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Importance of strategic management

صورة
  Strategic management is important due to following reasons: Participative management :Strategic management involves interaction at all levels of organization.It promotes participant management .It empowers employees. Problem prevention :Strategic management enhances problem  prevention   capabilities  of the organization.Problems anticipated and addressed during strategy formulation stage.This facilities problem  presentation  during strategy implementation. Better options :Group  interaction  generated better strategic options at alternatives for strategic choice. Motivation :Employees are motivation by performances reward relationship .This improves  productivity  and goal directed  behaviour . Reduced gaps and overlaps :Strategic management takes an  integrated   approach  to  resources  allocation.This reduces gapes and overlaps in activities.Rules and responsibilities are clearly specified.Strategic fit  facilitates  effective resources utilization. Change management :Strategic

Characteristics of strategic management

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  They are: Uncertain :Strategic management deals with future-oriented non-routine situation.They create uncertainly.Managers are unaware about the consequences of their decisions. Complex :Uncertainly brings complexity for strategic management.Managers face environment which is difficult to comprehend.External and internal environment is analysed. Organization wide :Strategic management has organization wide implication.It is not operation  specific .It is a systems  approach .It involves strategic choice. Fundamental :Strategic management is fundamental for improving the long-term performance of the organization. Long-term implication :Strategic management is not concerned with day-to-day operation.It has long-term implications.It deal with vision,mission and objective. Implication :Strategic management ensure that strategic is put into action,implementation is done through action plans.

Concept of strategic management

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  Strategic is something that is important,critical,central and long-term for future direction. Management gets the job done by working through people to achieving objectives effectively. Strategic management refer to strategic decisions and actions of top management.It is concerned with implementation of strategic to achieve long-term objectives.It involves decision about allocation of significant resources which impact the long-term performance of the organization.Resources can be people,money,technology,time and information. According to  Wheelen  and Hunger :Strategic management is that set of managerial decision and action that determines the long-term performance of a corporation. According to  Jauch  and  Glueck  :Strategic management is a stream of decisions actions which lead to the development of an effective strategy or strategies to help achieve corporate objective. According Pearce and  Robbinson  :Strategic management is the set of decision and actions that result in the

Factors affecting objective formulation

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  Important factors affecting objective formulation are: Size of the organization :Bigger size makes that objective formulation process complex. Value system of top management :The objective formulation is affective by the value system of top management. Their philosophy,attitudes,aspiration and needs  influence  objective. Philosophy reflects the creed of the organization.It specific basic beliefs,values,aspiration and philosophical priorities of managers. 3.Level of management :Organizational objectives are set by managers.Different levels of managers set different kinds of objectives. Top level managers(board of director/general managers) :They are involved in determining vision,mission,strategy and overall objectives. Middle level managers ( SBU  managers ):They are involved in setting key result area objectives for strategic business units. Lower level managers (Functional heads):They are involved setting specific operational objectives for functions. 4. Organization culture :Cult

Issues in formulating objective

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  They key of issues in formulation objective are : Reluctance to establish objective :Lack of confidence,fair of failure or avoidance accountability make managers reluctant to  established  objectives.They serves as an issues to effective objective formulation. Residence  to change :Change is making things different.People resist change.The reason can be fear or unknown,poor communication,loss of job security.Lack of participation or vested interests.Resistance to change serves as an issue n objective formulation. Improper reward system :Improver reward system for achieving objectives services as an issue their formulation.Similarly,too much emphasis on short term performance at the cost of long-term performance can be an issue is objective formulation.So can be reward for poor objective formulation behavior. Environmental dynamism :Rapidly changing environment can be an issue in objective formulation.Technological innovations and intense competition pose difficult in assessing future

Hierarchy of objective

صورة
  Objective have a hierarchy.They can be set at different levels of organization.They can be at following levels : Corporate level objectives :They are strategic objective set by top management.They defined long-term desired outcomes.They consist of vision,mission and strategy.They are stated broadly. Vision :It states the reason for the existence of the organization.It  defends  the scope and  boundaries  of the present  business  of organization.It is the purpose of the organization. Strategy :It is a broad action plan for achieving objectives.It provide long-term direction and scope to an organization. 2. Business units level objective :They are set for each strategic business unit( SBU ).They defined the business of the organization.They are desired outcomes for each  SBU  over long  term  in particular markets.They are set for key result areas,such as profit,market share,sales.They follow from  corporate  level organization. SBU  level objectives deal with the following aspects fo

Objective of strategic planing

صورة
  Objectives are desired outcomes or end result to be achieved.Strategic planing is about setting long-term objectives.Organizations are created to achieves.They are guided in their decisions and actions by objectives.Objectives are future-oriented. According to  Jauch  and  Glueck  :Objective are the ends the organization seeks to achieve through us existence and operation. According to wheels and Hunger :Objectives are the ends results of planed activity. According to Johnson  Scholes  :Objective are statement of specific outcomes that are to be achieved. Business organization purpose multiple objectives at the same time.They can be : Profitability :Profit is excess of income over expenditure.It is return on investment or earning per share. Survival :It is staying alive by avoiding  liquidation . Growth :It is all round growth in terms of profit,sales,market share.It is increase in assets and maximization of shareholder's wealth.It is essential for organization sustainability. Ef