Why Strategic Management is So Important

Today management is needed in all types of organizations regardless of their size, at all organizations levels and in all work areas. Because management is universally needed, improving the way an organization is managed is one of the keys to success, and the importance of strategic management to achieve this goal is recognised around the world. Importance Like mentioned before, strategic management can and will influence the organizations performance. Thats why you can have organizations that face the same environmental conditions, but with different performance levels and considering recent studies, there is a wide belief that organizations that use strategic planning usually have better performance that the ones that dont. Another reason that supports the importance of strategic management has to do with the continually changing situation that organizations face these days, because it helps managers to examine relevant factors before deciding their course of action, thus helping them to better cope with uncertain environments. Finally, strategic management is important most organizations are composed by diverse divisions and departments that need to be coordinated, else there would be no focus on achieving the organization's goals.
Why is strategic management so important? According to Hunger & Wheelen, Organizations that engage in strategic management generally outperform those that do not. The attainment of an appropriate match or fit between an organizations environment and its strategy, structure, and processes has positive effects on the organizations performance. A firm cannot afford to follow intuitive strategies once it becomes large, has layers of management, or its environment changes substantially. As the worlds environment becomes increasingly complex and changing, strategic management is used by todays corporations as one way to make the environment more manageable. Consistent with the importance of strategic management is the importance of staying informed on demographic, cultural, and political changes that affect a corporations business around the world. In the brief interview below, a management consultant explains how corporate strategy should reflect changes in the worlds demographic composition. That leaves to question: what information is needed for the proper formulation of strategy? Why? In order to properly formulate strategy, it is essential to have information on the important variables in both the external and internal environments of the corporation. This includes general forces in the natural and societal environment as well as the more easy-to-identify groups, such as customers and competitors in the task environment. A corporation needs to have this information in order to identify a need it can fulfill via its corporate mission. It is also important to have information on the corporations structure, culture, and resources. A corporation needs to have this information in order to assess its capabilities to satisfy a customers need by making and/or distributing a product or service. Information on both the internal and external environments can also help a corporation to predict likely opportunities and threats. Long-term strategies can be designed with these in mind.

the nature of SHRM The concept of SHRM is complex and somewhat amorphous. To understand SHRM it is necessary to analyse its elements, defne its aims and examine its meaning. The elements of SHRM Three key elements of SHRM have been described by Mabey et al (1998: 2425): Internal processes of organizational change are caused or necessitated 1 by processes of external environmental change. Under these new environmental pressures (competition, technology, 2 clients demands and so on) management must develop new and appropriate strategies to defend or advance corporate interests. This strategic response in turn requires organizational responses. 3 If the organization is to be capable of achieving or delivering the new strategy it will be necessary to design and implement changes in any or all aspects of human resource structures and systems.

Managing IHR activities:

When compared with domestic human resource management, IHRM requires a much broader perspective on even the most common HR activities. This is particularly so for HR managers operating from a MNCs headquarters (HQ). The number and variety of IHRM activities are daunting. International HR managers must deal with issues as varied as international taxation; international relocation and orientation; various other administrative services for expatriates; selecting, training and appraising local and international employees; and managing relations with host governments in a number of countries around the world. Even when dealing with one particular HR function area such as compensation, the international HR manager is faced with a great variety of national and international pay issues. For example, while dealing with pay issues, the HQ-based HR manager must coordinate pay systems in different countries with different currencies that may change in relative value to one another over time. An American expatriate in Tokyo who receives a salary of $100,000 may suddenly find the buying power of that salary dramatically

diminished if the Japanese yen strengthens in value relative to the US dollar. A US dollar purchased 248 yen in 1985, but less than 110 yen in 2000. In the case of fringe benefits provided to host company employees, some interesting complications might arise. For instance, it is common in the United States to provide health insurance benefits to employees and the employees family, which usually means spouse and children. In some countries however, the term family may include a more extended group of relativesmultiple spouses, aunts, uncles, grandparents, nephews, and nieces. How does the firms benefit plan deal with these different definitions of family? A final aspect of the broader scope of IHRM is that the HQ-based manager deals with employee groups that have different cultural backgrounds. The HQ manager must coordinate policies and procedures to manage expatriates from the firms home country (parent country nationals, PNCs), host-country nationals (HCNs), as well as third country nationals (TCNs, e.g. a French manager working for an American MNC in the firms Nigerian subsidiary) in subsidiaries around the world. Although such issues are important for the HQ-based manager, they are also relevant to the HR manager located in a subsidiary. This manager must develop HR systems that are not only acceptable to the host country but also compatible with company-wide systems being developed by his or her HQ-based counterpart. These policies and practices must effectively balance the needs and desires of local employees, PCNs and TCNs. It is at the subsidiary level that the increased involvement of IHRM in the personal lives of employees becomes particularly apparent. It is not unusual for subsidiary HR managers to be involved in arranging housing, healthcare, transportation, education, and recreation activities for expatriate and local staff. IHRM activities are also influenced by a greater number of external forces than are domestic HR activities. The HQ-based manager may have to set equal employment opportunity (EEO) policies that meet the legal requirements of both the home country and a number of host countries. Because of the visibility that foreign firms tend to have in host countries (especially in developing countries), subsidiary HR managers may have to deal with ministers, other political figures, and a great variety of social and economic interest groups than would normally be encountered in a purely domestic HRM.

Changing Demographics of Workforce:- Changing workforce demographics concerns dual career couples, couples where both partners are actively pursuing professional careers. Upper level positions need experience in a variety of roles in different organisational units. Nowadays young employees are growing. Infosys has employees whose average age is Just 25 years. Certain facilities such as dormitories, gymnasium etc. needed to be provided to the young employees for motivating them. India's young people can be an asset to the global economy. The rich countries will face a shortage of working age people while India will have a surplus. The other demographic changes in the workforce are increasing number of working mothers, a steady decline of blue collar employees and increasing awareness and education among workers. All theses have their own implications for H.R. managers.

CHANGED EMPLOYEE EXPECTATIONS With the changes in workforce demographics, employee expectations andattitudes also have shifted. Traditional allurements such as job security, attractive remuneration, housing and the like do not attract and motivate todays workforce.Employees demand empowerment and expect equality with the management.Previous notions on managerial authority are giving way to employee influenceand involvement alongwith mechanisms for upward communication and dueprocess. LOSS OF JOY AND PLEASURE The HR manager of today is an unfortunate individual. He/she has been deniedthe joy and pleasure of hiring and managing thousands of employees under oneroof. Which HR manager of today claims to have experienced the real HRchallenges of yester years? Which HR manager today has received bricks,encountered menacing body language of irate workers, faced strikes, sawlockouts, witnessed vehicles being burnt, executives being lynched, saw graffition the walls in which his own name is dragged and maligned by militant unionleaders? The HR manager of today is a poor legacy of the one lived in the past.With regard to the HR function, the focus in the coming years would be on thefollowing lines:

HRM to become integral of business,

Empowerment of employees,

Focus on productivity through team building,

Dynamic/flatter/matrix organizational structures,

People-sensitive management styles and practices,

Management of the changing workforce skill/sex/turnover,

Managing the changing work diversification change of priorities, Efficient use of information technology,

Strengthening organizational communication,

Greater focus on man-machine interface,

Institutionalizing employee involvement,

Sustaining individual effectiveness through performance feedback andcounselling