Strategic planning is a defined,
recognizable set of activities designed to achieve organizational objectives and
goals. The techniques for strategic planning may vary but the substantive
issues are essentially the same.
These include:
Establishing
and periodically confirming the organization’s mission and its corporate
strategy.
Setting
strategic or enterprise-level financial and non-financial goals and objectives.
Developing
broad plan of action necessary to attain these goals and objectives, allocating
resources on a basis consistent with strategic directions, and managing the
various lines of business as an investment “portfolio”.
Communicating
the strategy at all levels , as well as developing action plans at lower levels
that are supportive of those at the enterprise level.
Monitoring
results, measuring progress, and making such adjustments as are required to
achieve the strategic intent specified in the strategic goals and objectives.
Reassessing
mission, strategy, strategic goals and objectives, and plans at all levels and,
if required, revising any or all of them.
A great deal of strategic thinking must
go into developing a strategic plan and, once developed, a great deal of
strategic management is required to put the plan into action. Strategic
planning is a useful tool, of help in managing the enterprise, especially if
the strategy and strategic plans can be successfully deployed throughout the
organization. Thinking and managing strategically are important aspects of
senior managers’ responsibilities, too. To paraphrase an old saw, “The strategy
wheel gets the executive grease.” This is as it should be. Senior management
should focus on the strategic issues, on the important issues facing the
business as a whole, including where it is headed and what it will or should
become. Others can “mind the store.” became unstable, long range planning was
used and then replaced by strategic planning and later by strategic management.
In mid 1930’s, according to the nature
of business the planning was done through Adhoc policy making. As many
businesses had just started operations and were mostly in a single product
line, there arose a need for policy making. As companies grew they expanded
their products and they catered to more customers and which in turn increased
their geographical coverage. The expansion brought in complexity and lot of
changes in the external environment. Hence there was a need to integrate
functional areas. This integration was brought about by framing policies to
guide managerial action.
Especially after II World War there was
more complexity and significant changes in the environment. Competition
increased with many companies entering into the market. Policy making and
functional area integration was not sufficient for the complex needs of a
business. As the organization became large and the layers of management
increased alongwith were environment al uncertainties, basic financial planning
and foreast based planning became insufficient. As the only focused on operational
control.
Strategic planning develops increasing
responsiveness to markets and competition by trying to think strategically, later
Strategic management evolved which seeks a competitive advantage and a
successful future by managing all resources. Thus the evolution of the
strategic management includes a consideration of strategy implementation and
evaluation and control, in addition to the emphasis on the strategic planning.
General Electric, one of the pioneers of the strategic planning, led the
transition from the strategic planning to strategic management during the
1980s. By the 1990s, most corporations around the world had also begun the conversion
to strategic management.
A part of strategic management has now
evolved to the point that its primary value is to help the organization operate
successfully in dynamic, complex environment. To be competitive in dynamic
environment, corporations have to become less bureaucratic and more flexible.
In stable environments such as those that have existed in the past, a
competitive strategy simply involved defining a competitive position and then defending
it.
Organizations must develop strategic
flexibility: the ability to shift from one dominant strategy to another. Strategic
flexibility demands a long term commitment to the development and nurturing of
critical resources. It also demands that the company become a learning
organization It means an organization skilled at creating, acquiring, and
transferring knowledge and at modifying its behaviour to reflect new knowledge
and insights. Learning organizations avoid stability through continuous
self-examinations and experimentations. People at all levels, not just top the
management, need to be involved in strategic management: scanning the environment
for critical information, suggesting changes to strategies and programs to take
advantage of environmental
shifts, and working with others to
continuously improve work methods, procedures and evaluation techniques. At
Xerox, for example, all employees have been trained in small-group activities
and problem solving techniques. They are expected to use the techniques at all
meetings and at all levels. The evolution of Business policy to
strategic management summaried below:
Strategic Planning Process
The strategic management process means
defining the organization’s strategy. It is also defined as the process by
which managers make a choice of a set of strategies for the organization that
will enable it to achieve better performance. Strategic management is a
continuous process that appraises the business and industries in which the
organization is involved; appraises its competitors; and fixes goals to meet
all the present and future competitors and then reassesses each strategy. A
good strategic management process will help any organization to improve and to
gain more profits. Every organization should know that performance of the
management process is very important. There is a big difference between
planning and performing. The organization will be successful only if it follows
all the stages of the strategic management process. Strategic management
process has following four steps
a) Environmental scanning refers to a
process of collecting, scrutinizing and providing information for strategic
purposes. It helps in analyzing the internal and external factors influencing
an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis
and strive to improve it.
b) Strategy formulation is the process
of deciding best course of action for accomplishing
organizational objectives and hence achieving organizational purpose. After
conducting environment scanning, managers formulate corporate, business and
functional strategies.
c) Strategy implementation implies
making the strategy work as intended or putting the organization’s chosen
strategy into action. Strategy implementation includes designing the
organization’s structure, distributing resources, developing decision making
process, and managing human resources.
corporate
culture, it can lead to group think. It can also cause an organization to
define itself too narrowly.
Some
of the other reasons of strategic management failure which act as its
limitations are as follows:
•
Inability to predict environmental reaction
•
Failure to coordinate
•
Failure to obtain senior management commitment
•
Failure to obtain employee commitment
•
Failure to follow the plan
•
Poor communications
•
Failure to understand the customer
•
Over-estimation of resource competence
•
Under-estimation of time requirements
• Failure to manage change
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