Strategic Planning According to Mark

Strategic Planning

According to Mark K. Fiegener's Matching Business-Level Strategic Controls to Strategy: Impact on Control System Effectiveness, in general, companies that employ tight strategic control systems that fit the corporate strategy have more effective strategic control systems. However, this correlation only applies to cost-leaders, and not for differentiators. The main reason for this difference is the general difference that separates cost-leaders from differentiators.

On the one hand, the purpose of cost-leaders is to design, produce and market more efficiently that their competitors. Thus, the focus of the business strategy is to reduce overall costs while maintaining the general quality of the product. On the other hand, differentiation focuses on creating unique and superior value in terms of product quality, features and service. Thus, strategic planning is less effective due to the need for hands-on quality control. Therefore, in the business world of lower costs companies, one is more likely to see a strategic plan involving operations management whereas in the differentiation business one is more likely to see a focus on quality assurance.

In practice, the difference can be seen in the type of work performed by cost-leaders and differentiators. In general, cost-leaders are in the manufacturing sector, thus using strategic planning to make the production of a good more efficient. Differentiators, on the other hand, are more often service-sector and thus use quality assurance to provide services to a diverse array of clients with a diverse array of unique needs.

When determining whether a cost-leader or differentiator, or is either a service orientated business or a manufacturing orientated business, using five criteria typical of each type of business is useful. These five criteria for a service business include: 1) Intangible products; 2) No inventories; 3) High customer contact; 4) Short response time; and 5) Labor intensive. The five criteria for making the determination that a business is a manufacturing business, on the other hand, include: 1) Tangible products; 2) Can be inventories; 3) Low customer contact; 4) Long response time; and 5) Capital intensive.

When a business is service orientated, it is less likely to use strategic planning and is more likely to implement a policy of quality assurance. Quality assurance can be defined as the activity of providing evidence needed to establish confidence among all concerned. Typically, this establishment of confidence refers to ensuring consumers that quality related activities are being performed effectively with the goal of ensuring the quality of the product, good or service. Any and all planned or standardized actions needed to provide this confidence are part of a quality assurance program. The purpose of quality assurance is to that specific effective procedures are in place in order to make an advanced assurance that expected levels of quality can be assured.