Strategic Planning as an Appropriate Way of Developing an Organizations Strategy - Case Study Example

Strategic planning as an appropriate way of developing an organizations strategy Contents Introduction 3 Criticisms of strategic planning 3 Discussion 4 Rational Decision Making Model 5 Strategic planning in developing growth strategies 6 Strategic planning in developing change strategies 7 Strategic planning in gaining competitive advantage 9 Strategic planning in developing resource based strategies 10 Conclusion 11 References 12 Introduction The organizational process involved in making and developing strategies for growth and development of the company is known as strategic planning. It is rational and practical approach which deals in organizing plans, directions, instruction and process for enhancing organizational functions and strategies. Effective strategic planning helps the company to implement good strategies. In the changing business environment a company continuously needs to improve its existing strategies and implement new strategies for maintaining its position in the market. For this reason the organization needs to plan strategies as per its needs and requirements. There are various steps involved in developing and implementing organizational strategies. These steps are important part of strategic planning process. According to the requirements of a company, strategic planning process is developed. Based on that planning process a company is able to build strong and effective strategies. In this planning process an organization analyse its external and internal environment. If the strategy fits with the company’s criteria and expectations then as per the plan, strategy is implemented by the organization. In this case study the importance of strategic planning in developing organizational strategies has been critically evaluated. Many explanations are reasons are provided for showing the importance of strategic planning in forming strategies. Criticisms of strategic planning There are some negative aspects of strategic planning for which this planning process is avoided by some companies. Strategic planning process mainly relies on figures, analysis, forecasts etc. If those data are not updated then the entire planning process and the strategy becomes wrong. Planning process of strategy consumes huge amount of time. As a result it is not always possible for companies to spend so much time in planning strategies. Sometimes strategic planning process increases confusion in developing strategies (Hooley, Piercy, and Nicoulaud, 2012). But if these factors are handled tactfully then strategic planning contributes a lot in developing effective strategies. Companies get a clear idea about its strengths and weakness by conducting strategic planning process. They can utilize its strengths effectively with the help of good strategic which is only possible through strategic plans. Discussion Top managers and Board of Directors of a company make strategic decisions. But before forming a strategy they do different types of analysis programs to evaluate the effectiveness of the strategy. This analysis programs are accounted under the process of strategic planning. Various analytical tools like SWOT, Porters, and PESTEL are used by the company to analyze its business environment and based on that it forms strategies which can provide growth to its business (Grant, 2005). Different organization follows different types of strategies for gaining competitive advantages. But for implementing any kinds of strategies the organizations devote time and money for making plans for developing strategies. Rational Decision Making Model Strategic planning approach involves rational decision making models. The model highlights practical and systematic process for developing and implementing strategies. With the help of this model a company can implement prefect strategies for enhancing its business operations. By implementing this model the decision makers of a company get to know how they should behave at the time of implementing strategies. Therefore this strategic planning process contributes a lot in guiding organizational members at the time of developing strategies (Grant and Jordan, 2012). According to this model for making strategies decision a company needs to follow a specific plan then only the organization can implement effective strategies. First the company has to set its business objectives. Based on those objectives it has to understand and analyse the problems for achieving those objectives. As per the problems the company determines different options to overcome problems. All the options are evaluated and the best option is selected. The organization then implements the option as its business strategy for gaining success. Therefore this strategy planning process contributes a lot in selecting and developing right strategies. This strategic planning process helps the company to increase its awareness about different external and internal factors affecting the business. Implementation of this model facilitates the company to improve the allocation of its resources according to the important of its strategies. As a result for developing important strategies a company gets the idea of the amount of resource it is required to spend. For all of these reasons maximum companies do strategic planning for developing effective strategies. For example Xerox had used scenario planning for anticipating the convergence of printer and copier. Tesco had developed 7 part strategic plan for growing its retail service and making it stronger (Henry, 2008). Strategic planning in developing growth strategies For implementing growth strategies organizations need to plan the strategies as per their requirements and condition of the companies. Strategic planning process plays a significant role in developing such strategies. Strategies related to merger, acquisitions, integrations of a company are known as growth strategies. With the help of these strategies organizations experience huge growth and success. Company’s functions, performances depend highly on these growth strategies. For this reason company emphasises on the strategic planning process (Johnson, Scholes and Whittington, 2014). For developing these types of strategies a company needs to do a detail analysis of its business condition and the opportunities it will get by developing such strategies. To grow the business the firm needs to develop strategies which will provide many advantages and benefits to the company. As a result it has to consider many factors for developing strategies for which strategic planning process is very important. For example Kraft and Heinz merged their business by implementing strategy of merger. This was a very important decision for both of these companies. So they planned these strategies after analysing and considering many factors (Johnson, Whittington and Scholes, 2011). Without strong strategic plan it was difficult for the company to develop that strategy and implement that in an effective way. Strategic planning in developing change strategies In the changing business environment every company needs to implement strategies which help them to adapt organizational and business changes. For developing change strategies the companies analyse both internal and external business factors which play an important role in developing and implementing strategies. In this case the company plans its change strategies after analysing technological innovation, global competition; consumer behaviour etc. based on these factors a company plans its change strategies. Analysis of these factors helps the company to understand the present business trend (Joshi, 2005). These factors create a huge impact on the business. With the help of strategic planning process the company is able to understand various opportunities and potentialities which it will get by developing and implementing effective change strategies. Strategic planning helps the organizations adapt themselves with the changing business environment by showing them right ways. Earlier change strategies were implemented by a company by following three step planning process. First the company makes plan to develop strategies to change the business process or function as per changing business environment. Then it makes plan to implement those strategies in an effective way. After this stage the company get involved into planning strategies for continuing the change of its business process and functions. Strategic planning is involved in all of these three stages. Without strategic plan it will be very difficult for the company to implement right strategies in every stages of its business process. In the present time also strategic planning has huge contribution in developing change strategies (Balogun and Hope Hailey, 1999). In strategic planning process the company analysis the influence of business expansion, culture etc for developing different strategies. With the help of strategic planning process the company understand the capacity and capability of organizational members to accept and adopt changes. According to that strategies are formed. Moreover in strategic planning process the company also analyse its culture for developing strategy which will maintain and enhance the culture of the company and along with that it will help to grow the company. For implementing change strategies there a company undergoes through various steps. These steps help to analyse how quickly the firm can implement the change. The scope of the change is also evaluated. The company comes to know how much resource is required to develop and implement change strategies. According to the change strategies the firm divides its employees and evaluates their capacity. The firm evaluates the readiness of employees for implementing change and based on that it gives power to the leaders for imposing change strategies. All of these steps are accounted under strategic planning process. Therefore strategic planning facilitates the company in many ways to develop change strategies. There are four types of change strategies which help the company to grow its business. For developing any of these strategies a company incorporates strategic plan which helps it to understand the nature of change and the extent of change. For developing adaption strategies a company makes plan for developing change strategies which matches with its existing culture. Strategic plan helps to develop reconstruction strategies by not changing the original culture of the company. Revolution change strategies developed by changing culture of the firm. For developing evolution strategies a company incorporate strategic plan which analyse the requirement of cultural change (Johnson and Scholes, 1998). If a company does not focus on its strategic planning then there is a high chance that its change strategies will not be effective. Strategic planning in gaining competitive advantage Strategies are developed by a company for getting competitive advantage. Strategic planning has huge contribution in developing sustainable competitive strategies. For establishing such strategies a company first analyses its competitors’ strategies and the business environment. Based on this analysis the company plans its strategies which will benefit the business for long term. In strategic planning process the firm needs to analyse many external factors which affects the business growth because it is hard to develop strategies for gaining competitive advantage. For developing this type of strategies a company focuses more on strategy planning part. This planning process helps the company to continuously improve its business process. Strategic planning focuses on developing unique things which the competitor company can’t develop. The planning process of developing strategies facilitates the company to gather knowledge about business environment. Based on this knowledge the firm plans and selects its business level strategies which will help the company to outperform its rivals. For example the airlines company Ryanair implemented cost leadership strategy after analyzing the competitive business environment. This strategy helps the firm to achieve competitive advantage. In the strategic planning process a company also follows the model of strategy clock which help the firm to develop strategies as per its business functions and objectives. Strategic planning in developing resource based strategies For developing resource based strategies an organization needs to plan its strategies for long period of time. Resource based strategies involves in utilizing the resources of a company in an effective way. So the company needs to analyse all its internal resources and their capacity for developing resource based strategies. Strategic planning helps to identify the resources which can provide competitive advantage to the company. This planning process facilitates the company to improve its business process by developing new products and ideas (Haberberg and Rieple, 2008). The company analyse the durability of this resources and its ability to replace those resources. Based on these factors a company develops its strategies. Conclusion In this case study it has been highlighted that strategic planning plays a significant role in forming and developing organizational growth strategies. Though strategic planning has some disadvantages but in the long run it contributes a lot in establishing effective strategies. Strategic planning is a time consuming process. For this reason the process of strategic planning is avoided by some companies. But most of the companies are involved in strategic planning process for analysing different factors which influence business operations. With the help of this analysis a company is able to develop effective strategies to fulfil its business objectives. Many steps are involved in strategic planning. All of these steps contribute a lot in identifying right strategies for the company as per its business situation. A business strategy can be beneficial and also be harmful for a company. For this reason a company needs to plan its strategies in such a way that it can enhance its business growth without investing much. References Balogun, J. and Hope Hailey, V., 1999. Exploring Strategic Change. New York: Prentice Hall. Grant, R. and Jordan, J., 2012. Foundations of Strategy. London: OUP Grant, R., 2005. Contemporary Strategy Analysis, Blackwell. New Jersey: Wiley Haberberg, A. and Rieple, A., 2008. Strategic management theory and application. London: OUP. Henry, A., 2008. Understanding Strategic Management. London: OUP. Hooley, G., Piercy, N., and Nicoulaud, B., 2012. Marketing strategy and competitive positioning, 5th Ed. New York: FT Prentice Hall. Johnson, G and Scholes, K., 1998. Exploring Corporate Strategy. New York: Pearson Education. Johnson, G. Scholes, K. and Whittington, R., 2014. Exploring Strategy. Tenth Edition. New York: Pearson Education. Johnson, G., Whittington, R. and Scholes, K., 2011. Exploring Strategy (9th ed.). Harlow. London: Prentice Hall. Joshi, R. M., 2005. International marketing. New York: Oxford University Press. Read More