Strategy Determination, Management Control and Internal Control

‭3.‬‭STRATEGY DETERMINATION, MANAGEMENT CONTROL AND INTERNAL‬ ‭CONTROL‬ ‭ dministrative processes can be carried out at strategic, tactical and operational‬ A ‭levels. The outcome of the strategy formulation process is a set of long-term‬ ‭objectives and a strategy that provides direction on how those objectives are to‬ ‭be achieved. The strategy is part of the organizational principles and therefore‬ ‭partly determines the way in which the organization must be managed.‬ ‭Management control (the internal control system) is aimed at implementing and‬ ‭realizing the strategic goals of the organization (at the tactical and operational‬ ‭level), while internal control places more emphasis on the operational‬ ‭processes. The internal control system is made up of a number of‬ ‭complementary components (beliefs), namely a diagnostic component, a‬ ‭framework-setting component (boundary), a norms and values component and‬ ‭a coordination component (interactive). Internal control includes the elements:‬ ‭control environment, risk assessment, control measures, information and‬ ‭communication, and monitoring. Risk management is the process of analyzing‬ ‭the potential run risks and the conscious choice whether or not to do‬ ‭something about them.‬ ‭Introduction‬ '‭Internal control' is about obtaining reasonable assurance that the processes are‬ ‭effective and efficient, that laws and regulations are followed, that no unauthorized‬ ‭loss of organizational values and that reports are reliable.‬ ‭Strategy determination‬ I‭n this book we define strategy as determining the goals that the organization strives‬ ‭for in the long term, as well as the path and means by which we intend to achieve‬ ‭those goals.‬ ‭administrative information system will have to be designed in such a way that it is able to‬ ‭provide such information.‬ I‭n the classical approach, the strategy process involves formulating objectives (what)‬ ‭and formulating an approach to achieve these objectives (how). This involves looking‬ ‭at four components:‬ ‭-‬ ‭M arket opportunities;‬ ‭-‬ ‭Competencies (what are our strengths);‬ ‭-‬ ‭Personal values;‬ ‭-‬ ‭Social accountability.‬ ‭ o help make such a choice mAachen, Meij mentions eight different instruments that can be‬ T ‭used in the strategy determination process. The overview below summarizes these‬ ‭instruments.‬ ‭-‬ S ‭ cenario construction‬ ‭Various scenarios are developed and assessed based on this based on‬ ‭assumptions and principles, as it were, provide different views of the future.‬ ‭The uncertainties that complicate the choice are systematically linked to the‬ ‭options available.‬ ‭-‬ P ‭ ortfolio techniques‬ ‭An analysis is made of an organization's product portfolio and its development.‬ ‭The actual competence is related to the possibilities that the industry or the‬ ‭market offers us.‬ ‭-‬ ‭Key success factors‬ ‭ his method selects and measures the factors that will determine the success of the‬ T ‭strategy. Key success factors are those factors that are considered of such‬ ‭importance that the survival of the organization is dependent on them.‬ ‭-‬ ‭Benchmarking‬ ‭ hen benchmarking is applied, a comparison of one's own performance is made with‬ W ‭the visible performance most successful application. This most successful application‬ ‭(also called 'best practice') for example, can be found in a similar organization in the‬ ‭same or different industry.‬ ‭-‬ C ‭ ore competence‬ ‭The starting point is that a good strategy is based on the strength (core‬ ‭c ompetence) of an organization. This method attempts to align the essential‬ ‭c apabilities on which the company's success is based with its aspirations.‬ ‭-‬ ‭Shareholder value or embedded value‬ ‭ he basic principle is that a good strategy produces maximum stock market value. The‬ T ‭s trategic one The value of the activities or action programs must therefore be determined‬ ‭from this perspective.‬ ‭-‬ ‭Game theory‬ ‭ number of simulations are actually carried out here, in which the dynamic actions and‬ A ‭reactions are viewed in their mutual interaction.‬ ‭-‬ ‭Chaos theory‬ ‭ he factors that determine the dynamic self-organization of the business process are‬ T ‭considered.‬ ‭After the strategic choices have been made, the management of an organization will also want‬ ‭to monitor whether the organization succeeds in achieving the strategic objectives. The‬