Blog of Strategic,General and Financial Management (English/Spanish)

Strategycorner is now expanding its content to include posts about General Management, Financial Management, Finance Transformation, Marketing and HR Management. Posts will be published in English or Spanish.

At the end of the blog there are different charts about Strategic Management in Spanish. In the archive area you could find a lot of posts about strategy and its execution in English/Spanish.

Jesús Peral
Executive MBA IE Business School, Madrid,Spain

Master in Strategic Management
IDE-CESEM Business School, Madrid, Spain

Find at the end of blog all charts related to Strategic Management topics commented in the posts

Mapa Estratégico Genérico/Strategy Map

Mapa Estratégico Genérico/Strategy Map
Mapa Estratégico Completo

Modelo de Dirección Estratégica/Strategic Management Model

Modelo de Dirección Estratégica/Strategic Management Model
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lunes, 18 de mayo de 2015

Management control and its impact on strategy and performance

To maintain a competitive position a company has to generate the information necessary to define and implement its organizational strategies. Strategy is the connection between company´s goals and objectives and the operational activities executed to achieve corporate performance and growth. In the current global environment it is indispensable to be sure that such connection exists.

In my view, strategy is the art of creating value. It provides the conceptual models, intellectual framework and governing ideas that allow the leaders of the company to identify opportunities for bringing value to customers and for delivering such value in terms of profit. Based on this, strategy is the way a company defines its business and put together the main two resources that really matter in the current economy: knowledge and relationships or in other words, the competencies of the organization and its customers.

The achievement of a strategy takes back in consideration the different management horizons. At strategic level, settles the goals and objectives in the long term elaborating the strategic plan. At the operational level, we can place the budgetary process which translates into practices the established goals and objectives in the short term by preparing the budget and operational plan.

The management control acts in both horizons. The management control allows the leaders to perform strategic analysis on issues such as, determining the core competencies and constraints from a cost-benefit perspective and assessing the positive and negative financial and non-financial factors of strategic and operational plans.

Within the organizations the performance measurement has been dominated by management control processes focused on control and then improvement. Performance measures goes beyond the boundaries of traditional management accounting and could be achieved by finance teams having better understanding of the operational activities of the business and building this understanding into the design of new control processes, linking the control systems with the business strategy and focusing on the external environment within the business operates, through a value chain based approach.

The strategy of the organization has to be appropriate for its resources and objectives. The process involves matching the company´s strategic advantages to the business environment the organization is facing. A critical objective for an overall strategy is to put the company into a position to conduct its mission effectively and efficiently. A good corporate strategy should integrate the organizational goals, policies and tactics into a whole and should be based in business realities. With this regard the performance measurement system should encourage the leaders to act in the best interest of the organization supporting the mission and competitive strategies of the company.

As a conclusion I can say that management control is a core business function and should exist as a separate discipline within management field.

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