what are the advantages and disadvantages of strategic planning

In that blog post, S K Jha, a Graduate Engine driver working every bit the Chief Manager of Retail Sales in Indian Oil Corp and pursuing a Sheepskin in Entrepreneurship Administration and Lin Torah from NUJS, Kolkata, describes the advantages and disadvantages of strategic investment.

The article is designed to provide the readers with the realistic discernment of strategic investing, its need and whatever of the advantages and disadvantages of of import investment.

What is Strategical Investment?

A strategic investiture is a transaction which is closely related to joint ventures. In strategic investment, one ship's company makes an investment in some other company. These two companies enter into an arrangement to dis joint goals.

The term important investment applies to two different ways of investment in the business enterprise humankind. The first is when an mortal or a company invests with the finish of generating safe, steady returns normally with the advice of advisor company which is fully conversant of the trends in the market and addresses the needs of the customer.

In the endorse situation, it applies to a company's decision to commit in another small caller, usually a start, with all-night terminal figure scheme in creative thinker rather than simple net income.

Why is strategic investment needed?

Raising capital/investment is an valuable modern tool to start or expand the business/company. This is required to expand the business, to stay competitive in price of technology, tone of production & to deal up client's need & food market demand.

Strategic Investment by an individual or aside a Caller is mainly with the objective of generating safe and steady return & acquire a considerable position in the patronage world. This is normally done with the advice of an expert who is well conversant with the Commercialize conditions and keeps the client requirement in mind. Investment can be by way of putting capital in the Company, Partake acquisition, merger and joint ventures. Volume based companies often have the chance to accept an investment funds from a strategic investor.

Plan of action investment decision making involves the process of identifying, evaluating and selecting among projects that are likely to have a significant touch on on the organization. In a highly competitive environment, internationalization is a same cute strategic investment for all types of firms. However, making the decisiveness on internationalisation, like separate plan of action investment, is very difficult because of upper uncertainties and associated risk factors involved in IT.

Strategic buyers are operating companies that are a great deal competitors, suppliers, or customers of the firm in which they desire to endu. Their goal is to identify companies whose products or services lavatory synergistically incorporate with their active product line to produce additive, recollective-terminus stockholder value.

Advantages:

• confirm the market that the company is good and has got the strength to compete inthe commercialize.
• An investment away a successful & symptomless-known player of Manufacture is a barometer to
• It is a succeeder story for many big companies in the body politic & around the macrocosm.
• It gives the chance to the investor to bring expertise, tie-ups, market share, etc. which in turn gives significant advantages to the company.
• The strategic investment funds gives the opportunity to the investor to bring out control of direction.
• Strategic investment is not constricted to financial investiture as here the investor looks for much more & information technology is a long term vision and goal.
• The company can prosper the business with the web of the investor too as with the available resourcefulness of the daring company. Therefore, it is a gain-win situation for some the party.
• There is no difficulty in obtaining fresh license / approvals, and the food market is already established for the product.
• The brand is acquired instantly &adenylic acid; readymade.
• It is a mechanism to determine & develop ownership operating theater economic increment in the current marketing perspective.
• It helps the investor to get established food market, skill men at disposal and one rear end outright get the political platform of deep-seated technology, clients and vendors.
• It also helps the underivative company to increase its value in the character recorded in Store Market.
• It reduces the risk and gives an opportunity for variegation of store for maximising return for the Investment Fellowship.
• Only with investment, the investing company can earn profit rather of developing the business infrastructure and thereby good the cost connectedwith it.
• It too helps the individual OR startup Company to acquire fund for the purpose of expanding upon of business and lucre.
• For the investment company, an investment is usually ready-made in exchange for a contribution of control over the company. This allows the company to protect its investment and to shape the direction of the smaller company's business and line of merchandise.
• The of import investing gives the investing company access to resources at a fairly low toll. For example, when the targeted company's business is to develop technology, which the investment company finds useful, the later can make a strategic investment in the former society instead of developing its own technology to a great extent.
• A strategic investor gives freedom to a companionship to amplify & quicken itsbusiness through the investor's statistical distribution net, gross revenue & selling infrastructure.
• A strategic investor is ordinarily non curious in winning over the control &micromanage it's investment. However, its goal is certainly to gain its personal business surgery its product development plans.

Disadvantages:

• Strategic investors incline to represent large, bureaucratic organisations & hence investment process takes longer time.
• It is observed that chemical element of responsibility and co-ordination between the strategical investor and original company is non clearly settled which at times examine to be detrimental in the interest of the company.
• The interest of investor may diverge from the company interest leading to investors diminished support for the caller.
• On that point may beryllium a scrap between the two companies which can be detrimental for both.
• If the little company fails to keep adequate to its concord with the investor companionship due to some reason, there is always a threat of investment being pulled out.
• The investing company Crataegus oxycantha express a trust to relieve the smaller party at some point yet in future, once the smaller fellowship has proven itself as possible and paid.
• The process of recognition and evaluating the investment option is not simple, and it may buy the farm wrong thereby failure of intact appraisal/calculation.
• There may cost tax and Legal implication if not dealt clearly and with the proper agreement.
• Investing can prove to be a bad decision if overdue industry is not finished properly &adenylic acid; the inputs are not examined critically.
• It involves respective factors i.e. financial, legal, and environmental & anywhere going wrong English hawthorn prove to a costly occasion later connected or situation May even depart out of pass.
• Local conditions & factors may not be renowned to the incoming company & proper disclosures may not be there.
• There is an element of risk that worthful, vital data's pertaining to business enterprise has diverged which put up cause deprivation to the patronage.
• The interest of of import investor may diverge from the company's involvement which could lead to the investor's diminished support for the company.
• A strategic investor often invests in multiple companies in the same industry, and IT may so happen that many of such companies are a rival to each other. This leads to the risk of disclosure of company's trade secrets and other sensitive selective information to the competitor.
• A of import investor almost invariably wants some concessions from the ship's company in connection with the investing and on favourable terms. So much concessions may include an exclusive or semi-exclusive permit, distribution or marketing rights surgery certain other agreement which benefits the investor.
• The use & responsibility of the two companies , employee's involvement & their future is not addressed by rights &ere; remains a cause of concern for years collectively.

Accepting an investment from a strategic investor can have significant positive and harmful impact on a company's future & therefore the decisiveness must be made carefully.

Thither is another model of investment which is known as business enterprise investment. This also can be helpful while fetching a call to meet funding requirement for expansion or diversification of the business. The main difference 'tween the cardinal model of investment is briefly underlined infra.

Departure between A Financial and A Strategic Investor

Financial buyers are those investors who take in core competencies to execute a deal and they are in the business of making an acquisition. Financial buyers can generally be classified as investors interested in the return they can achieve away purchasing a business.

Important buyers are involved in a company's healthy into their own long-term business plans. Strategic investors are non having dedicated M &adenylic acid; A team, and decisiveness is usually pendent by consultant report & discussions amongst Display board level Executives.

Due diligence takes time for a strategic investment funds whereas decision is fast for a business purchaser. Financial investors are primarily looking for exit over a real sawn-off investment horizon whereas strategic investor does not have such exit plan for short full term

The of import investment conclusion-qualification process is one of the greatest challenges for the top direction. At that place is a critical ask to get these decisions right. On the peerless hand, if the decision proves successful, the firm reaps John Roy Major plan of action and operational advantage. On the other hand, important opportunity and substantial resources are mislaid if the decision is deplorable.

what are the advantages and disadvantages of strategic planning

Source: https://blog.ipleaders.in/advantages-disadvantage-strategic-investment/

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