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Harvard Business Review
Assessment task: strategic planning
Over the past decades, the strategic plan has become an important human resource management tool. Several researchers have written and published a lot in this field of strategy, and subsequently, on the subject of strategic planning. In the year 1970-80, planning was the core activities of modern firms because the management believed it would enable them achieve a competitive merit. Many of the studies during this time reveal the thoughts of managers towards strategic plans. Into the bargain, research from the past two decades has managed to identify the "pitfalls" of strategic planning. For example, the link between strategic planning and organizational performance has not produced conclusive findings, which has further made a synthesized stream of research difficult to achieve (Grant 2003).
From a planning point-of-view, strategic planning primary objective should achieve long-term survival. In a company's endeavors to achieve a competitive advantage, challenges such as financial performance, diversification and organizational change have substantial influence. In addition, strategic plans reflect the outcomes from a bargaining process among functional areas, whereby each of the functional area, may compete in the scope of constraints of competition to realize a favorable position in the future. However, this does not apply for companies with informal planning processes and those with formal procedures. Therefore, the planning process consists of a combination of evaluation and power-behavioral models. Some companies struggle and fail at strategic planning initiatives revealing that planning is significant to every firm.
Virtually, every company, large or small around the globe has a guide on some kind of planning system. Some studies suggest that every manager should have some understanding of strategic planning because it has connections to, and linked with the management process of an organization determining its success. However, the level of understanding among managers is at the minimal level (Grant 2003). Depending on the perception that one takes, strategic planning qualifies as "strategic backbone" in strategic management. In line with this thought, planning is a function, which embraces managers in all levels of organizations.
The concept of strategic planning is a subject to different degrees of attention. The interest in strategy as a study of management originates from large companies in 1950s and 1960s. In addition, the subject experienced varying levels of interest from scholars as well as professionals. However, the reasons for the rise and fall of strategic planning are many and historical events may help in identifying others; however, other reasons are unidentifiable. On history, strategic planning emerged in the 1960s, peaked in the 1980s and quieted in the late 1990s. During this time in history, the change arose because the objective changed from how to carry out strategic planning to formulate the strategy to criticize its efficiency and influence on organizational performance (Grant 2003).
Planning as a Process
Strategists or planners found in an established company know what their strategic plan entails. Some may claim that the planning process is more important compared to the document plan. Researchers through their studies have an agreement that strategic planning is a process, which decides when, who is going to plan, and the way implementation will happen. However, the same researchers and scholars are not in agreement with the exact components and structure of the strategic planning process. This process links three primary plans: master strategies, medium range programs and short-range budgets (Nauheimer 2007). Therefore, this process begins with the coming up with an organizations objectives, establishing strategies and refining the strategies with comprehensive action plans. Companies should recognize that planning is a continuous process and they need regular amendments in order to respond to the changes in the environment.
Strategic Planning Today
Having evaluated the origin and growth of strategic planning it becomes evident that there are two wide areas of empirical research: the impact of strategic planning on firm performance, with the focus on how performance varies in various sectors and environments. The second area examines the organizational process involved in formation of strategies. However, at its center lies a question on whether the strategic planning process results from a planned formal process, or whether it is an emergent process characterized by learning over time. The two questions are because of inadequate empirical research on the area (Nauheimer 2007). In addition, the questions reveal that the features of planning systems must have broad differences.
It is an expectation that the strategic planning process must have great differences across companies depending on the belief a company chooses to adopt. However, the process has a limitation in that; it involves different parties characterized by limited knowledge. Therefore, this calls for extensive researches on strategic planning to explore the role of the corporate centre. In the prior studies, it is also evident that the inadequate framework makes it complicated to locate the real phenomena of strategic planning (Nauheimer 2007). This suggests that there is a need of broad theoretical frameworks that will help disclose relevant characteristics of strategic planning.
With the existing inadequacies, this paper calls for identification of threads in strategic management studies that will assist in developing a comprehensive framework. The framework will help in establishing testable data to show how companies conduct strategic planning today. In addition, the framework will assist in determining which organizational actors that have substantial influence in the strategic planning process. When research is over, the empirical data will serve to provide reliable proof of the validity of the developed framework. In addition, in reference to the existing literature on strategic planning, it has become evident that there lacks a theoretical framework that serves to offer detailed information on the phenomenon (Nauheimer 2007).
Finding the Right Strategy
The oil industry is among the industries that hold relatively few surprises for planners and strategists. For instance, strategists know that as new resources emerge and political forces fall out, global supplies will fall and rise. In addition, they know that demand will increase and decrease with incomes, GDPs and weather conditions among many others. Since such factors are external, the planners may stand no chance in the industry. Therefore, a company should keenly organize its unique capabilities and resources in order to uphold its competitive advantage. In the internet application industry, an oil industry planner may not offer any help (Reeves, Love and Tillmann 2012). It is important to not that, the strategies that work in the oil industry cannot work in the unpredictable internet application industry.
A recent survey conducted by BCG, which surveyed 120 companies in the globe in 10 major industries show that managers recognize the need to link their strategy making processes to the particular demands of their competitive environments. In addition, the survey found that many industries employ strategies suited to predictable and stable environments although their environments do not reflect. In order for an organization to find the right strategy, the company should evaluate its industry (Reeves, Love and Tillmann 2012). Although there are several factors that influence the strategies to formulate; therefore, the managers can narrow down options by considering two elements: predictability, (how far into the future and how accurate the planners can confidentially predict demand, corporate performance, competition, and market expectations ) and malleability: (To what extents do the company's competitors impact the factors?) (Reeves, love and Tillmann 2012).
In addition, the strategists should put the two variables into a matrix and include four wide strategic styles, which they will label classical, adaptive, shaping and visionary. However, often, planners and strategists conflate the two variables (malleability and predictability) thinking that or assuming that any shapeable environment is unpredictable. By so doing, it leads to a division in the world of strategic possibilities into two parts (predictable and immutable or unpredictable and mutable), whereas they need to consider the four variables (Reeves, Love and Tillmann 2012). Therefore, it is not a surprise to find organizations linking their strategic styles to their environment, hence perform well.
Classical Strategic Style
Classical style works well for organizations operating in an environment, which is predictable but hard for the organization to change; this style will create a chance of success. In addition, classical style is the style familiar to many managers. The five forces, blue ocean and growth matrix evaluates are some of its manifestations. An organization sets an objective that targets a favorable market position it can achieve by capitalizing on its capabilities, resources and builds, and fortifies the position through orderly, successive rounds of planning. This should use quantitative forecasting techniques that may enable it to develop in the future (Reeves, Love and Tillmann 2012). In addition, after setting such plans, they tend to stay in place for a long time.
In addition, the classical style works well as a standalone function as it requires keen analytic and quantitative proficiency allowing the passage of information in departments. Many strategists found in oil companies similar to those in many other mature industries; efficiently use the classical strategic planning. For example, renowned major oil companies including ExxonMobil, Shell, have highly trained analysts in the…[continue]
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