This article talks about strategic planning in an organisation. This was devised by corporate
leaders to implement strategies that will enhance the competitiveness of each
business unit. It differs from the yearly fiscal plans of the organisation.
Strategic planning (SP) evolved in
the business world in the United States of America (USA) and was later adapted
for non-profit making organisations such as hospitals and tertiary institutions
such as the universities.
Strategic planning was embraced by
corporate leaders in the mid-1960s to devise and implement strategies that
would enhance the competitiveness of each business unit, generate decisions
about deployment of resources toward fixed goals and priorities and build a
sustainable long-term future with a constantly changing or dynamic environment.
Strategic planning cannot be prepared by an outside expert
but rather a prescription that is formulated by the combined expertise within
the organisation. The purpose of planning is to make decisions about
the future before the future either forces the decisions on us or renders any
decision irrelevant.
The essence of strategic planning is
the identification of specific desired results to which all the efforts and
activities of the organisation will be dedicated. The success of any plan is
determined only by the results its produces.
Strategic planning differs significantly
from yearly fiscal plans. Cope (1981) clearly identifies and states the
differences as follows:
a.
Strategic
planning focuses on the process while the long-term planning with its
application of formulae, gives little attention to the organisation’s politics
and the changing circumstances.
b.
Strategic
planning pays attention to the external environment, qualitative information
and initiative decisions regarding resource commitment and integrated
participatory involvement. Long-term planning tends towards internal analysis
and qualitative models of resources deployment, and it conducted as a separate institutional function.
c. Long-term
planning emphasises the science of planning with detailed and interfaced sets of data.
The strategic view emphasises creativity, innovativeness and methods
to maneuver the institution over time and across turbulent waters.
d.
Long-term
planning focuses on
organisational goals and objectives for at least five years ahead while strategic
planning asks what decision is appropriate today based upon an
understanding of where the critical external variables will be five years from
now.
Therefore, strategic
planning has been described as the process of setting organisational goals or
objectives based on identified strengths and weaknesses.
Many things have been written about strategic planning. However, strategic planning as a
discipline with its associated concepts and techniques only emerged fully in
the early 1970s. There are, of course, many reasons for this. In the words of
Kotler (1988), it was largely because of the growing and continuously buoyant
markets of the 1950s and 1960s when many companies prospered on the back of
largely short-term operational planning.
The turbulence of the early 1970s that
followed a series of crises, including oil supply restrictions, energy and
material shortages, high inflation, economic stagnation, labour unrest,
increased unemployment and then recession caused many major reasons to search
for a radically different approach to the running of their businesses. These
were compiled with influx of low-price but relatively high-quality products
from countries like Japan which began to flood the western markets. These
products changed rapidly and drastically the economics of manufacturing
industries.
The revised approach to management planning threats that
emerged was then designed to provide the organisation with a far stronger and
more resilient framework that would enable managers to recognise the opportunities
more readily and overcome threats more easily.
This marks the beginning of a
new planning process to take maximum advantage of opportunities and threats in
the environment. It also entails a consideration of strategic alternatives and
a choice of the most appropriate strategy towards achieving set goals or
objectives. This is in addition to periodic evaluation to ensure that the
chosen strategy would achieve the objectives; if not, to alter the strategy or
review the objectives. Daniyan (2002) reiterates the definition which states
that somebody defines strategic planning as “congruous and collective exercise
of foresight and taking informed decisions about the future”.
Another simple way of looking at
strategic planning is to consider it as a formal process of determining long-term
objectives and how to achieve them.
In practice, strategic planning deals
with five separate tasks, which are as follows:
(i) Determination
of the long-term direction of the company.
(ii)
Determination
of the resources requirement of the company.
(iii)
Establishing
of overall goals and strategies.
(iv) Assessment
of the competitive position of the
firm in the industry.
In a modern organization, strategic
planning is seen as the focal point for all planning and reporting. It is
closely linked to market studies, capital spending, contingency planning and
annual profit plan or budget.
In the process of strategic planning
are of three fundamental questions that needs to ask, which are
Where is our organisation now?
Where do we want the
organisation to be? How do we get the organisation there?
These three basic questions must be
objectively and sincerely answered for the strategic planning to achieve its
desired objectives. It should be noted that both short-term and long-term
strategies require planning.
There are processes and methodologies
involved in conducting strategic planning. The processes involve a step-by-step
systematic approach, which starts out from the very beginning with focus on
implementation. The standard methodology works for every organisation whether
big or small. However, industry variations and adaptations need to be made.
Such various include the following:
Organisations that enjoy monopoly of
their business, e.g. Power Holding Corporation of Zambia (PHCZ), will certainly
omit a step since it has no competitor.
Some organisations may need to plan for a long time to
come especially in trading activities (e.g. PHCZ) while others may not need
more than a year”s planning.
Consumer products companies are very much
marketing-oriented.
Such companies must be serious to consider the market
for their products in the strategic planning.
In this aspect, some industries or businesses are more
affected than the others. For instance, tobacco companies and alcohol producing
companies are more affected than the soft drinks producing companies.
Certainly, technological advancement vary vividly
between the advanced and the developing countries. This will affect the
activities of the organisation. The technology must be of concern particularly
to the local industries.
The local companies may be less sensitive than the
importers.
At the beginning of the 1990s, a
number of researchers including Stacey (1991) and Mintzberg (1994) began
questioning the traditional and well established line of thinking about
strategic planning. With its origin in late 1960s and early 1970s, strategic planning
had been held by many as the most logical and effective way of devising and
implementing the strategies which would improve the competitiveness of a
business unit.
However, Mintzberg argues that the creation in many
large organisation of specialist departments, staffed with strategic planners
who are involved in the thinking but not in doing or the implementation, has
created a series of difficulties and tensions. The net effect, according to
him, is that strategic planning has long since fallen from its pedestal. He
goes on to say that:
But even
now few people really understand the reason: strategic planning is
not strategic thinking. Indeed strategic planning often spoils strategic
thinking, causing managers to confuse real vision with the manipulation of
numbers. And this confusion lies at heart of the issue: the most successful strategies are reasons
not plans.
Mintzberg, in making this assertion, highlights the
way in which strategic planning is indeed strategic programming, an activity
which involves articulating strategies or visions which already exist. He
believes managers should understand the differences between planning and
strategic thinking so that they can focus upon what the development process
should really be.
This implies that the role of the
planner changes significantly. For Mintzberg, the planner’s contribution should be around
rather than inside the strategy-making process. The planner should provide the
analysis and data inputs that the strategic thinker needs and not the one supposedly
correct answer to the strategic challenge being faced. This redefinition of roles illustrates, in turn, the
distinction that needs to be made between the analytical dimension of planning
and the synthesis, intuition and creativity that characterise true strategic
thinking.
Stacey, in
his own criticism of the traditional logical and sequential approach of
planning, argues for a managerial emphasis upon adaptability, intuition,
paradox and entrepreneurial creativity in order to cope with an unpredictable
and inherently unknowable future. Stacey highlights the importance of
intuition and the need for managers to deal with problems in a truly holistic
fashion. He goes on to suggest that managers must learn to reason through
induction rather than deduction, and to argue by analogy, to think in metaphor
and to accept paradox. Both Mintzberg and Stacey argue for a greater
creativity within the organisation.
Stacey’s views rest upon the idea that, because of the
nature and complexity of the business system, anything useful about the future
is essentially unknowable, something which negates the value of the
conventional planning. Wisdom that success depends upon developing a vision of
where the company wants to be in five, ten or twenty years time, the strategy
that will achieve this and a shared culture.
Stacey believes that real strategy
emerges from group dynamics, from politicking and informal lobbying in the
corridors, from the complicated patterns of relationships and interplay of
personalities, from pressure groups that spring up after the formal meetings;
that real success lies not in total stability and “sticking to
your knitting” but in the tension between stability (in the day-to-day running of the
business) and instability (in challenging the status quo). Instability is not
just due to ignorance or incompetence; it is a fundamental part of successful
business firms (Stacey, 1994).
The
ultimate responsibility of the planning process rests firmly with the corporate
management. In practice, organisations differ greatly both in how they go about
this and in the degree of freedom given to the managers or individual business
units. For instance, some organisations allow business units considerable scope
in developing their own objectives and strategies, ensuring only that the
promised levels of performance are obtained. This is referred to bottom-up
planning. By contrast, others are opposed to this, in that they establish the
objectives and they insist on being involved in the development and implementation of the strategy. This is known
as the top-down planning. Yet, others establish the goals and then
leave the business units to develop the strategic for their achievement. This
is called goals down-plans up planning.
Irrespective of the strategic planning approach that
is adopted by the organisation, the corporate management has the ultimate
responsibility for the four major dimensions of planning, which are:
a.
Defining
of the business mission
b.
Establishing
the company”s business units (SBU”s)
<
p style=”margin-bottom: 0cm;”>
The concept of "Building Blocks Marketing" refers to a systematic approach to developing a marketing…
This blog post aims to provide a comprehensive exploration of the various types of interviews…
An annual marketing plan serves as the blueprint for business growth, allowing companies to strategically…
This blog post delves into the philosophy of market management, exploring its key concepts, strategic…
This blog post seeks to explore the multifaceted impact of technology on teaching, outlining its…
Umuganura is derived from Kinyarwanda, Rwanda's national language, where “umuganura” translates to "the first fruits."