Strategic Management - How to Achieve Strategic and Financial Objectives - Essay Example

STRATEGIC MANAGEMENT Strategy includes the many business moves and business approaches that a company implements to have a successful performance. It is also known as the business game plan. It is the strengthening of the business in terms of having and increasing the bigger share of the market and achieving performance targets. Strategy comprises the actions to improve short term profits, diversification, response to changing conditions, fresh offensive to have a bigger market share, pursuing new business opportunities among others. Strategy consists of how to satisfy customers, how to make the business grow in terms of company size and sales revenues, how the company will respond to the constantly changing industry and varying market conditions, or how to manage each functional piece of business or how to achieve strategic & financial objectives. The strategy of the business is to answer the following questions: where we are now, where we will be in the future, and how will get there. The five strategic management tasks are: 1) Develop strategic vision and mission 2) Setting objectives 3) Crafting strategy 4) Implementing and executing strategy 5) Evaluating and correcting. Strategic management is concerned with: a) Defining business and stating a mission & forming a strategic vision b) Setting measurable objectives C) Crafting a strategy to achieve objectives D) implementing & executing strategy E) evaluating performance reviewing new developments & initiating corrective adjustments. It is general knowledge that developing the vision and mission of the business is the FIRST step in strategic management tasks. After coming up with the vision and mission, the next step is to set up the company objectives to be accomplished. The objectives could be to have a bigger market share in its specialty product line or service. Another major objective that the company can come up with is to generate bigger sales and lesser costs and expenses for the near and far away future. Another objective is to open up one hundred branches every year around the world. Another objective is to satisfy customer needs and get new customers. Again, another obvious objective is the enter the territorial waters of the competition and “beat” them in their own game of marketing by offering better products and prompt services. The third task of strategic management is crafting the strategy. This is the how of management. For the objective of increasing sales, one strategy could be to hire more salesmen, another strategy to increase sales is to hire new sales men from the competing companies to get the competitors share of the market. For the objective of opening one hundred stores in one year we could get specialists to prepare feasibility studies to determine if the possible entry to unknown territory will result in a profitable venture. When the feasibility shows that it will result to increased income on the over all income statements, then we can go ahead with the expansion. The fourth step is the implementation process. After crafting the strategy, then we can put our expansion plans into action. This will determine whether the projected feasibility study which stated that there will be increased profitability will come out true. The purpose of having first the preparation of the feasibility study is estimate, beforehand, whether we should allocate a large amount of our scarce resources to a project. Implementation of strategy of management to increase market share by hiring courteous and hardworking front line employees can be tested whether these types of work attitudes will indeed increase sales of the business or if the “smiling” front line employees or service crews will not have an effect on sales volume. After the implementation stage, we can now proceed to the last but equally important step. This is the evaluation phase of strategic management process. By evaluating the performance of employees, we can see if the sales has, indeed, increased due to the courteous, fast and efficient service. We will also know from the evaluation whether the employees tasks to achieve the objectives set at the beginning of the strategic management have done their share as expected or have not kept in step with the accomplishment of management objectives. After evaluating whether the employees, managers, area heads, and senior management staff, the results will be tabulated and a meeting will be held to explain to the persons concerned. ( those evaluated and the heads of the departments of those evaluated ) The main agenda here is to praise and recognize the achievers and generate suggestions from the persons evaluated, the heads of these employees evaluated and the senior management staff as to what possible actions and reactions that could be put in place to prevent the continued below par performance of employees, heads of departments, managers, and the entire departments affected. Possible actions to be put in place is the promotion in their position or increase of take home pay and the regularization of employees performing beautifully thus generating much needed revenues for the business. For the below par employees, possible reactions from management is to retrain them on better ways to perform their jobs, assign them to other jobs in the same department, and if there is redundancy from work due to two or three persons doing the same jobs, then these “slow” moving employees could be assigned to other departments where they could do better since they have the ability to perform better on their other aptitudes. For employees with continues absenteeism, termination could be hard but necessary reality if these below par employees do not change for the better. IMPORTANCE OF MISSION IN STRATEGIC MANAGEMENT In developing a mission and a vision, we have to think what will happen to the firm in the future, around seven to twelve years from now. The mission’s purpose is to put a drive or purpose in the everyday activities of the business. This includes both short term and long term directional plans. It also gives the company the needed identity. It helps us decide who we are at present, what we do and where we are heading. Management develops its mission for it reflects the vision of what the firm seeks to do and what it wants to be in the future. The mission also indicates what the company plans to do in the daily satisfaction of its present and prospective customers. The mission clearly indicates what management plans to do regarding its position in terms of market share in the products it produces or services. In its vision and mission, we look at what our present market share is, what business we specialize in, what are the expectations of the stockholders, what the clients want in the future like newer and better products, what our competition is doing that will affect our share of the market. What the suppliers will provide and their efficiency in terms of delivery days. The constant change in the environment, and the maintenance of our competitive edge in the industry. The vision and mission is useful for it is what the entire work force of the company will share their talents, expertise together for a successful accomplishment where everyone will be happy in the end including suppliers, customers, government, stockholders, employees management, etc. Examples of mission vision are: example 1) our business is renting cars, our mission is total customer satisfaction (avis rent a car), example 2) the primary mission is to expand our worldwide leadership position in the spice, seasoning and flavoring markets (McCormick) example 3) to be the worlds best in chemicals and electronic imaging.(Kodak) example 4) the mission is to improve the quality of human life; to enhance self-reliance and concern for others; and to help people avoid, prepare for, and cope with emergencies (American Red Cross). The major reason that the mission is the first step in the strategic process is actually because the mission statement is likened to a slogan or battle cry. All employees in all branches of the business will take up the cudgels of the business “war” against the competitors who are constantly outmaneuvering each other for a constant increase and decrease of the product and service market share. If the mission is to provide high quality products at a lower price than the competitors, then the production line workers will work more efficiently to produce these quality items thru the help of market surveys of what the present customers want in a product. In return, the employees will benefit thru increases in their take home pay and the entire business entity will stay longer in the market scene due to the increase in sales resulting in higher net income. CONCLUSION: Mission is the first step in the strategic management process. The mission tells everyone, the production line employees, the administration staff, the board of directors, the customers, the suppliers, the government agencies the major purpose of the existence of the business. Whether the mission is serve customers with the same quality service the company is known for, or whether the mission is to adventure into unfriendly competitors’ territory to increase market share, whether the mission is to open five hundred stores every year around the world, or whether the mission is the increase sales by twenty percent per year, or whether the mission is to create many new products every year or whether the mission is to continuously improve its products and give free lifetime service warranty to its present and prospective customers buying products that is estimated to last “a lifetime”, or whether the mission is to help everyone have a healthy life or whether the mission is alleviate poverty, all these missions enumerated above plus other missions not mentioned above, will serve as the focal point for the combining of the talents and abilities and industry in the accomplishment of these missions. This theory tells us that it is preferable or better for a company to have a mission statement. \ But in the real world, the mission statement is not even talked about. There are companies who do not come up with or even advertise their mission statements. The usual or normal purpose of putting up a business is to generate enough sales to pay for the daily operating expenses of the business save money in the bank for future plant expansion or purchase new and better equipments to produce better items and more products thus increasing the net income of the firm. From experience, the mission statement is generally for internal purposes only. For the mission statement calls everyone in the organization to meet in one place for a short period of time and come up with the objectives or goals of the business. After the goals or objectives are set, then the strategy or various strategies are espoused, defended and attacked by the different personnel within the organization like the factory workers, accounting and administration personnel, heads of the different departments including, of course, the sales department. Some of the strategies are: the company could hire more salesmen to increase the sales. Another strategy is the hiring of salesmen from the competitors by offering them higher commissions and basic payments. Another strategy is to hire “smiling” and courteous employees for a high probability of increased sales. As they say, a “heartless” service crew will not get new clients. Another strategy is to lower the usual selling price so the clients will buy more products. This is usually done during a short “sale” period. Another strategy to increase sales is to lessen cost by retrenching employees when sales goes down during the lean months. Another sales strategy is to hire more personnel or service crews when the customers have to wait in a long line to be served. After the strategies are applied, then the final stage is evaluation. There will be a meeting of the many heads of the departments to study the evaluation results. Then the heads will decide what actions to take based on the results. Possible actions could be to promote the “hardworking” employees. Another action is to transfer employees who do not pass the benchmark. Also another action is to train the employees who need retraining due to substandard performances. So in the end, MISSION is the FIRST step in the strategic management process REFERENCES: Harvard Business Review on Managing the Value Chain, page 115, Harvard Business School Press,,2000,USA  Dessler, G, Management, page 133, Prentice Hall, USA, 2001  Harvard Business Review on Negotiation & Conflict Management, page 51-52, Harvard Business School Press,2000,USA  Harvard Business Review on Crisis Management, Page 180-181, Harvard Business School Press, 2000,USA  Hellriegle,Jackson & Slocum, Management,8th, page 491 Ed., Southwestern College Publishing,Ohio,USA,1999  Harvard Business Review on Management Uncertainty, page 30-31,Harvard Business School Press,USA,1999  Daft, R, Page 667, Management, Dryden Press, Philadelphia, USA,2001  Harvard Business Review on Corporate Strategy, Page 121-146,Harvard Business School Press,USA,1999  Hunger J. & Wheeler T., Page Strategic Management, Page 148-150,Addison Wesley Publishing,USA,1996  Harvard Business Review on Breakthrough Thinking, page 7-18,Harvard Business School Press,USA,1999  Sherman,Bohlander,Snell, Managing Human Resources, Page 156-157,International Thomson Publishing,Ohio,1996  Harvard Business Review on Measuring Corporate Performance, Page 128,133, Harvard Business School Press,USA,1998  Harvard Business Review on Leadership, page 85-86, Harvard Business School Press, USA, 1998 Read More