Career Assessment Test

Strategic Financial Management or institutional management

 

Abstract

 

Strategic or institutional management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives.] It is the process of specifying the organization mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives.

Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about “strategic alignment” between the organization and its environment or “strategic consistency”. According to Arieu (2007), “there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context.”

“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial

Methodologies

There are many approaches to strategic planning but typically a three-step process may be used:

Situation – evaluate the current situation and how it came about.
Target – define goals and/or objectives (sometimes called ideal state)
Path – map a possible route to the goals/objectives

One alternative approach is called Draw-See-Think

Draw – what is the ideal image or the desired end state?
See – what is today’s situation? What is the gap from ideal and why?
Think – what specific actions must be taken to close the gap between today’s situation and the ideal state?
Plan – what resources are required to execute the activities?

An alternative to the Draw-See-Think approach is called See-Think-Draw

See – what is today’s situation?
Think – define goals/objectives
Draw – map a route to achieving the goals/objectives

In other terms strategic planning can be as follows:

Vision – Define the vision and set a mission statement with hierarchy of goals and objectives
SWOT – Analysis conducted according to the desired goals
Formulate – Formulate actions and processes to be taken to attain these goals
Implement – Implementation of the agreed upon processes
Control – Monitor and get feedback from implemented processes to fully control the operation

Strategic planning

Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ), PEST analysis (Political, Economic, Social, and Technological), STEER analysis (Socio-cultural, Technological, Economic, Ecological, and Regulatory factors), and EPISTEL (Environment, Political, Informatic, Social, Technological, Economic and Legal).

Strategic planning is the formal consideration of an organization’s future course. All strategic planning deals with at least one of three key questions:

“What do we do?”
“For whom do we do it?”
“How do we excel?”

In business strategic planning, the third question is better phrased “How can we beat or avoid competitionIn many organizations, this is viewed as a process for determining where an organization is going over the next year or more -typically 3 to 5 years, although some extend their vision to 20 years.

In order to determine where it is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. The resulting document is called the “strategic plan.”

It is also true that strategic planning may be a tool for effectively plotting the direction of a company; however, strategic planning itself cannot foretell exactly how the market will evolve and what issues will surface in the coming days in order to plan your organizational strategy. Therefore, strategic innovation and tinkering with the ‘strategic plan’ have to be a cornerstone strategy for an organization to survive the turbulent business climate.

Mission, vision and values

Mission: Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its Vision. The mission could be either for the long term or the short term. A corporate mission can last for many years, or for the life of the organization or may change as the organization develops. It is not an objective with a timeline, but rather the overall goal that is accomplished as organizational goals and objectives are achieved.

Vision: Defines the desired or intended future state of an organization or enterprise in terms of its fundamental objective and/or strategic direction. Vision is a long term view, sometimes describing how the organization would like the world in which it operates to be. For example a charity working with the poor might have a vision statement which read “A world without poverty”

It is sometimes used to set out a ‘picture’ of the organization in the future. A vision statement provides inspiration, the basis for all the organization’s planning. It could answer the question: “Where do we want to go?”

Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization’s culture and priorities.

Strategy: Strategy narrowly defined, means “the art of the general” (from Greek stratcgos). A combination of the ends (goals) for which the firm is striving and the means (policies)by which it is seeking to get there.

 
Mission statements and vision statements

Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement Others begin with a vision and mission and use them to formulate goals and objectives.

While the existence of a shared mission is extremely useful, many strategy specialists question the requirement for a written mission statement. However, there are many models of strategic planning that start with mission statements, so it is useful to examine them here.

A Mission statement tells you the fundamental purpose of the organization. It defines the customer and the critical processes. It informs you of the desired level of performance.
A Vision statement outlines what the organization wants to be, or how it wants the world in which it operates to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria.

 

An advantage of having a statement is that it creates value for those who get exposed to the statement, and those prospects are managers, employees and sometimes even customers. Statements create a sense of direction and opportunity. They both are an essential part of the strategy-making process.

Many people mistake vision statement for mission statement, and sometimes one is simply used as a longer term version of the other. The Vision should describe why it is important to achieve the Mission.

 A Vision statement defines the purpose or broader goal for being in existence or in the business and can remain the same for decades if crafted well. A Mission statement is more specific to what the enterprise can achieve itself. Vision should describe what will be achieved in the wider sphere if the organization and others are successful in achieving their individual missions.

A mission statement can resemble a vision statement in a few companies, but that can be a grave mistake. It can confuse people. The mission statement can galvanize the people to achieve defined objectives, even if they are stretch objectives, provided it can be elucidated in SMART (Specific, Measurable, Achievable, Relevant and Time-bound) terms. A mission statement provides a path to realize the vision in line with its values. These statements have a direct bearing on the bottom line and success of the organization.

Which comes first? The mission statement or the vision statement? That depends. If you have a new start up business, new program or plan to re engineer your current services, then the vision will guide the mission statement and the rest of the strategic plan. If you have an established business where the mission is established, then many times, the mission guides the vision statement and the rest of the strategic plan. Either way, you need to know your fundamental purpose – the mission, your current situation in terms of internal resources and capabilities (strengths and/or weaknesses) and external conditions (opportunities and/or threats), and where you want to go – the vision for the future. It’s important that you keep the end or desired result in sight from the start.[citation needed] .

Features of an effective vision statement include:

Clarity and lack of ambiguity
Vivid and clear picture
Description of a bright future
Memorable and engaging wording
Realistic aspirations
Alignment with organizational values and culture

To become really effective, an organizational vision statement must (the theory states) become assimilated into the organization’s culture. Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging others to craft their own personal vision compatible with the organization’s overall vision. In addition, mission statements need to be subjected to an internal assessment and an external assessment. The internal assessment should focus on how members inside the organization interpret their mission statement. The external assessment — which includes all of the businesses stakeholders — is valuable since it offers a different perspective. These discrepancies between these two assessments can give insight on the organization’s mission statement effectiveness.

Another approach to defining Vision and Mission is to pose two questions. Firstly, “What aspirations does the organization have for the world in which it operates and has some influence over?”, and following on from this, “What can (and /or does) the organization do or contribute to fulfill those aspirations?”. The succinct answer to the first question provides the basis of the Vision Statement. The answer to the second question determines the Mission Statement.

Situational analysis

When developing strategies, analysis of the organization and its environment as it is at the moment and how it may develop in the future, is important. The analysis has to be executed at an internal level as well as an external level to identify all opportunities and threats of the external environment as well as the strengths and weaknesses of the organizations.

There are several factors to assess in the external situation analysis:

Markets (customers)
Competition
Technology
Supplier markets
Labor markets
The economy
The regulatory environment

It is rare to find all seven of these factors having critical importance. It is also uncommon to find that the first two – markets and competition – are not of critical importance. (Bradford “External Situation – What to Consider”)

Analysis of the external environment normally focuses on the customer. Management should be visionary in formulating customer strategy, and should do so by thinking about market environment shifts, how these could impact customer sets, and whether those customer sets are the ones the company wishes to serve.

Analysis of the competitive environment is also performed, many times based on the framework suggeste

Strategy formulation

Strategic formulation is a combination of three main processes which are as follows:

Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental.
Concurrent with this assessment, objectives are set. These objectives should be parallel to a time-line; some are in the short-term and others on the long-term. This involves crafting vision statements (long term view of a possible future),
mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.

Marketing action plan

Placement and execution of required resources are financial, manpower, operational support, time, technology support
Operating with a change in methods or with alteration in structure
Distributing the specific tasks with responsibility or moulding specific jobs to individuals or teams.
The process should be managed by a responsible team. This is to keep direct watch on result, comparison for betterment and best practices, cultivating the effectiveness of processes, calibrating and reducing the variations and setting the process as required.
Introducing certain programs involves acquiring the requisition of resources: a necessity for developing the process, training documentation,process testing, and imalgation with (and/or conversion from) difficult processes.

As and when the strategy implementation processes, there have been so many problems arising such as human relations, the employee-communication. Such a time , marketing strategy is the biggest implementation problem usually involves , with emphasis on the appropriate timing of new products. An organization, with an effective management, should try to implement its plans without signaling this fact to its competitors.[3]

In order for a policy to work, there must be a level of consistency from every person in an organization, specially management. This is what needs to occur on both the tactical and strategic levels of management.

 References
David, F Strategic Management, Columbus:Merrill Publishing Company, 1989
Lamb, Robert, Boyden Competitive strategic management, Englewood Cliffs, NJ: Prentice-Hall, 1984
Sweet, Franklyn H. Strategic Planning… A Conceptual Study, Bureau of Business Research, The University of Texas, 1964
Chandler, Alfred Strategy and Structure: Chapters in the history of industrial enterprise, Doubleday, New York, 1962.
Selznick, Philip Leadership in Administration: A Sociological Interpretation, Row,eterson, Evanston Il. 1957.
Ansoff, Igor Corporate Strategy McGraw Hill, New York, 1965. 

Strategic Financial Management or institutional management

 

Abstract

 

Strategic or institutional management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives.] It is the process of specifying the organization mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives.

Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about “strategic alignment” between the organization and its environment or “strategic consistency”. According to Arieu (2007), “there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context.”

“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial

Methodologies

There are many approaches to strategic planning but typically a three-step process may be used:

Situation – evaluate the current situation and how it came about.
Target – define goals and/or objectives (sometimes called ideal state)
Path – map a possible route to the goals/objectives

One alternative approach is called Draw-See-Think

Draw – what is the ideal image or the desired end state?
See – what is today’s situation? What is the gap from ideal and why?
Think – what specific actions must be taken to close the gap between today’s situation and the ideal state?
Plan – what resources are required to execute the activities?

An alternative to the Draw-See-Think approach is called See-Think-Draw

See – what is today’s situation?
Think – define goals/objectives
Draw – map a route to achieving the goals/objectives

In other terms strategic planning can be as follows:

Vision – Define the vision and set a mission statement with hierarchy of goals and objectives
SWOT – Analysis conducted according to the desired goals
Formulate – Formulate actions and processes to be taken to attain these goals
Implement – Implementation of the agreed upon processes
Control – Monitor and get feedback from implemented processes to fully control the operation

Strategic planning

Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ), PEST analysis (Political, Economic, Social, and Technological), STEER analysis (Socio-cultural, Technological, Economic, Ecological, and Regulatory factors), and EPISTEL (Environment, Political, Informatic, Social, Technological, Economic and Legal).

Strategic planning is the formal consideration of an organization’s future course. All strategic planning deals with at least one of three key questions:

“What do we do?”
“For whom do we do it?”
“How do we excel?”

In business strategic planning, the third question is better phrased “How can we beat or avoid competitionIn many organizations, this is viewed as a process for determining where an organization is going over the next year or more -typically 3 to 5 years, although some extend their vision to 20 years.

In order to determine where it is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. The resulting document is called the “strategic plan.”

It is also true that strategic planning may be a tool for effectively plotting the direction of a company; however, strategic planning itself cannot foretell exactly how the market will evolve and what issues will surface in the coming days in order to plan your organizational strategy. Therefore, strategic innovation and tinkering with the ‘strategic plan’ have to be a cornerstone strategy for an organization to survive the turbulent business climate.

Mission, vision and values

Mission: Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its Vision. The mission could be either for the long term or the short term. A corporate mission can last for many years, or for the life of the organization or may change as the organization develops. It is not an objective with a timeline, but rather the overall goal that is accomplished as organizational goals and objectives are achieved.

Vision: Defines the desired or intended future state of an organization or enterprise in terms of its fundamental objective and/or strategic direction. Vision is a long term view, sometimes describing how the organization would like the world in which it operates to be. For example a charity working with the poor might have a vision statement which read “A world without poverty”

It is sometimes used to set out a ‘picture’ of the organization in the future. A vision statement provides inspiration, the basis for all the organization’s planning. It could answer the question: “Where do we want to go?”

Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization’s culture and priorities.

Strategy: Strategy narrowly defined, means “the art of the general” (from Greek stratcgos). A combination of the ends (goals) for which the firm is striving and the means (policies)by which it is seeking to get there.

 
Mission statements and vision statements

Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement Others begin with a vision and mission and use them to formulate goals and objectives.

While the existence of a shared mission is extremely useful, many strategy specialists question the requirement for a written mission statement. However, there are many models of strategic planning that start with mission statements, so it is useful to examine them here.

A Mission statement tells you the fundamental purpose of the organization. It defines the customer and the critical processes. It informs you of the desired level of performance.
A Vision statement outlines what the organization wants to be, or how it wants the world in which it operates to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria.

 

An advantage of having a statement is that it creates value for those who get exposed to the statement, and those prospects are managers, employees and sometimes even customers. Statements create a sense of direction and opportunity. They both are an essential part of the strategy-making process.

Many people mistake vision statement for mission statement, and sometimes one is simply used as a longer term version of the other. The Vision should describe why it is important to achieve the Mission.

 A Vision statement defines the purpose or broader goal for being in existence or in the business and can remain the same for decades if crafted well. A Mission statement is more specific to what the enterprise can achieve itself. Vision should describe what will be achieved in the wider sphere if the organization and others are successful in achieving their individual missions.

A mission statement can resemble a vision statement in a few companies, but that can be a grave mistake. It can confuse people. The mission statement can galvanize the people to achieve defined objectives, even if they are stretch objectives, provided it can be elucidated in SMART (Specific, Measurable, Achievable, Relevant and Time-bound) terms. A mission statement provides a path to realize the vision in line with its values. These statements have a direct bearing on the bottom line and success of the organization.

Which comes first? The mission statement or the vision statement? That depends. If you have a new start up business, new program or plan to re engineer your current services, then the vision will guide the mission statement and the rest of the strategic plan. If you have an established business where the mission is established, then many times, the mission guides the vision statement and the rest of the strategic plan. Either way, you need to know your fundamental purpose – the mission, your current situation in terms of internal resources and capabilities (strengths and/or weaknesses) and external conditions (opportunities and/or threats), and where you want to go – the vision for the future. It’s important that you keep the end or desired result in sight from the start.[citation needed] .

Features of an effective vision statement include:

Clarity and lack of ambiguity
Vivid and clear picture
Description of a bright future
Memorable and engaging wording
Realistic aspirations
Alignment with organizational values and culture

To become really effective, an organizational vision statement must (the theory states) become assimilated into the organization’s culture. Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging others to craft their own personal vision compatible with the organization’s overall vision. In addition, mission statements need to be subjected to an internal assessment and an external assessment. The internal assessment should focus on how members inside the organization interpret their mission statement. The external assessment — which includes all of the businesses stakeholders — is valuable since it offers a different perspective. These discrepancies between these two assessments can give insight on the organization’s mission statement effectiveness.

Another approach to defining Vision and Mission is to pose two questions. Firstly, “What aspirations does the organization have for the world in which it operates and has some influence over?”, and following on from this, “What can (and /or does) the organization do or contribute to fulfill those aspirations?”. The succinct answer to the first question provides the basis of the Vision Statement. The answer to the second question determines the Mission Statement.

Situational analysis

When developing strategies, analysis of the organization and its environment as it is at the moment and how it may develop in the future, is important. The analysis has to be executed at an internal level as well as an external level to identify all opportunities and threats of the external environment as well as the strengths and weaknesses of the organizations.

There are several factors to assess in the external situation analysis:

Markets (customers)
Competition
Technology
Supplier markets
Labor markets
The economy
The regulatory environment

It is rare to find all seven of these factors having critical importance. It is also uncommon to find that the first two – markets and competition – are not of critical importance. (Bradford “External Situation – What to Consider”)

Analysis of the external environment normally focuses on the customer. Management should be visionary in formulating customer strategy, and should do so by thinking about market environment shifts, how these could impact customer sets, and whether those customer sets are the ones the company wishes to serve.

Analysis of the competitive environment is also performed, many times based on the framework suggeste

Strategy formulation

Strategic formulation is a combination of three main processes which are as follows:

Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental.
Concurrent with this assessment, objectives are set. These objectives should be parallel to a time-line; some are in the short-term and others on the long-term. This involves crafting vision statements (long term view of a possible future),
mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.

Marketing action plan

Placement and execution of required resources are financial, manpower, operational support, time, technology support
Operating with a change in methods or with alteration in structure
Distributing the specific tasks with responsibility or moulding specific jobs to individuals or teams.
The process should be managed by a responsible team. This is to keep direct watch on result, comparison for betterment and best practices, cultivating the effectiveness of processes, calibrating and reducing the variations and setting the process as required.
Introducing certain programs involves acquiring the requisition of resources: a necessity for developing the process, training documentation,process testing, and imalgation with (and/or conversion from) difficult processes.

As and when the strategy implementation processes, there have been so many problems arising such as human relations, the employee-communication. Such a time , marketing strategy is the biggest implementation problem usually involves , with emphasis on the appropriate timing of new products. An organization, with an effective management, should try to implement its plans without signaling this fact to its competitors.[3]

In order for a policy to work, there must be a level of consistency from every person in an organization, specially management. This is what needs to occur on both the tactical and strategic levels of management.

 References
David, F Strategic Management, Columbus:Merrill Publishing Company, 1989
Lamb, Robert, Boyden Competitive strategic management, Englewood Cliffs, NJ: Prentice-Hall, 1984
Sweet, Franklyn H. Strategic Planning… A Conceptual Study, Bureau of Business Research, The University of Texas, 1964
Chandler, Alfred Strategy and Structure: Chapters in the history of industrial enterprise, Doubleday, New York, 1962.
Selznick, Philip Leadership in Administration: A Sociological Interpretation, Row,eterson, Evanston Il. 1957.
Ansoff, Igor Corporate Strategy McGraw Hill, New York, 1965.