Business and Economics: Know Thyself

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Introduction

In business, strategic management can be generally described as the process of designing a long-term business plan that is aims at realizing organizational goals, sustaining organizational efficacy and producing a work plan that streamlines the operations of the business over a particular (Hedstrom et al., 1998, pp.5-19). In the recent times, companies have increasingly been using consultants or strategic managers to do strategic audits for their companies. In spite of the relative efficacy of these auditors, David (2009, p.106) asserts that these outsiders only come to apply universal solutions to business management but they cannot understand the internal business environment to give effective recommendations. According to David, therefore, real strategic management should be championed by workers and management within the organizations (pp.106-108).

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Businesses have different management levels both horizontally and vertically depending on the nature of the unit. However, effective coordination of functions should be improved to avoid duplication of duties and creation of expertise gaps within its ranks. Proper task description or terms of reference should be made aware to the staff for them to internalize it, allowing them some room for flexibility and creativity so that their productivity can be actualized (Banerjee, 2007, pp. 20-30). For instance, the finance department should know the times that collective responsibility has to be sought with the research department when buying research equipment.

Every company has a vision and mission that it hopes to actualize over a period of time and these aspirations has to be internalized within the hearts of the employees to provide focus and unity of purpose. These missions are met by establishing effective business objectives that has to be met; Strategic management helps in establishing these goals. Relationships among functional units of a business are also necessary and they should be meeting regularly to review and analyze business operations with each department giving its status report (David, 2009, pp. 106-108).

It is upon these briefly detailed principles of strategic management that the discussions below are conducted.

External factors as key considerations Strategic Planning

Personally, I am convinced that despite the fact that all facets of a business are important, the external environment we work in is the most vital aspect. The points below support this argument.

The business external environment has numerous influences on a business unit’s strategic planning. The external environment essentially refer to the outside considerations like the government regulatory framework, the technological advances, state of the economy, the changes in cultural environment and tastes, and the state of political affairs, among others.

Of course the internal environment also has a huge part to play in strategic planning and making sure that the firm’s objectives are met. These include matters to do with the personnel management, internal processes like sales and deliveries as well as the resource availability and modes of raising capital for long and short term goals. However, the external factors—to, a great extent, determine what is to be done internally.

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For instance, the government may limit business ownership by foreigners to a certain percentage and this mostly affect companies who are seeking to spread their business tentacles. This is because they may fail to meet the shareholding threshold they need to control the decision-making organ in the foreign subsidiary. Effectually, this affects strategic business planning in terms of finance because the business has to adjust its requirements to conform to the required regulatory concerns.

Again, technological advances and developments in information, communication, and technology have also greatly affected internal business processes in that businesses have been able to replace human capital with computers to hasten the processes or reduce system errors.

It is a common sight today to see staff in a number of companies, like British Airways, going on strike to demand that the management should stop staff layoffs. A good number of these layoffs are caused by the improvements in technology through outsourcing of some business functions because businesses and companies are investing in research and development. This results in creation of new products than hiring of more staff that only do routine duties.

Finally, cultures also go through transformations and these changes in tastes and preferences contribute to effective drafting of strategic management. This has a big impact on companies that are involved in direct sales of products. A product meant for a definite market has to reflect the cultures of the place for it to be accepted effectively (David, 2009, p.109).

Corporate Culture: Policies, Processes and Standards

Corporate culture is simply defined as the standard operating procedures of a company or an organization. It refers to the values, beliefs, attitudes, and behaviors that the organization together with its employees exhibit. The attitude that the business inculcates has to be noted down since it defines the way the staff should behave and operate especially in relation to the customers and the suppliers (Mintzberg, 1994, pp. 259-265).

The instructor defines Corporate Culture simply as the standard way of performing duties at the workplace, such action being guided by a structured system of policies, processes, and standards set up and enforced my Management in consultation with the other staff. I agree with this approach since it gives form to the meaning of culture as a management approach to building a firm’s image. This can be done by establishing clearly defined approaches and business processes.

A business can adopt a competitive approach which is aimed at boosting sales or market presence by for instance doing campaigns to familiarize the products and explain how it’s used, doing sales promotions as a reward to the clients, and creating the right attitude at the workforce to improve service delivery to the clients.

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According to Hooghiemstra (2000, pp. 58-65), a firm can also adopt the culture for innovation. For instance, micro-finance institutions give loans tailored to the low-end segment of the market and hence careful market analysis has to be done to investigate the viability of the market. In doing so, the risk factors also have to be analyzed to come up with the best products on loans meant for these people such that all the parties gain. Corporate culture is enhanced by well established policies and structures in the company (Mintzberg, 1994, pp. 110-125).

Policies are drafted by the management often in consultation with the experts and they form the backbone for the management of the organization’s affairs. Policies define the relationship between various departments while also giving attitude guidance to the employees. Polices on selling outline the various documents and processes someone has to go through before he/she finally gets to own the product. The sales policies should, therefore, be in such a way that the client is made comfortable by giving him the assurance that the goods will be in good condition for instance. This can be done by providing delivery services to the client.

Staffing policy also has to be drafted by the top management to not only determining staff hiring and layoffs, but to go deeper into looking at the re-evaluation of staffing needs at different departments to encourage efficiency (Thill & Bovée, 2008, pp. 20-23). A level of management can be done away with to outsource the functions when the company is faced with resource constraints. Credit policy, on the other hand, is aimed at determining the levels of credit that needs to be sought to finance various business objectives and it involves the company defining their primary recapitalization avenues for instance through rights issues and IPO’s.

In conclusion, it is worth saying that efficiency of the corporate culture is an indulging process. Consequently, all the relevant processes, standards and policies must be put in place to orient the maximizing of a corporate culture’s full potential in any given business.

Forecasting of the Management Processes

Forecasting in business context is looking into the future, predicting the opportunities that are available or the dangers that might affect the operations in terms of the output, scanning the lines of investments that are available, and predicting the human resource needs that the company will need over some period. After all this is done, the strategic business policies for instance over a five year term are then drafted taking into consideration the forecasted requirements (Mintzberg, 1994, pp. 245-250).

The size of business operations can be forecasted qualitatively and quantitatively using tools that predict future consumption or market size and segmentation using the variables that are presently visible. All businesses must expect growth in terms of revenues and output over some time.

The past and the present business conditions should provide a firm basis for analyzing or predicting the future business environment; but only if other salient factors like the political environment, corporate social responsibility (CSR) and the legal business framework are duly considered (Banerjee, 2007, pp. 20-25). Future prediction is analyzed by looking at the level of market saturation at the moment and tailoring products to reflect changing tastes, doing a competitor survey and leveraging on technology to enhance business operations, and be ahead of competitors in terms of adopting innovations.

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References

  1. Banerjee S. B (2007). Corporate social responsibility: the good, the bad and the ugly. Harvard: Edward Elgar Publishing.
  2. Bratton, J., & Gold, J. (4th Ed.). (2007). Human resource management: theory and practice. Basingstoke: Palgrave Macmillan.
  3. David, F. R. (12th Ed.). (2009). Strategic management concepts and cases. Upper Saddle River, NJ: Prentice Hall/Pearson.
  4. Hedstrom, G., Poltorzycki, S., & Strob, P. 1998. Sustainable development: the next generation of business opportunity. Prism, 4: 5–19.
  5. Hooghiemstra, R. (2000). Corporate communication and impression management: New perspectives why companies engage in corporate social reporting. Journal of Business Ethics, 27(1/2), 55-68
  6. Mintzberg, H. (1994). The rise and fall of strategic planning: reconceiving roles of planning, plans, planners. New York: Simon and Schuster.
  7. Thill J. V., & Bovée C. L. (2008) Excellence in business communication Chicago: Pearson Education, Limited.

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