Business Strategy
Business Strategy
For every organization to be successful, it must engage in strategic planning, and for an organization to engage in a strategic plan, it must have a clear understanding of what strategic planning entails. Some of the facts that every organization must include the understanding of what strategy refers. Secondly, the organization must understand strategic planning process. The stem of this report to is to enable the organization to clearly understand and articulate the concept, discipline, and practice of strategic planning. The guide has been prepared on grounds that the readers do not understand what strategic planning entails and; hence, it focuses on a detailed breakdown of the strategic planning process. Additionally, the strategic planning process guide also provides systematic examples and illustrations on how an organization engages in the process of strategic planning.
The strategic planning process as herein presented has been organized into several subject areas. The main sections include an introduction to strategic planning under which several definitions are provided including the definition of strategy, strategic plan, and strategic planning approach. Besides, the section also covers the mission, vision, goals, and objective and how all these objects are linked to the process of strategic planning (Dess, Lumpkin, & Eisner, 2010). After the definitions and introduction of the strategic planning context, the guide provides the close analysis of the strategic planning process covering the various steps followed in strategic planning and also covering the strategic thinking and every step herein discusses. By the end of the guideline, the strategic goal is to ensure that the readers articulately understand the strategic planning process and that they are ready to implement the strategic planning process in the setting of strategies in their respective organizations.
Strategic Management
Strategic planning is a responsibility of the top management in every given organization, which is why the starting point of this discussion is the concept of strategic management. By definition, strategic management refers to the formulation and implementation of the organization's major goals. The organization's management acts as the agents of the owners of the business entity, and consequently, the strategic plan must be aligned with the needs and goals of the owners of the business (Hill & Jones, 2010). Additionally, the strategic management function in strategic planning does not only end with the formulation of the strategic plan but also involves the consultations with people at all levels of the organization to ensure that the strategic plan is acceptable to all those involved in its implementation. One particular caption that I would like the readers to pick from the concept that is strategic management concerning the preparation of the strategic plan is the fact that the role vested in the managers is guided the process of strategic management and not to design the strategic plan single-handedly. As will be noted in the strategic planning process later discussed herein, the process entails bringing together multiple operational and tactical goals of the organization towards the attainment of the mega or ultimate goal that is defined as the strategic goal. If not that, the strategic goal must be able to be broken down into simpler goals that are achieved on daily, weekly, monthly, quarterly, and annually by the organization.
Strategic Plan and Strategy
The guide has mentioned strategic planning severally but what does a strategic plan mean? Besides, what is the strategy? A strategic plan refers to a document that an organization uses to communicate the organization's goals and actions needed to achieve those goals. Strategy, on the other hand, refers to a plan of action or the policies that an organization designs to achieve the overall goal that is the strategic goal (Hill & Jones, 2010).
Strategic Planning Introduced
There are several definitions provided by academicians and business leaders in explaining strategic planning but for purposes of this task, the Balanced Scorecard Institute provides the definition adopted herein. The Institute defines strategic planning as the organizational management activity that an organization uses in setting the priorities, focusing energy and resources, strengthening operations, and establishing agreements to ensure that the organization steers towards the attainment of common goals, adjust and adapt to the changing environment (Subba Rao, 2010). The definition captures various important parameters of strategic planning; these include the environmental scanning, forecasting, goal setting, and evaluation and control, and all these are instrumental for successful strategic planning. One particular thing that the readers of this guide must appreciate is the fact that strategic planning is indispensable to all organization whether they work towards the generation of profits or whether they are not for profit.
Environmental Scanning as a Concept under Strategic Planning
Environmental scanning as defined herein refers to the processes and tools that an organization employs in the survey and interpretation of data in the internal and external environment of the organization. The process leads to the discovery of the factors influencing strategic planning. Through environmental scanning, the organization realizes the threats and opportunities that are available to the organization (Coulter, 2010). Additionally, the environmental scan helps in the identification of the internal strengths and weaknesses that influence the context in which strategic planning takes place.
The environmental scan forms the basis of forecasting of the events and happening that may affect the organization's future and hence help in the primary figuring of the organizational goals and objective. In an organizational strategic plan, it is common to have terms such as the best-case scenario and the worst-case scenario. In other words, the use of such terms in a strategic plan boils down to the organizations forecasting capabilities (Coulter, 2010). Additionally, the forecasting enables the organization to include the control measures that the organization must apply in case the environmental factors change for or against the forecasted outcomes of the organization. Consequently, forecasting though shallowly discussed in strategic planning is as important as the resources that the organization channels towards the attainment of the goals and objectives as outlined in the strategic plan.
Resource Allocation concept in Strategic Planning
The other concept that the reader ought to understand is the concept of resource allocation as applicable under strategic planning and alongside the concept of resource allocation is the concept of goal setting. For example, an organization outlines a strategic plan in which it seeks to be the greatest supplier of smartphones in the UK by 2020. The organization must first understand the goal, and then understand the course of action or actions that it requires adopting to attain the goal, and then the resources that are required at every step towards the attainment of this goal (Dess et al., 2010). The resources mentioned herein include the financial resources, human resources, management resources, and time resources considering that the strategic goal identified in this case is time specific. The rationale of using the year 2020, in this case, is to show that the organizational strategic planning is long-term in nature and normally, the span of time for which the organization strategically plans is normally five or ten years. In between, the organization may have both operational and tactical plans that are all aligned with the long-term plan that is the strategic plan.
Goal Setting and the Goal Concept
The concept of goal setting is also mentioned severally in the paragraphs above, and it is for this simple reason that I find it important to introduce goal setting in the context of strategic planning at this level. Goal setting simply involves determining what the organization endeavors to achieve and by what time. For instance, a goal to achieve 20% increase in the sales of smartphones by the end of the year 2016. The example used herein points to some simple facts about goal setting for strategic planning. These facts are contained in the mnemonic SMART that stands for smart or sensible goals that are measurable, articulate, realistic, and time-specific. To illustrate this in an example, it would be inappropriate to have strategic goals such as to become the greatest company in the world considering the fact that such a goal does not provide any measurable aspect (Dess et al., 2010). For instance, does the organization seek to be the greatest by market capitalization, brand value, or by book value? It means that before setting a goal, the organization must ensure that it is SMART both in form and in the meaning of every letter of the mnemonic.
Mission and Vision Statements
At times, the goals that are also at times referred to organizational objectives are easily confused with other terms such as mission, vision, and value statement of the organization. However, it is important to note that these particular terms usually have a different meaning in strategic planning and their relevance to the organization in question. The mission statement, as Investopedia defines is a single sentence that summarizes the purpose of being. For instance, a mission statement for a school could read as ‘to provide spiritual, moral, and educational services for the creation of a future holistic generation.' On the other hand, vision statement simply represents a declaration of the organization's objectives based on economic foresight (Hill & Jones, 2010). One important factor that should be noted is the fact that the strategic plan must be aligned with the mission and vision of the organization and only in rare cases do we find the mission and vision being redesigned to fit the strategic plan. Rationally, the reason it is the strategic plan that must be aligned with the mission and vision of the organization is the fact that the goals of the organizations change only when achieved and if not achieved by one plan, then another plan can be designed to ensure that the organization meets the goals. It is the same reason to why an organization does not shift goals that appear great to smaller goals simply because it appears difficult to achieve the great goals. Instead, the organization changes tactics and keeps on reinventing itself to achieve the set mission and vision (Dess et al., 2010). Normally, the mission and visions of the organization must be displayed openly in the organization for all the stakeholders to read.
Core Competencies and Competitive Advantage
The mission, vision, and the strategic goal of an organization all embellish the emblem that is core competencies. In the simplest definition, the concept of core competencies refers to those defining capabilities and advantages that distinguish or set apart the organization from its competitors. On the other hand, a competitive advantage is that condition or circumstance that specifically puts a company in a favorable or superior position to its competitors. Core competencies and competitive advantages, therefore are two of the most important assets of an organization, and the strategic planning must revolve around the two. As the reader would be keen to note, the discussion of the two concepts introduces the readers to the fact that in strategic planning the organization must also consider the fact that there is competition for the company to deal with (Hill & Jones, 2010). More information on these concepts will be discussed in the following section that gets privy with the strategic planning process.
The Strategic Planning and Implementation Process
Having introduced the various concepts and terminologies that the reader will encounter and apply in the strategic planning process, now it is important to focus on the steps that are involved in the strategic planning process. The first step in the strategic planning process involves the conduct of an environmental scan to answer the question ‘where are we.' The environmental scan involves the analysis of the external and internal environment of the business. The external environment encompasses various parameters which include the political environment, the legal environment, economic environment, the social environment, the ecological environment, and the technological environment (Subba Rao, 2010). The internal environment, on the other hand, involves the analysis and the assessment of the organizational internal factors including the management, financial resources, core competencies, and the human resource capabilities of other factors. There are various strategic management tools that the organization can use in environmental scanning, and these include the SWOT analysis, Porter's Five Forces model, the PESTEL model, and the competition matrix with the five being the most common (Subba Rao, 2010). Answering the question of ‘where we are' enables the organization to understand the threats and weaknesses that it needs to deal with as well as the strengths that it would need to capitalize on to utilize the identified opportunities.
The second important step in the strategic planning process provides answers to questions about where the organization wants to be and when. In simpler terms, this step involves the setting of the strategic goals. At this level, the organization also identifies the resources required for the strategic goal and also the personnel requirements for the attainment of the strategic goal. The mission statement and the vision statement come it at this level and additionally, the organization also addresses the various operational and tactical goals that lead to the attainment of the strategic goal (Coulter, 2010).
The next step involves the identification of all alternatives and the measurement of the results from each of the goals. It is at this level that detailed goal articulation takes and also the organization identifies the key performance indicators for each of the goals or identified alternative. The most relevant point to this goal is the fact that there could be several alternatives towards the attainment of a specific strategic goal, and the role of this step is to ensure that the strategic planning team identifies all the available options and their strategic and financial implications. The follow up to this goal is the best alternative selection step that ensures that the organization selects the best alternative and assigns resources to meet this objective. Notably, any failure by the organization to articulate the available alternatives comprehensively may lead to failures at later stages of the implementation process (Coulter, 2010).
After best alternative selection comes the implementation stage. At this stage, a clear plan is identified on how the strategic objective or goal of the organization will be attained. The implementation involves the determination of the periodic milestones that the strategic goal must go through. At the bottom line of the implementation, the process is the realization that the strategic goal cannot be achieved through one single action but rather takes sustained actions and action plans and the process of attainment of the strategic goal must be graduated say in percentage form (Coulter, 2010). Ina construction plan for instance, piecemeal goal attainment may mean that the organization must have attained the first level or 20% within the first year of the launching of the strategic plan. If the set short-term goal is not attained within the set period, this means that the strategic goal may not be achieved as planned and this calls for review and evaluation.
Constant review and evaluation of the strategic plan implementation process are probably one of the most important processes. It is particularly so because over the period of strategic plan implementation the environmental factors may deviate from the forecast meaning that the organization must then consider whether adjusting the strategic plan is important or not (Dess et al., 2010). The idea of flexibility as brought herein relates to the controlling stage which is the last stage in the strategic planning and implementation process, and it pertains from the common truth that is often overlooked, and this is the idea that the organization must either adapt to the changing environmental patterns or die.
Before concluding this section, it is important to note one thing, and this is the fact that the organization's management must involve the subordinates in the strategic planning process based on the simple fact that it is the subordinates that have the greatest responsibility in the implementation process.
Issues Involved in Strategic Planning
Strategic planning is a complex process, and it is one of the reasons why strategic management is taught as an independent discipline in institutions of higher learning and especially at the graduate level. The issues relate to the management of people in the strategic planning process. At times, the management may forget to include the tactical and operational employees and other stakeholders in the strategic planning process. It results in conflicts in the organization. Secondly, there are issues of disruption and change management considering the fact that strategic planning may come with new management structure and at times even the adoption of lean organization management systems. The employees are hesitant and opposed to change in the organization especially where they fear that the change may result in laying off some employees (Dess et al., 2010). At times, the targets set by the strategic management team may be considered unachievable, and this brings us back to collaboration in the creation of the strategic plan. These and other issues must be addressing from the onset of the strategic planning process.
Different Techniques used in Strategic Planning and Conclusion
In concluding, strategic planning need not be a hectic process for the organization. There are various techniques that the organization can employ in the strategic planning process. Some of the most common techniques include the BCG growth-share matrix. This BCG growth matrix is an important planning tool concerning market share and market growth. The directional policy matrices tool (DPM) is an important tool for the determination of the organization’s preferred segments. This tool helps the organization in determining the sections that the organization should invest. Other strategic planning techniques and tools include the SPACE and PIMS models (Dess et al., 2010). The PIMS model, the selection of marketing strategies based on the profit impact of the marketing strategy as the name of the model, suggests while the SPACE model revolves around the strategic positioning of the organization. More information about the various strategic planning techniques is available in various media. The reader ought to understand that the selection of the strategic planning tool does not by itself lead to a robust strategic plan, but consultation with various stakeholders in the organization does. It is for this reason that the organization must consider involving people from all departments of the organization. Additionally, the strategic management team must not forget the importance of strategic plan evaluation and control.
References
Coulter, M. (2010). Strategic management in action. Boston: Prentice Hall.
Dess, G., Lumpkin, G., & Eisner, A. (2010). Strategic management. New York: McGraw-Hill Irwin.
Hill, C., & Jones, G. (2010). Strategic management. Mason, Ohio: South-Wester, Cengage Learning.
Subba Rao, P. (2010). Strategic management. Mumbai [India]: Himalaya Pub. House.
