When it comes to the nature and the scope of business, it looks like it is very wide. It covers all the activities related to production and distribution of goods and services from the place productions to the final consumers with an aim to earn profit. There are two types of business activities. These Business Activities also known as business components. These components of business are actually define the scope of business to us. So lets talk about the scope of business organization with the help of these components.
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Today business has great importance in our lives, and we can easily see that people who own business are much successful in their lives. Before talking about the importance of business, lets talk about business first. The word “business” means the state of being busy. So “business” means all those human activities which are related to the production and distribution of goods and services with the object of earning profit. E.g. Farmer, Fisherman, Manufacturer.
The external factor evaluation matrix is prepared by considering certain key external factors. These key external factors need to be properly summarized in order to develop an effective external factor evaluation matrix. The information related to economic, social, demographic, cultural, technological, legal, political, governmental & environmental variables is summarized & evaluated by the strategists in the preparation of External Factor Evaluation matrix.
Internal Factor Evaluation (IFE) Matrix is important for conducting internal strategic management Audit. The strengths & weaknesses of the organization in its different functional areas are highlighted through the IFE matrix. Moreover the relationship between different strengths & weaknesses of functional areas of the organization are also identified & evaluated by IFE matrix. There is no perfect scientific approach for developing an IFE matrix so intuitive judgments are helpful in this regard. There are certain factors that are used in IFE matrix which are much more important to be understood than the actual numbers. The development process of IFE matrix is similar to External Factor Evaluation Matrix and is completed in the 5 steps.
Marketing plays very important role for the success of the organization & following are seven functions of marketing which should be understood by strategists in order to point out the strengths & weaknesses of the organization more effectively.
Functions of finance play an important role for an organization to promote its strengths & improve its weakness in order to become successful. There are number of functions of finance, which should be described well.
Internal Audit / Internal strategic management audit is process in which the information about key internal factors is gathered & compiled in order to ascertain the strengths & weaknesses of the organization in the functional areas of marketing, management, finance/accounting, production/operations and research & development etc. This internal strategic management audit is conducted for the assistance of the organization to positively utilize its strengths for the success while improving its identified weaknesses.
Process of Conducting an External Audit: The identification & evaluation of those trends & events that are beyond the control of an organization is called external strategic management audit or external audit, e.g. population shift to sunbelt, increased foreign competition, information technology & computer revolution etc. As compare to Internal Audit, external audit is bit difficult to do so as it cover a lot amount of factors to analyzed. The external audit points out the important opportunities & threats that comes in front of the organization and therefore the management of the organization should develop proper strategies to avail those opportunities and to reduce of avoid the effects of threats.
There are some of basic strategic management key terms that need to be considered at the beginning in order to completely understand strategic management. These strategic management key terms are eight in numbers and are the base of strategic management.
There are number of benefits of strategic management and now strategic management has become the necessity of the organization to become successful in the competitive world. There are many potential benefits that are associated with the strategic management.