Importance Of Strategic Audit
TEAM 3 CHAPTER 6 - STRATEGIC AUDIT - Varsha Madhavan 1321766
Meaning – The review of a company’s business plan and strategies to identify weaknesses and shortcomings and enable for a successful development of the company can be called as strategic audit. Business operates in two environment external environment and internal environment. The external environment in which a business operates can create opportunities to explore and expand, as well as it would affect the business from various competitions. However, to be in a position to exploit opportunities or respond to threats, a business needs to have the right resources and capabilities in place.
An importance of organizational strategy is concerned with ensuring that these resources
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Every countries economical legal norm, culture tradition differs. Technology advancement has a direct impact on the performance of the business. Under these tools of strategic audit macro environment indexes are considered for the effective auditing strategic auditing.
• Industry and corporate competitiveness- The external threats and corporate competiveness are identified by the way of strategic tools. These factors help the organization to identify the core competitive advantages of the company and result in formulation of the strategic policies according to the organizations objectives.
• Experience curve –The experience curve indicated the how the cost per unit of the product behaves with respect to the accumulated volume of the production. The key factor contributes to the decline factor of the total volume of production would be in respect to the change in technology, economies of the
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Few external scenarios such as country’s inflation rate, economies of scale, government policies, and international business environment factors result in formulation of effective framing of the policies.
IMPORTANCE OF STRATEGIC AUDIT IN THE ORGANIZATION
• Assessing Current Strategy- Assessing the current strategy of the company helps in maintenance and effective utilization of certain resources within the organization levels. Audit helps the management to take up effective decision making and formulation of policies for the company.
• Identify Strategic Risks- Auditing helps the management to identify the potential risks associated with the strategies formulated by the companies. Auditor should possess sufficient knowledge in judging the resources and effective allocation; this is possible only in the process of auditing.
• Resource Adjustment- Auditing helps the management to adjust the resources according to the policies and procedures formulated by the organization. By this wastage and adequate or abundant maintenance can be avoided by this process organization can reduce the cost of excess storage of
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