Strategic management is a vitally important accompaniment to a business that maintains the efficiency and effectiveness in overall performance while ascertaining long term goals. It's also meant for creating value for customers, as well as shareholders. In the following article we will discuss about the merits of strategic management.
It would be appropriate to mention an old saying which is analogous to the context that failure to plan is to plan for failure. It's thus making plans ahead of times is very important thing to do in a business organization. Planning ahead of times is an artistic skill and special sort of planning is to add elegance to this skill. The same is true of strategic management, in the sense, it adopts special sort of plans- strategies and does it utmost for the overall implementation in a business organization.
Having been related to the mission and the vision of the organization, strategic management analyzes both environments of a business - external and internal. What in terms of external environment is to be done is that the opportunities and threats to a business are to be assessed, whereas, strengths and weaknesses underlying the internal environment, are to be ascertained.
Next to the process of analysis, strategic management formulates strategies and implements them accordingly for the total organizational development. In other words, it is to pave the path for organizational success and sets out the direction for the attainment of its long-term goals while focusing simultaneously on the total organizational objectives. In fact, what lies in the pursuit of strategic management is existent in a broader scopes and spectrum, but we would focus our attention mainly on internal environment. And that is in terms of personnel and finance function.
The same is outlined herein briefly:
Before we discuss about personnel function and what strategic management has to do with it, it is worth mentioning that no other resource of an organization is as powerful as humans. A business will never prosper whose human element is ignored. The same message can be derived from the words of Sam Walton, the founder of Wal-Mart. Once he was asked a question that what could be the key factor to a successful organization, his reply was “People are the key.” This statement stands out as a guideline to any organization to sustain human assets, to preserve their relationship as well as to understand the conceptual dimensions in terms of their jobs, so that there can be overall achievement in organizational efficiency, effectiveness and development. Thus, in view of the same, the task of strategic analysis is to assess the relationship between the organization and the employees. In other words, it is an assessment of the strength and weakness of this relationship.
The Purposes of evaluating personnel function are as follows:-
Personnel function : The overall purpose of the personnel function is to manage the relationship between employees and the organization. Therefore, internal analysis of personnel function is an assessment of the strength and weakness of that relationship. This function can be analyzed by examining the following factors.
Assessing the the necessary skills of the employees.
Whether or not all necessary jobs are available.
Are the required training programs being conducted to develop the employees' skills?
Ascertaining the Image of pay scale in the organization.
Evaluating Turnover and absenteeism
Conducting Performance evaluation properly and timely.
Organization structure must support strategies and facilitate successful implementation. Some of the things to be considered in terms of organizational structure are:
Does organizational structure make sense?
Is it confusing or it is designed appropriately?
Ascertaining whether or not it expedites communication.
Do morale and motivation of the employee seem to be low or appropriate?
Are the people unclear of what they are expected of?
Verifying coordination, Is there lack of coordination or is it being maintained effectively?
Verifying if there are lots of procedures and paper work.
The Finance Function
Finance Function is critical to any business. Every business needs to have up-to-date information about its financial strength and weakness. A successful business requires effective planning and financial management.
Financial statements reveal much about an organization's operations, strength and weaknesses. They also serve as a basis for predicting future financial developments. Financial analysis helps greatly in ascertaining whether or not the strategy is working.
It's important to make comprehensive financial analysis, as it leads to determine the business organization's strength and weaknesses. Comprehensive Financial analysis consists of four elements. Ratio analysis, Interpretation of cash flow position, Analysis of retained earnings and predictions of future financial statements. All findings of financial analysis should be reduced to a stage where the strength and the weakness of an organization may be evaluated accurately. Then, the expected changes related to each item may be forecast. It would thus lead the managers to make effective decisions in relation to financial strength and weakness and potential earnings of a business organization.
Subsidiary books are those where one can easily note transactions of a particular category. It avoids wastage of time as the similar transactions are recorded in separate books, called subsidiary books.
Below article defines accrual concept in Financial Accounting. It also speaks about the importance of accrual basis accounting method while discussing in a little bit detail..
Man power planning being also called as human resource planning is of great significance for business organizations. It’s a process of acquiring, developing, allocating and utilizing human resources.