CSS Solved Business Administration Past Paper 2019 | Significance of Strategic Management. Explain Strategic Management Process.
The following question is attempted by Miss Nimra Masood, the top scorer in CSS Business Administration papers. Moreover, the answer is written on the same pattern, taught by Sir to his students, scoring the highest marks in compulsory subjects for years. This solved past paper question is uploaded to help aspirants understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.
Topic: Strategic Management
Subject: Business Policy
Strategic management is the heart of business management. Without it the subject of business management is incomplete. To get good marks in this paper comprehensive understanding of this question is necessary.
Strategic management is the process of setting direction for a future course of action. From environmental scanning to strategy formulation and implementation, all are called strategic management processes. A successful strategy can be the key to success while its failure can lead a company towards bankruptcy. The strategic management process is the comprehensive policy of the company that leads the way for employees and management.
Significance of Strategic Management:
- Identifying Opportunities:
At the stage of environmental scanning, new opportunities and ideas can be explored. Also, this process can help discover new ways to implement strategies.
- Prepare for the Future:
Along with opportunities, this process highlights internal weaknesses and external threats critical to the company’s survival.
- Strengthens Organizational Structure:
This process provides a common goal and objective for all its employees to work together. Each individual is dependent upon others to progress towards a common goal. Hence only a strong organizational structure can endure in a difficult time.
- Sustained Competitive Advantage:
The key to the success of every organization is its competitive advantage. The strategic management process helps in ensuring that this competitive advantage is sustained for a longer period of time.
Strategic Management Process:
The strategic management process has five following steps.
- Setting of Goals and Objectives:
The first and key step in strategy-making is to define what the company wants to achieve in the near future. In other words, it is the reason for the company’s existence. This step further clarifies the process in which this goal will accomplish and the persons who will be responsible to achieve these task
- A. Vision Statement:
Where the company wants to be in the near future
- B. Mission Statement:
The purpose for the company’s existence.
To set clear objectives vision and mission statement must be clearly defined and illustrated.
- Environmental Scanning:
The next step in strategic management is environmental scanning. This scanning is done in both the internal and external environment. Internal scanning includes factors such as employees, resources, organizational structure and operational potential. While the external environment involves scanning for suppliers, buyers, competitors and distributors.
- A. Strengths:
These are advantages available within the organization.
For example, a company might have an extraordinary pool of human resources.
- B. Weaknesses:
Areas where the company has internal loopholes.
For example, a company may have good human resources, but a weak organizational structure becomes a hurdle in utilizing the resource.
- C. Opportunity:
This is growth space available in the external environment. Factors like weak competition; additional resources, and operational capacity can contribute it.
- D. Threats:
Loopholes that can be exploited by other companies in the external environment.
- Strategy Formulation:
This phase is about choosing the best course of action to achieve objectives. In this phase, a comprehensive analysis is done of key factors. The following steps are involved in strategy formulation:
- A. Evaluating Organizational Environment:
The next step is to evaluate the general environment in which the company is to operate. The country’s political, economic and legal factors have an impact on the company’s operations.
- B. Setting Quantitative Targets:
At this step, financial targets are set for the future. The purpose is to evaluate the contribution of each department towards objectives.
- C. Performance Analysis:
This is about finding the gap between actual and desired performance targets.
- Strategy Implementation:
At this stage, the strategy is translated into organizational actions. It is the manner in which an organization develops, utilizes and collaborates organizational structure, control system and culture.
- A. Disbursement of Resources to ensure implementation of strategy
- B. Linking Reward Structure with results.
- C. Finding room for constant improvement
- Strategy Evaluation:
This is the last step in the strategic management process. In this step, actual and desired outcomes are compared. Control measures are also part of this step. This measure can rectify errors in the process and can also work as a damage reduction tool. It has the following steps:
- A. Fixing Benchmark Performance:
Setting the minimum target objectives to be achieved
- B. Measuring Performance:
Comparing actual performance with the benchmark performance
- C. Taking Corrective Measure:
Once a discrepancy is identified in performance, then corrective actions are required to be taken.
The strategic management process is the outline of whole business activity. From setting goals and objectives to strategy evaluation, every step is crucial in making the process successful. The process helps in strengthening the organizational structure by making optimum use of opportunities available in the business environment. It further assists in ensuring that the company has a sustained competitive advantage to reap benefits. The strategic management process is the core of operations in a business.
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