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The development of companies in a changing environment
Currently, companies face a changing and complex environment. In response to this, to survive and adapt to changes in the environment, it is necessary that they carry out a strategy, which we call business strategy. We can define the strategy as the pattern of the main purposes, goals or objectives and essential plans to achieve them, establishing through these in what kind of business is the company or wants to be and what kind of company is or wants to be.
To answer the main question about which this essay will be, we first have to answer the following questions: Who makes the strategic decisions of a company? Who sets the objectives of a company? These questions have all a common answer, they are part of the functions of the Board of Directors.
The Board of Directors is an essential body in the organization and management of any company. Among its functions we can highlight the following: Define and approve the general strategies of the company, control the execution and achievement of the objectives of the strategic plan, appointment, supervision and control of senior managers, in addition to carrying out periodic evaluations of the results of the results of the organization.
After this brief introduction to the subject I will develop, as the composition and attributes of the Board of Directors are not only related to the strategic management of the company, but also influence it. This essay is structured in two sections: in the first one a review of the literature and theoretical foundation will be carried out that allows to define the existing connection between the composition of the Board of Directors and the strategic direction of the company, and a second section where The main conclusions will present.
First, the CA composition refers to its size, the type of counselor and the minority representation (Zahra and Pearce, 1989). There is no perfect number of directors. However, a high number of directors can become an impediment when making decisions quickly and efficiently. Although it is true that a greater variety of opinions and an increase in the capable of supervision benefits the Council, coordination in decision making is not always easy.
Within the CA, we find two types of positions: the president (which he preferably must not hold a managerial position, to be able shareholders and are oblivious to the management of daily activity; and the independents – professional councilors who do not keep a direct relationship with the company or their shareholders and contribute to an improvement of practices, methodologies and strategies).
Second, it is important that the Council be diverse (three albums of the diversity of Jent and Hilb). On the one hand, in regards to the aspects related to age, gender, nationality, as well as, profile and background and, on the other hand, the experience and knowledge that it possesses. However, all this diversity is not enough but it is used.
A fundamental issue to understand the existing connection between the Board of Directors and the strategic management of a company, is to know that, after defining the strategy by managers and the Board of Directors, it must be implemented. In order to implant the strategy, the objectives and processes of each area must be align with the goals of the complete organization. While it is the responsibility of managers to implement the strategy, the Council is the final responsible for the strategy. Its members are expected to have independence and impartiality, since this task is not delegable. To validate that the objectives are met and the processes are carried out, the supervision of the council is needed.
Therefore, we can conclude that the connection between the Board of Directors of a company and the strategic management of this is the efficiency when implementing the strategy. There is no ideal composition of the Council, but this must be adapted and must fit with the strategy that is intended to be implemented. Always the main objective of the Council the correct implementation of the same.