Control Function of Strategic Management
Identify and briefly explain the steps that are involved in the controlling function of management. Which, in your view, is most important? Why?Control Function of Strategic Management
200 words, no references
Every business, regardless of its size and industry, needs to have a financial controls policy in place. Its role is to provide guidance on the keeping of financial accounts and records, payments, income and procedures that are implemented to manage the company’s finances. Such a policy not only ensures the accuracy of reporting but also helps prevent and eliminate fraud and protects the organization’s physical and intangible resources. In the long run, it may contribute to the growth of your business and improve its bottom line.
Strategic Management at a Glance
Any business owner needs to have a good understanding of financial controls, which play a key role in strategic management. The strategic management process involves the continuous planning, analysis, monitoring and implementation of a company’s initiatives and goals. Think of it as a roadmap that shows how to reach your objectives and improve efficiency within the organization.
The end goal of strategic management is to help companies achieve and maintain a competitive advantage. It shows where your company is right now, what its goals are and what steps are needed to get there.
What Are Financial Controls?
Ever wonder which strategy do companies use for their financial benefit? As part of their strategic management plan, organizations implement various strategies to allocate resources more efficiently and reduce unnecessary expenses. They also check their financial statements regularly to identify losses and find new opportunities for growth and expansion. Financial controls play a key role in these processes.
At the most basic level, financial controls include the policies and processes that companies implement to ensure that their resources are properly monitored, directed and measured. These depend largely on the organization’s size, industry and resources. A startup, for example, will have different financial controls than a multinational corporation.
In general, companies start with an initial analysis of their finances. During this stage, managers evaluate the cash flow statement, the balance sheet and profit and loss reports. Next, they simulate real-life situations and create forecasts to identify the main factors that may influence their revenue, expenditure and overall financial performance.
This information provides valuable insights based on which managers can develop policies and procedures to grow their business and reach their financial goals. It also helps ensure that everything is running well and can detect specific problems before they escalate. Furthermore, companies may use financial controls to implement preventive measures, determine the best course of action and identify areas of improvement.
There are different types of control that organizations can use to ensure business growth and optimal performance. While financial controls focus on a company’s finances and accounting procedures, strategic control involves setting performance standards, assessing and improving a company’s current performance and setting goals for long-term business growth.
Your business may also implement operational control policies and procedures. The main difference between strategic control and operational control is that the first one helps track your strategy as it’s being implemented, while the latter focuses on execution.
For example, operational control policies can help determine whether your company’s resources are being utilized efficiently, the expenses associated with your new product line are in line with the cost estimates, your products meet the desired requirements and so on.
A strategic management plan can include different types of organizational controls depending on your company’s short- and long-term goals. Financial controls, for example, can help you detect potential issues in your books and deviations in the budget. They also ensure that relevant accounting standards are implemented throughout the organization and that your business is operating efficiently. Strategic controls, on the other hand, can help you determine whether specific processes or strategies are working