2 Explain the importance of strategy and policies in organizational functioning Describe how strategy and policies are formulated in the organization you are familiar with?

Managing a company, always a challenging task is becoming more difficult, and careful analysis is vital to cut through the maze. Yavitz and Newman (1982) detail forces that are making strategy crucial:

1. A wider range of external pressures that must be taken into account in their major decisions is confronting managers. These include environmental protection, employment opportunities for disadvantaged, shielding the consumer, and conforming to increasing government regulations.

2. Shorter pay out periods is necessary for most investments. The more frequent shifts in technology, Consumer preferences, resource availability, foreign exchange rates, etc, trim the time available to recoup investments. Consequently, better forecasting and faster responses to external changes have to be built into the planning process.

3. Improved communications aid competitors, suppliers, customers and us alike. Jet travel, cell phones, television via satellite, internet and world-wide news services all increase the range of factors to be considered and the speed of responses to events everywhere. And they add to the information explosion. One result is that strategic shifts must be more discerning and more frequent.

4. Growing intensity of competition quickly removes any slack in the system. Global trade means competition anywhere; advancing technology encourages cross-future competitors will be, not only who is here today.

5. Larger enterprises require more levels of management and usually embrace more diverse kinds of business. This size itself leads to antitrust complications, potential synergies, hedging risks, more formal internal systems, and less first-hand experience in the managed.

6. Changing values of members of the organisation complicate strategy formulation. Attitudes towards leisure self-fulfilment, mobility, insecurity (future shock), ethical behaviour, "participation," and loyalty to one's employer affect the alternative strategies proposed and the commitment to new ventures. Moreover, growing sophistication of techniques within each function (finance, marketing, production and the like) increases the danger that highly specialised technicians will pursue narrow goals, which is, sub-optimise. Strategy helps to integrate these specials skills.

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7. Management professionalism arising from an increasing separation of owners and managers impacts on managerial styles. Tomorrow's managers will be even more sophisticated about available planning and control techniques, subjected to more risk taking. One important function of strategy is to counteract a tendency of professional managers to become too conservative and bureaucratic.

Each of the trends just listed will probably continue, and, in so doing they will make forward planning increasing complicated.

They compound the problems to new opportunities and the new threats. That complexity, however, heightens the need most other planning. It cuts through the fog. It provides a direction and a sense of practical operations items.