Monday, November 4, 2013

STRATEGIC FRAME WORK...LONG TERM TANGIBLE VALUE CREATION

Only participation of employees into the strategic discussion forum would not be sufficient unless their recommendations and their thought process and ideas are taken into real shape within the organizational strategy frame work. We cost accountants play an integral part in cost management and strategic management hence we need to get innovation and thoughts into the strategic frame work. A major aim of the process is to achieve the understanding of and commitment from all managers and employees. There is an requirement of commitment and participation from every employees into the strategic decision making process. If they are unheard and their recommendations are not taken into account then a time will come when they will not be committed into the objective achievement of the organization. In my research I find that there is an substantial financial and non financial development and achievement by adopting the strategic frame works. Balanced score card and Six Sigma can help an organization to new heights.

In my research I have found that by adopting Balanced score card and Six Sigma the strategic frame work helps an organization in the flowing ways:
:
1. It allows for identification, prioritization, and exploitation of opportunities.
2. It provides an objective view of management problems.
3. It represents a framework for improved coordination and control of activities.
4. It minimizes the effects of adverse conditions and changes.
5. It allows major decisions to better support established objectives.
6. It allows more effective allocation of time and resources to identified opportunities.
7. It allows fewer resources and less time to be devoted to correcting erroneous
or ad hoc decisions.
8. It creates a framework for internal communication among personnel.
9. It helps integrate the behavior of individuals into a total effort.
10. It provides a basis for clarifying individual responsibilities.
11. It encourages forward thinking.
12. It provides a cooperative, integrated, and enthusiastic approach to tackling problems and  opportunities.
13. It encourages a favorable attitude toward change.
14. It gives a degree of discipline and formality to the management of a business

Now in my research I have also found that why companies fails to achieve the strategic objectives:

1.     Lack of knowledge or experience in strategic planning—No training in strategic planning.
2.     Poor reward structures—When an organization assumes success, it often fails to reward success. When failure occurs, then the firm may punish.
3.     Firefighting—An organization can be so deeply embroiled in resolving crises and firefighting that it reserves no time for planning.
4.     Waste of time—Some firms see planning as a waste of time because no marketable product is produced. Time spent on planning is an investment.
5.     Too expensive—Some organizations see planning as too expensive in time and money.
6.     Laziness—People may not want to put forth the effort needed to formulate a plan
7.     Content with success—Particularly if a firm is successful, individuals may feel there is no need to plan because things are fine as they stand. But success today does not guarantee success tomorrow.
8.     Fear of failure—By not taking action, there is little risk of failure unless a problem is urgent and pressing. Whenever something worthwhile is attempted, there is some risk of failure.
9.     Overconfidence—As managers amass experience, they may rely less on formalized planning. Rarely, however, is this appropriate. Being overconfident or overestimating experience can bring demise.  Forethought is rarely wasted and is often the mark of professionalism.
10.  Prior bad experience—People may have had a previous bad experience with planning, that is, cases in which plans have been long, cumbersome, impractical, or inflexible. Planning, like anything else, can be done badly.
11.  Self-interest—When someone has achieved status, privilege, or self-esteem through effectively using an old system, he or she often sees a new plan as a threat.
12.  Fear of the unknown—People may be uncertain of their abilities to learn new skills, of their aptitude with new systems, or of their ability to take on new roles.
13.  Honest difference of opinion—People may sincerely believe the plan is wrong. They may view the situation from a different viewpoint, or they may have aspirations for themselves or the organization that are different from the plan. Different people in different jobs have different perceptions of a situation.
14.  Suspicion—Employees may not trust management

This the main reason that  when managers and employees understand what the organization is doing and why, they often feel they are a part of the firm and become committed to assisting it. For this their innovative ideas and thoughts should be included in the strategic frame work. They should be included in the decision making process and equal value addition should be gives to their thoughts so that the organization can get into a bonded internally to achieve the strategic objective of the organization.

Strategic management policies helps an organization helping firms avoid financial demise, strategic management offers other tangible benefits, such as an enhanced awareness of external threats, an improved understanding of competitors’ strategies, increased employee productivity, reduced resistance to change, and a clearer understanding of performance–reward relationships. Moreover Businesses using strategic-management concepts show significant improvement in sales, profitability, and productivity compared to firms without systematic planning activities. This achievable only when the organization understands that employees are equally important into the part of strategic frame work. Balanced score card helps to bridge the gap of employees and internal strategic frame work. Firms that have nurtured their managers and employees, shared organizational objectives with them, empowered them to help improve the product or service, and recognized their contributions can turn to them for help in a pinch because of this interaction. The 4 pillars of balanced score card helps to design the path of achieving the strategic objectives of the organizations. The reason behind why every firm is not successful is that Balanced score card and Six sigma are not applied simultaneously into the system. Companies which apply various cost management and strategic tools into their business operations are the biggest gainers in the long term. We cost accountants are very much well equipped with these tools hence strategy framework designed by us are efficient enough to create long term  tangible value of an organization. 
Written By Indranil Kripabindu Sen gupta & Hardik Bhatt

0 comments:

  © Blogger template 'Minimalist H' by Ourblogtemplates.com 2008

Back to TOP