Strategic Management - Strategic Planning

Strategic Management - Strategic planning is crucial for an organization in the contemporary global business culture. With the advent of the Internet and increases in technology, information regarding competitors, markets, and the general needs of a business flows so quickly it is almost impossible to keep up. Without a strategic plan -- that is knowing where it is the organization wants to move in x amount of time, the very real possibility is that the business will be run by tactics only -- a series of putting out fires and not utilizing resources effectively. Further, because strategic planning is a process, it allows more members of the organization to help identify and define the organizations vision, objectives, policies, and plans that will allow forward momentum (Information on Strategic Planning and Management, 2010)..

Strategic management provides the overall direction to the organization and ensures that goals between departments and business units are in line with each other -- consistent with the plan. It is an ongoing process that continuously evaluates and controls the business and looks at the overall goal and how the company is moving towards that goal. It identifies large disconnects and assigns tactical solutions to those issues. It must be the most honest and guiding part of the business because it asks three key success questions: 1) Is it suitable (will it work)? 2) Is it feasible (can it be made to work)? And, 3) Will it be accepted (will they work/use it)? (Johnson, Scholes and Whittington, 2008).

Part 2 - Effectiveness within an organization is a measure of how effective the organization is in achieving the outcomes or goals it has for itself. An organization's effectiveness is also interdependent upon its set of morals, ethics, and ability to community appropriately. Effectiveness is important in different ways for different organizations because of the criteria used to judge (e.g. A non-profit aid group might have a different benchmark than a new accounting firm). It is sometimes difficult for an organization to be effective due to external factors, lack of clear definition and focus, and internal dynamics. One way to judge effectiveness is to look at the way an organization adapts internally and externally to competitive pressures. According to Michael Porter, there are six strategic forces that form this mold: the threat of new competitors entering the market; rivalry between existing firms; threat of knock-offs (substitute and potentially inferior products or services); the bargaining power of buyers (too much in the market and too many choices); bargaining power of suppliers, and relative power of stakeholders (Porter, 110).

My own past firm was in a transitional stage, trying to become more vital in the market and attempting to reinvigorate the company by focusing on a learning organization paradigm. Their biggest barrier to success dealt with the encroachment of e-commerce and companies who were competing in our market without having brick and mortar expenses; American taxes and employee issues; and American taxation and regulatory issues. Management decided that competition was not dead, and it was up to the company to change and adapt as opposed to ensuring the clients did so.

Traditionally, competition is based on price, offers, and markets -- product or service A versus B. For more sales, more customers. The new market template though, is part of a fluid cooperative environment -- for instance, a great restaurant in a neighborhood that is failing will likely go under. So, the coevolution of companies that take into context environmental issues as part of their ecosystem (supplies, producers, competitors, stakeholders); form a different type of competitive nature. Porter notes that "Substitutes limit the potential returns of an industry by placing a cap on the prices firms in the industry can profitably charge" (Ibid., 112). But, in addition to pricing, we found that the competitor's products were shoddily made; external paint chipping, inferior manufacturing techniques and materials, and a long list of service and quality issues.

In the global market place, collaboration is as important as cooperation because of the supply/demand curve (sources), consumer need, and ability to drive the market. In many ways, certain businesses are not as much in competition with each other for the consumer's dollar, as they are with similar industries offering alternatives. Too, cooperation can provide a needed synergism to enhance and refresh an organization, keep it more on the cutting edge, and refuse to allow status quo to set in. Knowing this, the solution was painfully easy -- painful because it required the strategic alignment with other domestic organizations that had been fierce competitors in the past.