CORPORATE GOVERNANCE

Corporate Governance

Corporate governance

Introduction

"Strategic management is the process of decision making which have high medium term to long term impact on activities of the organization including the implementation of those decisions to create value for customers and key stakeholders and to outperform the competitors".

Strategic management has three elements such as strategic analysis, strategic choice and strategic implementation. Strategic analysis gives the idea to understand the strategic position of the organization. It is an ongoing activity of organization. Strategic analysis gives the clear picture of the changes in the environment and how these changes affecting the organization and its activities. It gives idea about the resources and competencies present and their contribution to competitive advantage and development of new opportunities. Also it produces the idea about the people and groups such as manager, shareholders, union, stakeholder etc. associated with organization and their contribution for the development of organization. (Thompson, A, A. & Strickland, A, J. 2003, 64-89) Basically strategic analysis develops the relationship between different forces influencing the organization and its choice of strategies. These forces are environment, resource and competences etc.

It is an overall strategy that the organizations are follow. Its development involves a grand strategy and using portfolio strategy approaches to determine the various businesses making up organizations. A grand strategy provides basic strategic direction at corporate level. There are several three basic categories: growth, stability and defensive. Growth strategy - these are the grand strategy which says organizational expansion as a major element. Basically organisation growth means more sales and earnings. Organizations grow in the term of revenue, clients, wider distribution network etc. the major growth strategies are concentration, vertical integration and diversification. Concentration focuses on growth of single product or service. Concentration occurs through market development, product development or horizontal integration (adding one more similar business). Vertical integration - this approach involves the growth through production of inputs previously provided by supplier or trough replacement of a customer role by disposing of its own output. Diversification - this approach involves in the growth through development of new areas clearly distinct from current business (Thompson, A, A. & Strickland, A, J. 2003, 64-89)

Stability strategies - this strategy involves maintaining the status for growth of the organisation slowly or methodically. Organizations select stability for many reasons. When a company is doing well the managers don't want the risk and disturb of aggressive growth. This happens in case of small private owned businesses which are the larger group to adopt a stability strategy. Another reason is that it provides a chance for recovery (Thompson, A, A. & Strickland, A, J. 2003, 64-89) Defensive strategy - this strategy focus on reducing organizational operations through cost reduction or asset reduction. Defensive strategy includes harvest, turnaround, divesture and liquidation (Thompson, A, A. & Strickland, A, J. 2003, 64-89)

Strategic analysis focuses on stabilizing the current environment, and it also support the organization's business plans and goals. Strategic analysis helps to grip, new projects, new technology, consolidation of data centers, data ...