UNIT 01…CESM [Link]
com/doc/24398947/Strategic-Management-Final-Notes
What is Corporate Governance?
Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. I
carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees
company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals.
Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in
corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organiza
be healthy and there should be no conflict between the two. The owners must see that individual’s actual performance is according to th
performance. These dimensions of corporate governance should not be overlooked.
Corporate Governance deals with the manner the providers of finance guarantee themselves of getting a fair return
on their investment. Corporate Governance clearly distinguishes between the owners and the managers. The
managers are the deciding authority. In modern corporations, the functions/ tasks of owners and managers should be
clearly defined, rather, harmonizing.
Corporate Governance deals with determining ways to take effective strategic decisions. It gives ultimate authority
and complete responsibility to the Board of Directors. In today’s market- oriented economy, the need for corporate
governance arises. Also, efficiency as well as globalization are significant factors urging corporate governance.
Corporate Governance is essential to develop added value to the stakeholders.
Corporate Governance ensures transparency which ensures strong and balanced economic development. This also
ensures that the interests of all shareholders (majority as well as minority shareholders) are safeguarded. It ensures
that all shareholders fully exercise their rights and that the organization fully recognizes their rights.
Corporate Governance has a broad scope. It includes both social and institutional aspects. Corporate Governance
encourages a trustworthy, moral, as well as ethical environment.
Benefits of Corporate Governance
1. Good corporate governance ensures corporate success and economic growth.
2. Strong corporate governance maintains investors’ confidence, as a result of which, company can raise
capital efficiently and effectively.
3. It lowers the capital cost.
4. There is a positive impact on the share price.
5. It provides proper inducement to the owners as well as managers to achieve objectives that are in interests
of the shareholders and the organization.
6. Good corporate governance also minimizes wastages, corruption, risks and mismanagement.
7. It helps in brand formation and development.
8. It ensures organization in managed in a manner that fits the best interests of all.
Strategic Management - An Introduction
Strategic Management is all about identification and description of the strategies that managers can carry so as to achieve better perform
a competitive advantage for their organization. An organization is said to have competitive advantage if its profitability is higher than the
profitability for all companies in its industry.
Strategic management can also be defined as a bundle of decisions and acts which a manager undertakes and which decides the result
firm’s performance. The manager must have a thorough knowledge and analysis of the general and competitive organizational environm
to take right decisions. They should conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should m
possible utilization of strengths, minimize the organizational weaknesses, make use of arising opportunities from the business environme
shouldn’t ignore the threats. Strategic management is nothing but planning for both predictable as well as unfeasible
contingencies. It is applicable to both small as well as large organizations as even the smallest organization face competition and, by for
and implementing appropriate strategies, they can attain sustainable competitive advantage.
Strategic Management is a way in which strategists set the objectives and proceed about attaining them. It deals with
making and implementing decisions about future direction of an organization. It helps us to identify the direction in
which an organization is moving.
Strategic management is a continuous process that evaluates and controls the business and the industries in which
an organization is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential
competitors; and then reevaluates strategies on a regular basis to determine how it has been implemented and
whether it was successful or does it needs replacement.
Strategic Management gives a broader perspective to the employees of an organization and they can better
understand how their job fits into the entire organizational plan and how it is co-related to other organizational
members. It is nothing but the art of managing employees in a manner which maximizes the ability of achieving
business [Link] employees become more trustworthy, more committed and more satisfied as they can co-
relate themselves very well with each organizational task. They can understand the reaction of environmental
changes on the organization and the probable response of the organization with the help of strategic management.
Thus the employees can judge the impact of such changes on their own job and can effectively face the changes.
The managers and employees must do appropriate things in appropriate manner. They need to be both effective as
well as efficient.
One of the major role of strategic management is to incorporate various functional areas of the organization
completely, as well as, to ensure these functional areas harmonize and get together well. Another role of strategic
management is to keep a continuous eye on the goals and objectives of the organization.