Corporate and Business Law, Essay Example

Why is it necessary to monitor and control strategic plans? Who should be responsible for monitoring and controlling strategic plans? Why? What are the pitfalls of failing to monitor and control strategic plans?

It is essential to monitor the strategic plans of organization for several reasons namely:

• Providing better and up-to-date information about the organization’s current position and predicting the future stand of the organization. This means that all goals are realigned and shaped to respond to the environment
• Providing the opportunities to managers for evaluating the company’s budget according to the situation as well as alerting managers and other members in an organization about the opportunities and threatening development in their corresponding field and helping the organization to unite its managerial and organizational efforts
• Creating a more proactive management posture so as to promote the development of a constantly evolving business model as well as increasing the flexibility of the business in responding to market pressures.

The monitoring and controlling of strategic plans should be done by the top level management also referred as strategic apex. This is because they are the ones who set the strategic goals and understand the underlying reasoning as well as the future focuses of the strategies so set. The middle management and techno structure cannot monitor the implementation since they are the ones charged with the responsibility of implementing, hence it would result in self review.

The organizations constant monitoring of the environment helps them align their goals to maintain strategic fit. According to Miller and Dess (1996) strategic fit is defined as a concept that shows the degree to which a future growth strategy is likely to be achieved depending on the existing strengths of an organization and the market opportunities available.

Failure to effect proper monitoring makes a business get caught up by changes in the environment as well as the regulatory requirement. Secondly some process may turn obsolete hence in order to implement a strategy successfully, managing the process is also vital. This involves evaluating the efficiency and efficacy of the process and making changes where necessary, monitoring the results and establishing control for variances. Failure to do this results in an amorphous organization without strategic focus.

As an employee of an organization, what role do you play in the strategic planning process? What role do you play in the implementation process? What role do you play in the monitoring and controlling process?

Employees of the organization are charged with the responsibility of deploying the resources in the appropriate departments and ensuring that the departments are well manned with the appropriate skills to meet the set targets. The onus of implementation therefore lies squarely with the employees, this is because they are the ones at the contact point between the resources and they therefore are the vital link between the theoretical plans and the implementation. As employees, the monitoring responsibility is limited to the recording of relevant data as well as reporting accurately on the progress that is being made towards achieving the set goals. The strategic apex then decides whether the progress being made is with the goals established hitherto. Different organizations have different monitoring levels that ensure proper reporting as well feedback in as far as strategy implementation is concerned. An example is companies that have managers at different levels. The structure spirals upwards with the responsibility and mandate of every member of the structure clearly defined. An example is PricewaterhouseCoopers an audit firm. The management sets the strategies and engages specific staff members known as champions who are charged with the responsibility of ensuring the strategy is well taken up by the staff and implemented. These champions are the ones who report the progress made towards the achievement of the set targets. At this level therefore, the employees are able to play their part in implementation of strategy.

What are some examples of regulatory issues that affect the controlling aspect of a strategic plan? What are some examples of organizations that have failed to comply with regulatory requirements in controlling their strategic plans? What were some of the repercussions that these organizations have faced?

Regulatory issues that can affect strategic planning include first taxation policies that regulate the nature in which transactions are entered into as well as recognized in the business. Similarly the framework regulating the operations of the business also determines the strategy that they employ for example the medical profession is strictly regulated. Similarly the business ethics that govern the operations of the entities determines how they structure their operations in order to ensure that they are compliant. An example of a business that failed to comply to the regulatory requirement is Arthur Andersen the audit firm for the collapsed energy giant Enron. Enron’s Auditors Arthur Anderson has been accused of not only being complacent in their review of the financial figures presented by their clients but of being party to the collapse. First Arthur Andersen’s Risk management standards in as far as client engagement is concerned were brought into question. The key question that was being asked of how Arthur Andersen had sought to address the issue of self review. This is where an audit firm subjects its own decisions to a review during audit (BPP Media). This was especially in appreciation of the fact that the auditors used to rake in colossal amounts of money in consultancy fees besides the audit fees. This was seen to have compromised the independence of the auditors especially since the money they made from Enron alone accounted for close to 27% of their total revenue from audit fees (Wikipedia). Also of importance to note is the fact that the auditors failed to point out the credit risk that Enron was running due to the financing arrangements as well as that they moved to shred all the evidence they had when the scandal was eventually unearthed led to the downfall of the audit firm. They were accused by Enron’s board of malpractice leading to their eventual closure. The repercussions were harsh in that Arthur Andersen was put under serious review and investigations and they eventually closed down. The organizations that fail to abide by the regulatory framework are faced by sanctions and at times eventual deregistration and their operating licenses are revoked by the issuing authorities. It is therefore of essence that the organizations set there strategies in line with the existing regulatory framework to ensure that they do not conflict with the requirements.

References

BPP Learning Media (2009). Corporate and Business Law.  London: BPP Publications.

Miller, A and Dess, G (1996).  Strategic Management. London: Mcgraw Hill