Strategies in successful management of a building society:and their application to Equity Building Society, Kenya.
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There is no uniform definition of strategy in business but in military terms it means overall planning of operations into favourable position for fighting. In business many writers on management have given several definitions which can be summarised by Chandler's description of strategy as the determination of the basic long term goals and objectives of an enterprise and the adoption of courses of action and allocation of resources necessary for carrying these goals". In other words, business strategy is about objectives, decisions, planning and allocation of resources to achieve objectives. Some writers have defined it simply as "The plan for getting the best return from resources" or "The formula for achieving success". BUSINESS OBJECTIVES Business objectives are normally to satisfy needs in a constituency at a profit for the interested parties. Lately "the parties" have included workers, government, suppliers and the customers The object of strategic management of business therefore must be to make maximum use of its resources to satisfy the need of its customers with maxim profit. Meeting Customers’ Needs Before meeting market needs management must clarify the business they are in, its special requirement, and their advantages and then plan to meet the needs from the available resources. It 18 therefore essential to have information on: Customers interests and the benefit they expect from the business; Maturity of the market and products; Profit potential; Penetration of the market; Areas where business may be vulnerable; Areas of competitive advantage. STRATEGIC MANAGEMENT OF RESOURCES In strategic management of business resources are people, money, information, technology, organisation, products, physical materials like inventory, equipment and structures. For business, to achieve optimum results it must make maximum use of its resources. Iaccocca believes, people are the key to business success. Hence management of people is a crucial element of strategic planning in business. Their recruitment, posting, motivation, productivity and support of the firm must form a major part of corporate strategy. Money is the lifeblood of business. Hence the quickest way to kill a business would be to place it under a manager lacking in imagination and unable to assess its financial requirements and organise to meet them. Business must then have a clear strategy for financing its operations. financing but also many problems. There are several methods of Information may be underplayed in ranking of business resources. In practice it should follow people in importance. For strategic management to be effective, business must have accurate information on its resources , and the environment. From these it can assess its strengths, weaknesses, threats and opportunities. It is therefore essential for business to have an internal information gathering system and an internal delivery machinery. Technology has had the greatest contribution to all spheres of human progress in the last 40 years. In banking the use of computers has made Labor-i.ous accounting systems automatic routine resulting in high efficiency. Automatic teller machines have made it possible to serve customers 24 hours a day at convenient locations while fund transfer systems have made it possible to move funds among institutions at incredible speeds. Hence in these days of fast technological change business must look to technology for efficiency and productivity. Organised management systems has made running of business smooth. Organised systems with manuals and other forms of instructions are easy even for the mediocre to follow. If they form a part of business culture they are a valuable asset. Physical resources are the tangible structures, products, and equipments that service all the other resources. Their availability and fitness make it possible for the others to attain corporate objectives. These comprise, premises, stationery, office equipment and motor vehicles. On their maintenance and deployment stand the physical structure of the business. Products for a building society are the services it renders to its members. Since a society does not sell physical materials its services are the only products. Rendering the very best service' in the industry should then be among its top strategy. Management leadership has been placed by writers on management at the core of strategic management. Plans, decisions and reviews, evolve around the leadership for policy decisions, allocation of resources, implementation and standards. Though not ranked at the top, it is one resource that differentiates existence and success. DECISIONS AND ALLOCATION OF RESOURCES In the process of reaching decisions on deployment of strategic business resources management should after clarifying the aims, obtain information on the available resources, describe what should constitute success, and then examine the options open to it. Working from factual data business should select the suitable op t ions-con the basis of:-. Minimum risks in loss of resources; Maximum number of opportunitiesj Maximum return on resources employed; Area of maximum need of products offered by the business; Whether business resources match the need. Having selected the best options open to it business should plan its short term and long term strategies to realise the best results. Planning In planning it should follow an optimising strategy for resources in:- Locating a favourable position in the market; Using minimum resources for maximum results; Estab1ishing compatible "mondus operandi" with the environment and exploiting its usefulness to the business; Designing a plan for use of the resources in a manner directed to attainment of its objectives; Building strengths; Meeting standard of success; Protecting vital business interests; Provision for contingency to deal with change. Implementation In "The Effective Executive" Drucker, P.F. says "no task is compeleted until it has become part of organisational action and behaviour". It therefore means once the strategies are drawn, all those who participate in their implementation must believe in them as their own and accept the necessity of following them through. The strategic plan must be presented in a written form and dissenting views and suggestion discussed until an agreement is reached. Once strategic plans are accepted management must instal the essential structure. The most effective management structure in experience is a decentralised one. The structure should be the assembly of functions for effecting the strategy. Priorities must be drawn and communicated. Monitoring and Contingency Planning Corporate management strategy should be evaluated regularly to determine feasibility in terms of:- Resources, "Structure, and Impact. Effectiveness of strategic management should be monitored through review of per-formance and the likelihood of future success. To quote Drucker again (op. cit) "The unexpected always happens the unexpected is indeed the only thing one can confidently expect. And almost never is it a pleasant surprise". Responsibility for monitoring progress and submitting reports on performance and revision of strategy should be assigned to functional managers. Corporate managers should then integrate the changes into corporate strategies. At that stage communication and actions are vital to the success of strategies employed. Davis, K. in Communication Within Management says "not only must management know (that is be informed) but it also must understand the information well enough to interpret it to the others" .Finally, it is important to note what Koontz et al in "Essentials of Management" say about implementation of strategies, i.e. "To effectively put strategies to work, managers must first communicate them clearly to their subordinates, make sure that plans contribute to and reflect the strategies and the goals they serve, review strategies regularly, develop contingency strategies and be sure that the organisation structure of the firm fits its planning programs"