Strategic Management and Governance

MB601.E Strategic Management

Discussion Question 1-1

Date: 05/01/2017

Profitability (Net profits):

One of the most important strategies of any firm is to increase its net profit. An advantage of increasing the net gain is that the company becomes more attractive to any potential investors, but to get to this point, it is important that a company set realistic goals in the annual business plan. If the targets are too conservative or too ambitious, it could hurt the enterprise. The setting of net profit goals should also not just be a numbers mark where it makes sense on paper, but it should also be an attainable goal for the staff without drastically affecting the way they work. The objective would be to set an ambitious goal and to trim it down to where it is acceptable to all parties.    

Efficiency:

Efficiency is not just looking at the reduction or the lowering of costs, but looking at the overall performance and effectiveness in providing operational excellence. It is the comparison of a firm's current production with the available resources at hand and figuring out if the company can increase its output with the same available resources. The advantage of having an efficiency goal is that it forces the company to reevaluate the way it is doing business in meeting the companies overall goals.

Growth:

The process of improving a business success by boosting its revenue and minimizing its costs. An advantage of having a growth target it that it keeps top management and the company focused on creating more shareholder value by generating more sales and increasing its bottom line. By thinking more out of the box and revising the way the company sells to customers and how the company penetrates the market can lead to a successful growth strategy.

Shareholder wealth:

Increasing shareholder wealth is the primary goal for any corporation as the measure of a companies value is directly linked to the profit it generates for its shareholders. An advantage of increasing shareholder wealth is that it leads to monetary expansion and wealth creation for its shareholders, creating more dividend income for the shareholders and an ever growing stock price. Companies can do this by building their credit and boosting their stock prices which in turn gives them access to more capital with favorable loan terms.

Utilization of resources:

Properly utilizing all available resources can be an advantage as a companies become more focused on ensuring the projects selected adds value and have a good return on investment. The objective is to utilize all available assets effectively to maximize customer service levels thereby creating an advantage over the competitors.

Reputation:

Building a strong reputation as a trusted brand and company that people can rely on is essential and critical to the overall success of a company. Customers today are more inclined to support businesses that stand for something and knowing who they are as a brand. The advantage of having a good reputation strategy is that it does not solely focus on making money but also on being sustainable. All of this leads to better customer retention and loyalty towards the company which could be powerful in becoming a ‘top" firm.

Contributions to employees:

The saying "happy workers are productive workers." is an understatement. Having a reliable employee contribution strategy that ensures employees are motivated will ultimately lead to business growth and giving the company an advantage or edge over its competitors. The strategy should not only take wages into consideration but also look at career advancement and development along with making sure that there is provision made for the different mixed multi-generational environments.