Importance of Strategic Management (Research Paper Sample)

IMPORTANCE OF STRATEGIC MANAGEMENT
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Strategic Management Stages
Introduction
Management is part of any business and is the key to its success. Lack of proper management can lead to business failure. For any business to succeed, it must have goals and objectives to be accomplished. The business goals and objectives can only be attained through strategic management. Strategic management is therefore a broad collection of day-to-day business activities and processes that companies use to systematically organize and bring into line resources and actions with a specific objective, mission and vision throughout the whole organization. Strategic management is therefore important for any organization or company to succeed in its business operations. In this work, I am going to discuss the International Lease Finance Corporation and its strategic management activities.
International Lease Finance Corporation is among the largest lease finance companies in the world. It deals with leasing of aircrafts such as the Airbus and Boeing to airlines all over the world. The company was established in 1973 and later was acquired by the International insurance giant, in 1990. The company has maintained its position in offering high quality services to its potential customers in four decades. The company has owned and managed around 1000 aircrafts within a variety of leasing programs.
The company works with approximately 200 airlines in more than 85 countries. The business is wholly owned by international insurance giant, which is an international insurance company that serves almost 130 countries in the world. The company’s headquarter in California. International Lease Finance Corporation is aimed at becoming more global while it serves customers from all over the world with high standards of quality services. It is therefore shortlisted among the top companies in the aircraft leasing industry.
Strategic Analysis Procedure
Once a company has specified its goals and objectives, it starts to set a strategic plan to attain those goals. Changes in the external factors often bring new opportunities and ways to attain the company goals. An environmental scan is normally conducted to recognize the existing opportunities. It is necessary for the company to know its own strengths and weaknesses in order to choose the best strategy for attaining the best results.
Stages of the Strategic Analysis
There are three main stages involved in the strategic analysis stage of the strategic management process. These are the input stage, the matching stage and the decision stage.
The Input Stage
The input stage comprises of three sub-stages, which are evaluating the internal organizational factors, the competitive factors and evaluating the external factors of the organization. This stage requires essential input information for the matching and decision stage, strategists for quantifying objectivity early in the process and good perceptive judgment. For example, in the International Finance Lease Corporation, the company normally evaluates its employees to make sure that they work as required and how other firms in the industry operate their businesses in order to make the best strategy for its business.
The Matching Stage
The stage involves comparing and matching the organizational internal factors such as the opportunities, resources, and skills with the external factors. The matching stage contains four different types of stages. First, Strengths-Opportunities stage which is the use of company’s internal strengths with an aim of taking advantage of the available external opportunities. The second stage is the weaknesses- opportunity, which deals with trying to take advantage of the available external opportunities with an aim of improving the company’s internal weaknesses. The third stage is the strengths – threats.
This stage is concerned with reducing the external threats effects by making good use of the company’s strengths. The last sub-stage in the matching stage is the weaknesses- threats, which consist of trying to avoid the external threats and reduction of the company’s internal weaknesses. In general, the matching stage deals with matching the key organizational factors to formulate the alternative strategies and hence determining the best strategy for the organization. The international finance lease corporation normally looks at the level of its credit worthy in determining the best strategy to be implemented in the business.
The Decision Stage
In this stage, procedures are designed to decide on the virtual attractiveness of the possible alternative actions. The stage involves a number of steps, which include noting down the internal and external and opportunities, and threats of the company. Weights are allocated to each of them in examining the matching stage in order to decide which strategy the company should consider to implement. Moreover, the attractiveness score is attached thus enabling comparison the total score of attractiveness and lastly deciding on the overall score of attractiveness In International Finance Lease Corporation, the company always computes the total attractiveness in deciding on the best strategy to be implemented.
Steps of the Strategic Analysis Process
Problem Identification and Definition
The first thing is to define the problem trying to be solved. Once the problem is well defined and understood through the analysis, it enables the business to focus on the specific areas involved in attaining the goals and objectives. Poor problem definition makes many companies to focus on the whole organization which makes it hard to achieve the desired objective. Problem definition has been pertinent to the International Finance Lease Corporation. Thanks to defining its problems and knowing well what is supposed to be done can contribute to the company’s success significantly (Acharjee, 2013).
Gathering Information
Ones the problem is well defined, the process of data collection and carrying out relevant research concerning the defined problem is done. The information collected will assists in identifying the strengths and weaknesses of the issue at hand. Information gathering can be done through observing past studies concerning the issue and their conclusions. This approach enables the business to identify the appropriate strategy to be implemented in solving the problem. International Finance Lease Company normally conducts some research to get information on the problems they face that need to be solved. In this way, the company gets to know the probable cause of the problem, its effects, and the appropriate ways of solving the problem at hand.
Defining Potential Opportunities and Threats
After getting enough information on the issue to be solved, the next step is to define the potential opportunities and threats that are likely to be within the scope of the issue trying to be solved. The best way of doing this is by assembling a group of people in the organization with appropriate skills concerning the departments that will mostly be involved in managing the issue and implementing the solution. This team will then assist in recognizing the opportunities and threats to the organizational effort that the company faces. In knowing its opportunities and threats, International Finance Lease have found it easy to solve some issues affecting the business. The company has been able to enjoy full utilization of its opportunities and deal with the available threats, which have contributed to the company’s success.
Analysis Reviews
After knowing the company’s strengths and weaknesses it is important to use the information from the analysis to determine ways in which the company can make the best use of its strengths, remedy the weaknesses and fully utilize the available opportunities. This has also been an important key to success of the company.
The Strategy Formulation Processes
There are two main processes involved in formulating a strategy. The two are continuous implementation and environmental scanning. The environmental scanning process is concerned with concentrating on the external environmental factors that can affect the company’s business operation. The continuous implementation process on the other hand focuses on implementing some necessary sections of the company’s strategy to undertake the next step in the strategy formulation. For example, the international lease finance company focuses on its suppliers to make sure they supply materials at the right time in order for the business activities to be conducted in time.
The Steps in Strategy Formulation
Evaluating the Company’s Environment
Under this step, both the company’s external and internal environment is observed for determination of the company’s strengths and weaknesses. Based on the discovered strengths and weaknesses, the company determines the probable strategies to be formed in dealing with its competitors and other external factors. International Lease Finance Corporation regularly evaluates its employees and the suppliers to determine respective strengths and weaknesses in and thus deciding which strategy should be formed.
Setting Quantitative Targets
This step involves setting quantitative targets to be met through some of the company’s set objectives. For example, the International Lease Finance Corporation’s target is to become a worldwide leader and serve customers all over the world, thus meeting its objective of providing its customers with high-quality services.
Aiming in Context with the Divisional Plans
In this step, the contributions prepared by all departments in the company are recognized and consequently strategic ...