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Strategic Planning, Mintzberg
Roll of strategic planning and implementation
Introduction
According to Mintzberg et al (2003, p.10) ‘A strategy is the pattern or plan that
integrates an organisation's major goals, policies, and action sequences into
a cohesive whole. A well formulated strategy helps to marshal and allocate an
organisation's resources into a unique and viable posture based on its relative
internal competencies and shortcomings, anticipated changes in the
environment, and contingent moves by intelligent opponents'.
Likewise Haberburg and Rieple (2008, p.6) defined strategy as ‘ a strategy is
the set of actions through which an organisation , by accident or design,
develops resources and uses them to deliver services or products in a way
which its users find valuable, while meeting the financial and other objectives
and constraints imposed by key stakeholders.'
In contrast White (2004, p.5) defined strategy as ‘a coordinated series of
actions which involve the deployment of resources to which one has access
for the achievement of a given purpose.' Furthermore strategy ‘is a process of
translating perceived opportunity into successful outcomes, by means of
purposive action sustained over a significant period of time.'
Lynch (2000, p.8) defined corporate strategy as ‘ it is the pattern of major
objectives, purposes or goals and essential policies or plans for achieving
those goals, stated in such a way as to define what business the company is
in or is to be in and the kind of company it is or is to be.'
Morden (2007, p.14) revealed, Strategic Management is concerned with the
character and direction of the enterprise as a whole. It is concerned with
basic decisions about what the enterprise is now, and what it is to be in the
future. It determines the purpose of the enterprise. It provide the framework
for decisions about people, leadership, customers or clients , risk, finance,
resources, products, systems, technologies, location, competition, and time. It
determines what enterprise should be capable of achieving, and what it will
not choose to do. It will determine whether and how the organisation will add
value, and what form that added value should take. Strategic management is
also concerned with management planning and decision making for the
decision making for the medium and long-term future. It is considered with the
anticipation of that future and with the establishment of a vision or view of
how the enterprise should develop into the future that it must face.
Strategic Planning
According to Marios I.Katsioloudes (2006) “Strategic planning is the process
by which a system maintains its competitiveness within its work environment
by determining where the organization is, where it wants to go, and how it
wishes to get there. In other words, strategic planning involves examining
what strategies will enable to corporation or association to prosper in future”
Strategic planning is a process where you determine the strengths and
weakness of your business. You also can set your company's goals, objective
and mission statement during this process.
We can say this that strategic planning is a management tool for organizing.
It's also lead an organizing from where is now to future.
A good definition is strategic planning is “the process of determining a
company's long-term goals and than indentifying the best approach for
achieving those goals.” Without a strategic planning an organization will never
know where it going.
Importance
Strategic planning is a very important for an organization. And its help to
achieve
An organizations goals and its also helps to provide direction and focus for all
employees. It points to specific results that are to be achieved and
establishes a course of action for achieving them. A strategic plan also helps
the various work units within an organization to align themselves with
common goals.
Strategic planning Process
In the earlier 1970's, various large firms adopted an official top-down strategic
planning model. With this model, strategic planning became a planned
process in which top executives from time to time would prepare the firm's
strategy, and then communicate it down the organization for implementation.
The following strategic planning process model discuses below.
Mission
|
V
Objectives
|
V
Situation Analysis
|
V
Strategy Formulation
|
V
Implementation
|
V
Control
This process is most appropriate for strategic management at the business
unit level in organization. For large corporations, strategy at the corporate
level is more concerned with managing a selection of businesses. In the
process outlined here, "company" or "firm" will be used to signify a singlebusiness firm or a single business unit of a diversified firm.
Mission
A mission is important key factor of any organization. The mission often
expressed in the form of a mission statement of any organization, which
conveys a sense of purpose to employees and projects a company image to
customers. In the strategy formulation process, the mission statement sets
the mood of where the company should go.
Objectives
Objectives are actual goals that the organization will achieve, for example, an
earnings growth target. The objectives should be challenging but achievable.
They also should be considerable so that the company can monitor its
progress and make corrections as needed.
Situation Analysis
Once the firm has specified its objectives, it starts with its current situation to
set up a strategic plan to fulfil those objectives. Changes in the external
environment and make new opportunities and new ways to achieve their
objectives. An environmental scan is performing to find out the available
opportunities. The situation analysis therefore involves an analysis of both the
external and internal environment.
The external environment has two dimensions: the macro-environment
affects all firms and a micro-environment that affects only the firms in a
particular industry. The macro-environmental analysis includes political,
economic, social, and technological factors and sometimes is called PEST
analysis.
An important part of the micro-environmental analysis is the industry in which
the firm operates or is considering operating. Michael Porter devised a five
forces framework that is useful for industry analysis.
We also can use SWOT Model to Analysis Company's internal and external
situation. Strength and weakness use for internal analysis and opportunity
and threats use for external analysis of any organisations as show in the
diagram below.
Strategy Formulation
Once we get a clear image of the organization and its environment in hands,
exact strategic alternatives can be applied. Infect different firms has different
alternatives depending on their situation, there also exist generic strategies
that can be applied across a wide range of firms.
Control
Once we applied the strategy, the results of the strategy need to be
calculated and evaluated, with changes need to be required to keep the idea
on path.
Strategy implementation
De Wit and Meyer (2005, p.278) revealed, the implementation of the strategy
comprises a series of sub activities that are primarily administrative. If
purpose is determined then the resources of a company can be mobilized to
accomplish it. An organisational structure appropriate for the efficient
performance of the required tasks must be made effective by information
systems and relationships permitting coordination of subdivided activities.
Furthermore the role of personal leadership is important and sometimes
decisive in the accomplishment of strategy. Although we know that
organisational structure and processes of compensation, incentives, control
and management development influence and constraint the formulation of
strategy, we should look first at the logical proposition that structure should
follow strategy on order to cope later with the organisational reality that
strategy also follows structure. When we have examined both tendencies, we
will understand and to some extent be prepared to deal with the
interdependence of the formulation and implementation of corporate purpose.
According to Henry (2008, p.10) ‘effective implementations of strategies
require the organisation to be sufficiently flexible in its organisational culture
and design. Strategies need to be communicated, understood, and properly
coordinated with the stakeholders inside and outside the organisation. In an
age of collaboration, this may involve discussions with suppliers and partners.
Although the leader of the organisation will ultimately be responsible for a
strategy's success or failure, their role should be to encourage and create an
organisational culture which empowers managers to respond to opportunities.
In this way each employee will be confident to try out new ideas and innovate
without fear of reprisals'.
White (2004, p.618), the implementation of a successful strategy is to focus
on the five Cs as the basic requirement needed to keep the separate units in
any organisation to achieve the objectives of strategy. The five Cs are:
Coordination, Communication, Command, Control and Conflict/consensus.
Coordination: There should be coordination at every step of strategy making,
certainly in the process of formulation and implementation between the
stakeholders, different cooperating enterprises and organisational levels, and
between different internal units within the enterprise itself.
Communication: Coordination is only possible with the help of proper
communication of information concerning objectives and threats, capabilities
and threats, risks and threats. The accurate information must be
communicated.
Command: “It is passed downward, reflecting the hierarchy of authority which
characterizes every organisation. It should be rarely given and only when
absolutely necessary, in crises or to resolve a particular conflict. It is held in
reserve for when is needed. Everyone should be aware of possibility of
command but it does not have to be used. There are some occasions when
decisive action is necessary, but most the time staff should be aware of what
they need to do without being prompted.
Control: It is often exercised indirectly and discretely, through incentive
structures and globalization of a corporate culture. There are direct control
systems in certain areas such as finance. It is better that all become
committed to following the broad directions of the strategy without explicit
instructions. The outlines of strategy provide the guidelines are internalized
and do not require endless repetition. Each decision maker has their own
domain or is of control, all well understood, and obtains from intervention on
other domains unless invited or if there is a crisis.
Conflict / Consensus: Honest disagreements are certain in any organisation.
It is a vital aspect of any creative activity, since creative thinking means
thinking outside the normal boundaries. If a new idea is to change behaviour,
it needs to be argued out in the forum of enterprise where there will inevitably
by those who cannot agree. Any proposal for change for change almost
always invites conflict of kind, hostility from those opposed to a new way of
thinking or to change.”
Strategic Management Process
Thompson and Strickland (2003, p.6) defined term strategic management “it
refers to the managerial process of forming a strategic vision, setting
objectives, crafting a strategy, implementation and executing the strategy, and
then over time initiating whatever corrective adjustment in the vision,
objectives, strategy, and execution are deemed appropriate.
Strategic Vision: A strategic vision of a company reflects management's
aspirations for the organisation and its business, providing a panoramic view
of ‘what we are doing' and giving specifics about its future business plans and
giving specifics about its future business plans. It brings out long-term
business purpose and shape the organisational identity. A strategic vision
helps an organisation in a particular direction and in a strategic path for it to
follow.
Setting Objectives: ‘The purpose of setting objectives is to convert managerial
statements of strategic vision and business mission into specific performance
targets, i.e. results and outcomes the organisation wants to achieve'.
Crafting a Strategy: Strategy making brings into the critical managerial issue
of how to achieve the targeted results in light of the organisation's situation
and prospects. Objectives are ends and the strategy is the means of
achieving them.
Implementing and Executing the strategy: Strategy implementation concerns
the managerial exercise of putting a freshly chosen strategy into place'.
Likewise ‘strategy execution deals with the managerial exercise of
supervising the ongoing pursuit of strategy, making it work, improving the
competence with which it is executed, and showing measurable progress in
achieving the target results.”
Case: British Airways
Airline industries and carriers are facing very hard time, because recession
has affected the business and the industries have to reduce their prices and
are not making well profit as compared to the past. As it is a worldwide fast
growing industry making airlines more complex and challenging. Because of
recession and increased number of unemployment's in airline industries.
British Airways is the UK's largest international airline, flying to 6 domestic
destinations over 148 international destinations at multiple times, to the all
best located airports. The major place of business is Heathrow, one of the
world's premier airport locations. BA also operates a worldwide air cargo
business. But still British Airways had to restructured and make some serious
strategic changes to avoid the bankruptcy or the closure. BA had his vision to
achieve their goal and took effective and reasonable steps to compete in the
market with its performance and operation under the last couple of years.
Market fell from more than 30 per cent in 1998 to about 20 per cent in 2005.
This year, BA announced the worst half-year losses in its history.
During the six months to September 2009, the company face a £292m
($485m) loss, compared with £52m profits during the same period a year
earlier. In order to survive and to make an easy recovery in this competitive
environment and to attain a leadership in the industry BA has taken strong
steps to upgrade the systems and technology, In order to increased the fleet
size British Airways ordered 36 new long haul Aircraft on 27th September
2007 which includes 12 A380s,and 24 Boeing 787s. British Airways also
ordered on 1st February 2008 Airbus A318s to run a premium services out
from London City Airport to New York. This fitted luxury 32 lie flat beds in
business class cabin. The increase in technology like online ticketing, online
checking also enhances the BA business. Because customer has no need to
stand in queue. Innovative flight service such as sleeper service will attract
more customers. Introduction of the terminal 5 on the HEATHROW AIRPORT
will help increasing of the flights of the BA and able to provide more relaxed
environment to its customers. Possible merger of the BRITISH AIRWAYS and
QANTAS AIRLINE could be the great opportunity to become absolute market
leader of the world. Willie Walsh stated that British Airways had reduced
1,450 staff members since March 2009. They also reduced the overtime and
500 redundancies were made. Twenty percent of future capital expenditure is
reduced this year from 725 million pounds to 580 million pounds and it will be
the same through out this year. Mr. Willie Walsh also admitted that this
structural change of British Airways is necessary for survival and long term
success. British Airways managed with its comprehensive and proactive
strategy to accelerate its return to profitability and economic welfare well in
advance of its rivals. The airline announced that it is planning to raise £680
million of liquidity through a £350 million convertible bond issue and by
gaining access to bank facilities which are currently used to provide
guarantees to its pension funds. This will increase liquidity to approximately
£2 billion.
Conclusion
A successful and well-organized strategic plan can recognize the
organisation's strength, and related weaknesses, determining the new
opportunity and with useful action resolve the problems. These can be either
from the capabilities and expertise of an organisation or from the actual
market demand. Successful strategy plan is when there is a continues
perfection and effective use of time and resources. The role of manager is
very important to make organisation profit-making or non- profit making with
taking right decisions. He should think strategically rather than operationally.
The main factor of strategic planning is that how the information gained,
implement and used.
References
Mintzberg, H., Lampel, L., Quinn, J. & Ghoshal, S. (2003) The Strategic
Process, 4th edition, Prentice Hall publishing, New Jersey.
White, C. 2004, Strategic Management, 1st edition, Palgrave Macmillan, New
York
Lynch, R., 2000, Corporate Strategy, 2nd edition, Prentice Hall, Harlow
Morden, T. 2007, Principles of Strategic Management, 3rd edition, Ashgate
Publishing, Aldershot.
Haberberg, A. & Rieple, A. 2008, Strategic Management: theory and
application, 1st edition, Oxford University Press, New York.
De Wit, B. & Meyer, R. 2005, Strategic Synthesis: Resolving strategy paradox
to create competitive advantage, 2nd edition, Thompson, London.
Henry, A. 2008, Understanding Strategic Management, 1st edition, Oxford
University Press, New York.
Thompson, A., Strickland A.J., 2003, Strategic Management: concepts and
cases, 13th edition, McGraw-Hill, New York.
Marios I.Katsioloudes Ph. D, (2006) Strategic Management, Global Cultural
perspectives for profit and non-profit organisation, p 2, 6
Lynch, R., 2003, Corporate Strategy, 3rd edition, Prentice Hall, Harlow
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