Strategic Planning processes:
Strategic Planning is the process of defining the challenges and goals for the future of an organisation and allocating the resources to accomplish the target effectively and efficiently. Hence , it is essential for sustainable growth.
The three key elements of strategic planning:
- Where is your business now?
- Where do you want to take it?
- What do you need to do to get there?
Hence, there is no standard structure for strategic planning. Thus, the following can be the key fundamentals for a good strategic planning structure:
- Analysis of internal drivers (strengths, weaknesses, opportunities and threats)
- Analysis of external drivers (market structure, demand levels, cost pressures)
- Vision statement
- Top-level objectives
Methodologies for strategic planning
The Porter Approach:
Micheal Porter developed this ingenious approach. Moreover, it analyzes the level of competition within an industry and business strategy development. Also, It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore, the attractiveness of an industry. Thus, helps businesses determine how well they can compete in the marketplace.
The approach has three parts:
- The experience curve – It represents a volume-cost relationship. With an increase in the cumulative historical volume of output, the unit costs will fall at a geometrical rate.
- The product life cycle concept – This holds that every product or line of business proceeds through four phases. The phases are – development, growth, maturity and decline.
- Portfolio balance – Related to the product life cycle is the concept of portfolio balance. Rather, it seeks to combine attractive investment segments with cash generating segments, eliminating segments with unattractive prospects.
- The Boston Consulting Group:
- Select an attractive industry
- Develop a competitive advantage through cost leadership and product differentiation.
- Develop attractive value chains.
- Adaptive Processes:
Mostly, this concept states that a firm’s competitive position is defined by a bundle of unique resources & relationships. Also, it states that the task of general management is to adjust and renew these resources & relationships. Rather, it is a direct function of time, competition, and change erode their value.
Alternative approaches towards strategy planning:
- Checklists and iterations: It represents a disciplined approach to strategic planning. Here, checklists are made and reviewed in an iterative manner. Moreover, it involves making use of ideas from a wide range of philosophical perspectives.
- Flexibility and rapid adjustments: First of all, it is more of a tactic and not a strategy. Thus, any organisation will have to adapt to the fundamental change in markets, technology, customer preferences, economic and political changes. Accordingly, one should approach the pre-defined set of goals.
Thus, once an organisation identifies its goals and objectives, it has to adapt to the vigorous change in the environment. Moreover, it is necessary to sustain the economy and to succeed further. It must recognize the competition and economic changes, reassess and make timely decisions to face such challenges. In addition,the methodologies of writers on strategic planning give major pre-requisites for helping firms carry out strategies. It aims at a higher degree of efficiency than they otherwise would have been able to attain.
The key requirement is a rapid information feedback system! Thus, it would help improve its ability to adapt changes, correct errors and grasp new opportunities.Add to favorites