A company must make a competitive return for its shareholders and treat its employees fairly. A company also has wider responsibilities. It should minimise any harm to the environment and work in ways that do not damage the communities in which it operates. This is known as corporate social responsibility. Bowen argued that corporate social responsibility rests on two premises: social contract, which is an implied set of rights and obligations that are inherent to social policy and assumed by business, and moral agent, which suggests that businesses have an obligation to act honorably and to reflect and enforce values that are consistent with those of society.… Read the rest
Strategic Management
Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It involves the systematic identification of specifying the firm’s objectives, nurturing policies and strategies to achieve these objectives, and acquiring and making available these resources to implement the policies and strategies to achieve the firm’s objectives. Strategic management, therefore, integrates the activities of the various functional sectors of a business, such as marketing, sales, production etc. , to achieve organizational goals. It is generally the highest level of managerial activity, usually initiate by the board of directors and executed by the firm’s Chief Executive Officer (CEO) and executive team.
Evaluation of Acquisition Targets
Valuing an acquisition candidate is similar to valuing any investment. The analyst estimates the incremental cash flows, determines an appropriate risk-adjusted discount rate, and then computes the net present value (NPV). If firm A is acquiring firm B, for example, then the acquisition makes economic sense if the value of the combined firm is greater than the value of firm A plus the value of firm B. Synergy is said to exist when the cash flow of the combined firm is greater than the sum of the cash flows for the two firms as separate companies. The gain from the merger is the present value of this difference in cash flows.… Read the rest
The Nature of Strategic Planning
Organizations exist to make contributions to society. An organization is a collective enterprise, a group of individuals that provides society with more than individual enrichment. If it fails to maintain its contribution to society, especially through value creation, it can disintegrate. When an American automobile manufacturer stops providing customers with quality cars, customers buy cars elsewhere, perhaps from a Japanese automobile company. If too many customers buy foreign cars, the American manufacturer can become bankrupt. If a church fails to serve its members, it will lose its congregation. And if a university no longer offers sound academic programs, students will transfer to other schools.… Read the rest
The Growth of Strategic Planning
Many of today’s most successful business organizations continue to survive because many years ago they offered the right product at the right time; the same can be said for nonprofits and government organizations. Many critical decisions of the past were made without the benefit of strategic thinking or planning. Whether these decisions were based on wisdom or luck is not important. They resulted in momentum that has carried these organizations to where they are today. However, present day managers increasingly recognize that wisdom and intuition alone are not sufficient to guide the destinies of large organizations in today’s ever changing environment.… Read the rest
The Importance of Strategic Management in Business
Strategic management provides the framework for all the major business decisions of an enterprise such as decisions on businesses, products and markets, manufacturing facilities, investments and organizational structure. In a successful corporation, strategic planning works as the pathfinder to various business opportunities; simultaneously, it also serves as a corporate defense mechanism, helping the firm avoid costly mistakes in product market choices or investments.
Another reason for the importance of strategic management is that it provides a sense of direction so that organization members know where to expend their efforts. Without a strategic plan, managers throughout the organization may concentrate on day-to-day activities only to find that a competitor has maneuvered itself into a favorable competitive position by taking a more comprehensive, long-term view of strategic directions.… Read the rest
The Concept of Strategist
Strategist is the person performing the activities associated with business strategy planning. There are various kinds of strategists in any kind of organization like board of directors, chief executive officer, entrepreneurs, senior management, SBU-level executives, corporate planning staff, consultants, middle level manager, and executive assistants. Each one plays a different role in an organization.
The major responsibilities of a strategist are:
- First, he must assume the responsibility to develop a plan to complete the strategy activities, the plan must be initiated, dates set, deadlines established, and the process must be monitored to ensure that the deadlines are met.
- Second, basic assumptions about forecasts, economic indicators, technology, and general industry competitiveness must be agreed on and communicated to the functional areas.