MN7405 Strategic Management Assignment Sample

Abstract

Strategic management is both the art and the science of defining, putting into action, and analyzing the inter-functional choices that will aid an organization in accomplishing its goals. This is done in order to facilitate the organization’s success. In order for an organization to be successful, the strategic management of that organization needs to take into account all of the many different aspects of the company’s operations. These aspects include the organization’s finances and accounting, its manufacturing and operations, its research and development (R&D) of new products, and its information technology (IT). In certain educational institutions, the subject that is often referred to as “business policy” is instead referred to as “strategic management.” This is despite the fact that “business policy” is widely regarded as one of the most important topics in the study of business administration.

Introduction

The first step of the process of strategic management is strategy formulation, the second stage is strategy evaluation, and the third stage is strategic implementation. Strategic management is a process that consists of three phases. The process of developing a strategy entails a number of distinct processes, such as the formulation of an objective, the evaluation of an organization’s external opportunities and threats, the identification of the organization’s internal strengths and weaknesses, the formulation of long-term goals, the production of a number of plans, and the selection of particular strategies to pursue. One of the most important steps in developing a strategy is deciding which specific strategies to pursue. The process of formulating a strategy involves making decisions regarding which firms to grow into or leave behind, how to allocate resources, whether or not the company should diversify its offerings or expand into new markets, and how to protect itself against a hostile takeover. These decisions must be made before the strategy can be formulated.

When putting a strategy into action, there are many different things that need to be done. These things include things like cultivating a culture that is supportive of the strategy, establishing an organizational structure that is effective, refocusing marketing efforts, developing and utilizing information systems, preparing budgets, and motivating individuals to take action.

Discussion

It is vital to review the performance of both people and the organization as a whole in order to evaluate the effectiveness of the creation and execution of a plan. Once this evaluation is complete, any required adjustments can be made to the plan. Even though it is the primary responsibility of an organization’s owner or CEO to make excellent strategic decisions, managers and employees still need to be involved in the process of developing, putting the strategy into action, and evaluating the plan. This is because everyone in the organization has a stake in the organization’s success. In order for there to be any possibility of bringing about change, individuals need to be actively involved in the process.

For strategic management to be effective, it is necessary to use a strategy that is oriented on people. People are what make the difference, and this is true across all hierarchical levels of management and staff. The difference is created by the people. When it comes to achieving efficient strategic management, we at Rock Well International are strong believers that every level of an organization’s staff has to hold a thorough education in order to do their jobs effectively. Everyone who works for the business is responsible for being aware of the company’s goals, as well as the route it is now on and the steps it has previously taken in order to move closer to reaching those goals.

When it comes to making significant choices for an organisation, one method that is advocated for is one that is methodical, objective, and based on sound reasoning. This method is often referred to by the name “strategic management process.” In order to accomplish this objective, it attempts to arrange both qualitative and quantitative information in such a manner as to make it simpler to come to rational conclusions, especially when faced with ambiguity. Strategic management, on the other hand, is not a simple science that can be applied in a clear manner such as “one, two, three.”

In order to arrive at defensible choices about one’s business strategy, it is necessary to make use of one’s intuition, which is formed from one’s prior experiences, judgement, and feelings. The ability of a person to utilise their intuition is heightened when they are put in circumstances that have a high degree of ambiguity, a lack of precedent, several interdependent components, high stakes, or the necessity to pick among various alternative answers. It was precisely situations like these that led to the development of the notion of strategic management.

Some company owners and executives claim that they have been endowed with an amazing intuitive talent, which allows them to devise effective business plans based only on their gut sensations alone. They say that this endowment enables them to succeed when others fail. For example, Alfred Sloan referred to Will Durant, the man widely credited with being the primary impetus behind the founding of General Motors, as a “machine.” “”a man whose course of action was, as far as I could tell, solely directed by some intuitive flash of brilliance; this was the kind of person I found fascinating; he was a mastermind.” “a man who was a mastermind.” From his point of view, there was no need to conduct an engineering investigation. On the other hand, there were a few instances in which he had every reason to be correct.” According to a quotation attributed to Albert Einstein, he reportedly said, “I believe in intuition and inspiration,” demonstrating that he was aware of the importance of such ideas. There have been instances in my life in which I am certain that I am correct, but I am unable to articulate the reasons for this conviction. Knowledge has its limits, but one’s imagination may include all there is to know. Therefore, imagination has a greater impact on reality than does knowledge.

Companies that don’t have intuitive geniuses at the helm aren’t quite as lucky as those that do, despite the fact that such CEOs aren’t all that common. If you want to make changes to your firm, you should consider about adopting a management style known as strategic management, which is a method of decision-making that combines intuitive thought with objective evaluation. In situations in which decisions must be made, there is no one right answer that can be applied in every circumstance. When doing analysis for strategic management, managers at all levels of an organisation should depend on their own intuition and sound judgement rather than relying on the findings of external experts. In the same thought process, it’s possible to be successful by combining analytic and intuitive modes of thinking. This is something that should be regarded a good concept.

A business practise known as “management by ignorance” states, “I’ve already made up my mind; don’t bother me with the facts,” which is not an effective way to run a company. A more suitable word for this kind of management is “management by intuition.” In a now-famous exchange, Drucker was questioned about intuition and famously said, “I only believe in it if you can discipline it.” When “hunch” artists in medicine and management make a diagnosis without first validating it with data, they put both patients and companies in danger. It’s possible that this will end badly for both of them. The mental processes that take place in the head of a smart and perceptive person when that person has a full knowledge of a company are ones that strategists seek to replicate.

A visual representation of the impacts that are brought about as a consequence of the interplay between the rates of environmental change and the intensities of management control systems is shown in Exhibit 1.2. The first stage was the establishment of a stable environment, which led to the creation of yearly budgets and improved management of financial resources. The passage of time made it plainly clear that alterations to the environment were happening at an accelerated pace, and that the ecosystem was in a state of flux. This became abundantly visible as time progressed. Even while every facet of the environment is going through the same cycle of “stable transitional turbulent unstable,” the rates of change for certain components of the environment could be quite different from one another. When it comes to the changing behaviours of consumers or the market, the pace of change may be significantly different from the rate at which technology, competition, or the mindset of employees is advancing.

The human race as a whole, together with the civilization that they have fashioned, has acquired a healthy scorn for the unknown. Alteration, on the other hand, is a fertile environment for ambiguity and often an enormous quantity of uncertainty. In contrast to the other components, which offered a scenario that was very unstable, the technical element maintained an acceptable degree of stability throughout the post-budget era, as shown by Exhibit 1.1 by phase 2, which was produced by phase 2. Many managers were unable to deal with the unpredictability and, as a result, chose to stick with the strategies that had previously been shown to be successful. This led to the selection of the previous budgeting criteria by those managers. A number of companies made the decision to create formalised corporate planning schedules as an alternative to relying only on estimates. These schedules included things like defining goals, doing environmental scans, and developing strategies. In a word, these companies came to the conclusion that formalised corporate planning was the way to go.

In the same manner as budgeting and the administration of budgets are dependent on monetary data, financial control is also dependent on such statistics.

This system, which first served as a tool for the management and control of currency, has now developed into a foundation for the management of a wide range of other operations. Despite this, the management of money continues to be its major responsibility. In order to improve the effectiveness of the company’s overall financial management, the vast majority of businesses organise themselves into separate departments. These departments each have their own set of responsibilities, and these responsibilities are delegated to specific individuals. Depending on the specifics of the responsibilities that they carry out, many names may be applied to them, including cost centres, expenditure centres, activity centres, profit centres, investment centres, and activity centres. In addition, depending on the particulars of the duties that they perform, they could evolve into responsibility centres.

The effectiveness of a company’s operational and business divisions may be assessed by management using a limited number of major financial criteria, which are subject to intense inspection. These criteria include the amount of income earned and the amount of money spent. These metrics are produced from the raw data that is used throughout the process of developing the budget.

Utilizing financial ratios as an essential tool in the process of exercising financial control entails both the evaluation of the company’s own financial performance and condition as well as the comparison of the company to other companies that are comparable to the company in question. This evaluation and comparison can be accomplished through the use of both internal and external comparisons.

One of the most major issues that arises with budgets and the management of monetary matters is the fact that there is a certain amount of time that may be considered. When the idea was initially developed, the market was calmer and there was less competition than there is in the present world. It felt appropriate to place the spotlight on the achievements that were achieved by the organisation during a certain year. The debates that took place during the period of Budgetary Control were seen as being of less significance, if not completely irrelevant altogether. These debates concerned a potential change in strategy, the dispersal of capital investment over a number of years, and the slow winding down of operations that were lagging behind. In addition, it was agreed that there would be no need to recalculate the budget at the beginning of each new year since it was seen to be superfluous. It was sufficient to build on the results of prior years, which were appropriately changed and updated. This allowed for progress to be made. Because of this, we were able to make some headway.

Both the climate and the degree of competitiveness have become much more precarious over the course of such a significant amount of time. After a given period of time, it was determined that the management of a budget could no longer be regarded appropriate. The passage of time made it abundantly evident that in order for a company to be successful over a prolonged period of time, it was necessary for them to engage in planning activities. As a direct result of this, budgeting and budgetary management have been supplanted by corporate planning as the primary tactic that should be used in order to plan for and monitor the performance of a business.

On the other hand, observing one’s financial constraints is never going to go out of vogue. In a later stage of development, corporate planning and strategic planning led to budgeting and budgetary control being the primary arm of action plans throughout the implementation and control phases. This was the result of a chain of events that began with planning for the corporation. The earlier development of corporate planning had a direct influence on the outcome of this situation. In order to facilitate the formation or appearance of commitments emerging from a strategy or corporate plan, a new approach to budgeting requires not only the use of historical data, but also talks performed within the framework of management by goals. This is done in order to facilitate the formation of a budget that is based on management by goals. This is due to the fact that management by objectives is predicated on the concept that an organisation should be organised in accordance with its objectives (MBO).

In the meanwhile, the procedure of budgeting has undergone several iterations, which have led to significant improvements throughout the course of time.

There are some novel ideas that should be taken into consideration. If you adopt a method of budgeting that is flexible, you will be able to adjust the initial criteria that are used to gauge performance anytime there is a change in the actual level of operations. This will ensure that your budget accurately reflects the current state of your business. Zero-Based Budgeting (ZBB) is a method that, in a way that is comparable to that of Zero-Base Budgeting (ZBB), establishes a comprehensive set of standards with the intention of compelling managers to justify their monetary allotments right from the start, as opposed to gradually establishing the new budget. This is accomplished by establishing a zero starting point for the budget.

When assessing the success of the company as a whole as well as their own individual performance, managers have become overly focused on profitability as a result of a dependence on financial measurements and a rigorous concentration on budgetary management for a certain year. This has led to a dependency on financial measurements and a rigorous concentration on budgetary management for a certain year. Return on investment (ROI) has swiftly moved to the top of the priority list of management throughout the era of corporate planning, where it has maintained a continuous theme throughout the process. During this time, the ROI has also been a primary focus. Because of this excessive fixation on return on investment (ROI), a significant number of companies have inadvertently harmed their asset base and inhibited investments that are necessary. They were able to do this by giving up the company’s long-term competitive advantage in exchange for a high return on investment for the next fiscal year. This pattern has been exacerbated by senior management’s unusual relationship with shareholders in many nations, as well as by the stock market’s focus on quick profit-taking and the tax laws of many governments, which discourage capital gains. Additionally, this pattern has been exacerbated by the focus of the stock market on quick profit-taking. The focus placed on quickly extracting profits in the stock market is another factor that has contributed to the worsening of this tendency. As a direct result of this, the management and policy of a great number of businesses and countries, in addition to the mentality of their respective governments, were often dichotomized between short-term safety and long-term growth at the expense of potential danger.

When it comes to budgeting, companies that only rely on budgetary and financial management methods find themselves in a situation that is potentially dangerous in terms of their return on investment (ROI).

Conclusion

If one does not have an in-depth understanding of the aggressive character of the firm and its attitude to competition, then a basic strategy of budgeting and managing financial resources will not be adequate to prevent unfavourable consequences from occurring.

The fundamental concept that underpins performance criteria is expressed in the form of objectives. A standard of performance, as contrast to a goal, is something that is allotted to a specific individual rather than to a group, division, or department. This is because a goal is something that needs to be accomplished. This is because a goal is something that has to be completed before it can be considered successful. There are times when the individual standard and the business goal could coincide, which is something that is not impossible but does occur sometimes. As an example, a product manager may be assigned a goal for the amount of market share that their firm achieves. The standard may be anything that is developed from the objective, such as dividing the overall corporate goal into sections and allocating staff members to each section (for example, the personal sales target of a sales representative). Quite generally, they are responsibilities that have been allotted a certain period of time in which they must be finished. One way to think about the entire idea is as a web of goals, all of which are connected in some manner to the core and secondary objectives that the organisation has established for itself.

Personal standards are an important factor in determining the level of success that may be attained via the execution of a set of plans as a technique for ensuring that the plans are carried out. By doing so, a direct link is made between the work that is performed by each specific employee and the overarching objective of the organisation as a whole.

The “management by objectives” (MBO) technique that Humble utilises, which was discussed in greater detail above, has a significant tie to the personal standards system that was mentioned earlier on in this paragraph. It’s almost like a streamlined version of the MBO method, except the goals are much more specific this way.

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