UNIT 3 STRATEGIC MANAGEMENT PLANNING
3.0 MAIN CONTENT 3.1 Scope and Definition
Strategic management planning is a systematic process of determining goals to be achieved in the foreseeable future. It consists of the following.
(1) Management’s fundamental assumptions about the future economic, technological and competitive environments
(2) Setting of goals to be achieved within a specified time frame (3) Performance of SWOT analysis
(4) Selecting main alternatives or strategies to achieve these goals (5) Formulating, implementing and monitoring the operational or
tactical plans to achieve the interim objectives.
However, implementation involves designing an appropriate organisational structure and control system to put the organisation’s chosen strategy into action.
One way to look at strategic planning activities is by looking at the strategic analysis. Strategic analysis is the review or scanning of the organisation’s environment e.g. the political, social, economic and technical environment.
3.2 Components of the Strategic Planning Process
Planners carefully consider various driving forces in the environment such as increasing competition, changing demographics, etc. Equally, planners look at the various Strengths and Weaknesses, Opportunities and Threats (SWOT) regarding the organisation.
Some people take this wide look around after they have identified or updated their mission statement, vision statement, value statement etc. These statements are briefly described below.
Global Strategy
Strategy
Implementation
Fig. 3.1: Main Components of the Strategic Planning Process
Planners carefully look at the major issues and opportunities facing the organisation and the first step of strategic management is crafting the organisation’s Mission Statements. A mission statement is a brief written description of the purpose of the organisation, and why a company is in operation. It also provides the framework with which strategies are formulated.
A mission statement, however, has three main components as itemised below.
1. A statement which gives reason why the organisation came into existence; this refers to the mission or vision of the company.
2. Vision of the Company.
3. The statement of the key values or guiding standard which will drive and shape the actions and behaviours of employees and a statement of major goals or objectives.
Mission and Goal
External Analysis:
Opportunities and Threats
SWOT Strategy Choice
Internal Analysis:
Strengths and Weaknesses
Functional Level Strategy Business Level Strategy
Global Strategy Corporate Level Strategy
Corporate Performance Governance and Ethics
Implementing Strategy across industries and countries Implementing Strategy in a
Single Industry
Feedback Loop
Meanwhile, mission statements vary in nature; it can be very brief or quite comprehensive. It includes a specific purpose statement that is part of the overall mission statement. Many people consider the value statement and vision statement to be part of the mission statement.
Today, vision and value statements are increasingly used. Vision statements are usually a compelling description of how the organisation will or should operate at some point in the future and how customers or clients are benefiting from the organisation’s products and services.
Value statements list the overall priorities on how the organisation will operate. Some people focus the value statement on moral values. Moral values are values that suggest overall priorities on how people ought to act in the world e.g. integrity, honesty, respect, etc.
3.3 Formulating a Mission Statement
This is the first important step, and it is to give a definition of the organisation’s business. Definition will answer the following questions.
What is our business?
What will it be?
What should it be?
However, the responses to these questions above guide the formulation of a mission statement. Next is the formulation of goals and objectives from the mission statement, etc. A goal is a desired future statement or objective that a company attempts to realise.
Therefore, from the model in figure 3.1 above, it is clear that strategic planning is an ongoing event, it never ends. Once a strategy has been formulated, its execution or implementation must be monitored to determine the extent to which strategic goals and objectives are actually being achieved and to what degree competitive advantage is being created and sustained.
Once the corporate level of the organisation collects that information, it becomes input for the next round of strategy formulation and implementation.
objective. Therefore, implementing a strategy typically involves implementing a set of tactics along the way, and in that sense, tactic is still a strategy.
Action planning also includes specifying responsibilities and timeliness with which each objective is being met and who needs to do what and at what time? Action planning should also include methods to monitor and evaluate the plan, which includes knowing how the organisation will know who has done what and when?
It is also common to develop an annual plan which is sometimes called the operational plan that includes the strategic goals, strategies, objectives, responsibilities and timeliness within which that should be done in the coming year.
3.5 Why Strategic Planning Fails
One reason for the failure of strategic planning in an organisation is that strategic managers in their initial enthusiasm for planning techniques may forget that the future is full of uncertainties and highly unpredictable.
Another reason for strategic planning failure is that even where you have the best designed strategic planning system, it may fail to produce the desired results if managers do not use the information available at their disposal.
4.0 CONCLUSION
In this unit, it has been made known to you that strategy is an action that a company takes to attain one or more of its goals. Strategic planning has a positive impact on the overall performance of an organisation especially in the areas of profitability.
6.0 SUMMARY
In this unit, you have learnt about strategic planning, components of strategic planning, mission statement formulation, action plan and reasons for the failure of strategic planning.
6.0 TUTOR-MARKED ASSIGNMENT
What steps should be taken to ensure that strategic planning do not fail?
7.0 REFERENCES/FURTHER READING
Charles, W.L.; Hill, & Gareth, R.J. (2007). Strategic Management :An Integrated Approach (6th Ed.).New Delhi: biztantra .pp.296-316.
Hofstede, G. (1980). “Motivation, Leadership and Organisation: Do American Theories Apply Abroad”. Organisational Dynamics, Vol. 9, Summary, p. 43.
UNIT 4 CORPORATE PLANNING