The management of the organization plays a very important role in strategic management. A major concern of the top management in implementing a strategy, particularly if it involves a major change, is whether right mangers are in the right position for the new strategy. Confidence in the individuals occupying key managerial positions is directly and positively correlated with top management expectations that a strategy can be successfully executed.
Formulation of a strategy and its subsequent implementation is not so easy task as it is seen. A lot of analysis and detailed studies have to go in to execute a strategy successfully. The goals of the organization should be clear enough so as to devise the paths (or strategies) to reach the predetermined goals.
The principal value of a mission statement is its specification of the ultimate aims of the firm. A company gains a sense of purpose when its managers address the issues of: What business are we in? What customers do we serve? Why does this organization exist? Yet many a time managers are not clear as to what their company’s mission is. It is not enough to say that Hindustan Lever Limited is in the business of making anything that cleans anything or that Polaroid is committed to businesses that deal with the interaction of light and matter. Therefore a manager should see that the long term missions are clearly mentioned in this way, the goals can serve as a basis for planning, performance evaluation and controlling.
Formulating Long Term Objectives:
Long term objectives are defined as the results a business seeks to achieve over a specified period of time, usually five years. Some common long term objectives are profitability, productivity, competitive position vis-à-vis the competitors, employee development, employee relations, technological leadership, and public responsibility. The top management is expected to exercise its strategic skills in order to achieve these objectives. The strategies formulated should be acceptable to the parties involved, flexible as per the conditions and circumstances, measurable over time, motivating suitable to the organizations, understandable and above all realistic and achievable.
Assessing the External Environment:
The external environment of a business constitutes two inter-related sets of variables – the remote environment and the operating environment. The remote environment includes the political, economic, social and technological forces, usually beyond a firm’s control. Competitive position, customer profiles, suppliers and creditors and the labor market constitute the operating environment.
Strategies involving a firm’s external environment can provide a valuable planning base, keeping in mind the following:
1) Environmental data should be collected for a meaningful range of factors. The personal perceptions of the managers should be combined with data from public sources.
2) Studies should be undertaken to convert the data into relevant information, to determine the overall consequences for the firm to implement the available alternative strategies.
3) Flexibility should be incorporated in the strategy to allow for unexpected variations from the environmental forecasts.
After taking into considerations the points mentioned above, the management should also view the following factors. The strategies they lay out for the organization should be kept in accordance with these forces, which have an influence on the operations of the firm.
There are many forces that have to be balanced in formulating strategy.
Change and Continuity: There has to be a balance between the manager’s attention to change and his attention to continuity. We have talked about this balance in simple language as the 20 / 80 rule – 20 percent for change and 80 percent of routine activity. But it may not be the same for all the jobs. Some may need very little amount of major change, here 10 / 90 may be a better balance. Some jobs may need a 30 / 70 balance or even a 40 / 60 ratio.
A manager has to strike a balance in the time he spends on the routine work and the time he spends in making strategic developments.
Thinking and Doing: Also a right balance has to be struck between thinking and doing. It is seen that the people who think a lot, do the least. The most important aspect of effective management is the skill of how quickly a person can put his thoughts to work.
Efficiency and Effectiveness: Efficiency means doing things in the right way. Effectiveness means doing the right things. Here too a balance has to be struck. Too much reliance on the efficiency would also hamper the organization’s activities. Too much emphasis on cost cutting may leave the organization unable to cope with the changing market conditions.
Time needed and Time Available: What is the amount of time which a manager needs for strategic planning. Also he has to see the time available for it. Many a times the time available is not in accordance with the time needed for it.
A right balance has to be made between the time needed for strategic development and the time available for it.