a general vision of what the company wants to be. And, this requires the skill and ability of strategic management”. Organizations should consider whether the objectives give the employees direction to focus their efforts on projects that bring value to an organization. _____ is the collection of managerial decisions and actions that determine the long-run performance of an organization. At this stage, the analyst will decide what the result will be, based on relevant results of the previous analysis. It involves structuring the financing of a business to ensure the finances are in line with requirements. Strategic management provides all the employees with clear objectives and directions about the future of the enterprise – People perform better if they know what is expected of them & where the enterprise is going. Strategic management tries to offset environmental uncertainty by prescribing the future course of action in the light of various forecasts made by the organization. Strategic management minimises resistance to change – The benefit of acceptability of change with minimum resistance is also likely to follow participative process of strategy making, as there is greater awareness on the basis of choosing a particular option and the limits to available alternatives. Deals with Real-Life Business Situations 4. It helps in determining the courses of action to be followed, ideal enterprise locations, alternative forms of activities, capital limits, procurement as well as profitability. The compensation should be calculated by an accountant. Content Filtration 6. The discounted payback period approach is the time period that it will take for the business to recover the cost of investment. It does so by finding the best balance among the trade-offs among the three strategic activities, aided by those in the external environment. Strategic management improves managerial skills. The importance of strategic management can be identified in the following contexts: Effective strategic management results in financial benefits to the organizations in the form of increased profit.

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