Economics of Strategic Management
In any company, care should be taken to ensure quality strategic management takes place; the primary goals, objectives, and initiatives of a company should be identified and plans to achieve these benchmarks put in to place. Generally, the highest-ranking members of management work to develop these goals and move them forward on behalf of the owners or stockholders of the corporation. This process is not a fixed one; it is completed regularly and routinely to ensure the best possible course of action has been implemented.
Part of strategic management relies on the incorporation of economics. By understanding and applying the various economic forces that can impact the likelihood of achieving one’s goals or objectives, one is more likely to be successful. Some factors that need to be considered include the overall status of the economy at large, including whether it is in a recession or period of prosperity, for example; applicable interest rates; monetary policies that exist within the company and with regards to their various business dealings; the fiscal policies of the company; and decisions on pricing structures. Long-range strategic planning should consider the wide array of variables in interest rates, inflation, and the value of various forms of currency in order to develop alternative approaches and plans that can be implemented if the economic situation changes. It is also important to consider both the local economy and the economy at large, whether it is one’s community, nation, or global market, as factors in each of these locations can have an impact on the economic success of an existing strategic plan.