It focuses organisation’s strengths and resources on important and high-priority activities rather than routine and day-to-day activities. It helps organisations analyse their strengths and weaknesses and adapt to the environment. Missions formulate objectives and objectives help to formulate strategies. It becomes a guide for the organisation and members to direct their efforts in a unified direction. Analyse … ), marketing (market share, consumer needs, promotion mix, product mix etc. It reallocates resources from non-priority to priority sectors. Whether these factors promote or restrain business activities is analysed in framing strategies. It also provides motivation to people at lower levels when they know their efforts are contributing towards organisational goals. Thus when an organization no longer provides beneficial services or products to its stakeholders, society perceives little need for its existence. Managers should have high conceptual skills and abilities to make strategic plans. are the giants who report good financial results as a result of sound strategic planning. Organizations exist to make contributions to society. Huge capital investments in projects is followed by expected financial returns. It enables managers to anticipate problems before they arise and solve them before they become worse. Not only does a strategic training plan focus on improving the quality of work in the present, but it is developed to make your workforce more competitive in the long term. This promotes motivation and innovation. Strategic planning makes best use of resources to achieve maximum output. The list of strategies is not exhaustive. Learn how your comment data is processed. If it fails to maintain its contribution … A successful strategy aligns with the environment. It is a projection into environmental threats and opportunities and an effort to match them with organisational strengths and weaknesses. Environmental analysis is the “systematic assessment of information about the... 3. After selection, the strategy is put into action and practiced. (b) Does the strategy focus organisational resources on critical success factors in the product/market area for which it is intended to be formulated? Organisational weaknesses, if any, have to be overcome to take benefit of environmental opportunities. It means dropping some of the resources (human and non-human) to make best use of the remaining ones. Firms have financial benefits if they make strategic plans. (c) Does it maximise company’s internal strengths and minimise its weaknesses? Strategic Management can be defined as "the art and science of formulating, implementing and evaluating. The following steps are identified by Hofer and Schendel to analyse resource position of the organisation: (a) Develop a profile of the organisation’s principal resources and skills in three broad areas: financial; physical, organisational and human; and technological. If existing strategies can help in reaching the desired objectives, new strategies need not be formulated but if there is a gap, managers develop strategies to attain the objectives. It helps in generating strategies and answer the basic question of strategic planning—what we are and what we want to be or where we are and where we want to go? It aims at long-term planning, keeping in view the environmental opportunities. Implementation requires designing the suitable organisation structure, developing a sound system of communication, motivation and control, allocating authority responsibility, resources etc. Post was not sent - check your email addresses! Managers should be farsighted to make strategic planning meaningful. Definition: … Is it being adopted and implemented at the right time? Strategic planning is a fundamental component of organizational management and decision making in public, private, and nonprofit organizations. Peters and Waterman are not advocating quantitative analysis; they are reporting a pattern of effective research coupled with innovative management among America’s best firms. Your email address will not be published. 1. In fact, they observe that many disintegrating firms have relied too heavily on detached, analytical decisions at the expense of inquisitiveness and innovation. If it fails to maintain its contribution to society, especially through value creation, it can disintegrate. ), finance (debt-equity ratio, dividend policy etc.) “It is the difference between the objectives established in the goal formulation process and the results likely to be achieved if the existing strategy is continued.”. Objective Formulation: Earning profits is less meaningful than earning a growth rate of 10% per year. This information may be related to production (plant location, layout, inventory management repairs and maintenance etc. Strategic planning helps in knowing where we are and where we want to go so that environmental threats and opportunities can be exploited, given the strengths and weaknesses of the organisation. Your email address will not be published. Missions justify existence of the organisation in terms of purpose (objectives), markets, products/services, consumers etc. This site uses Akismet to reduce spam. Different strategic options are evaluated on the basis of their competitive advantages in terms of: Will the strategy be able to achieve the objectives? It is “a process through which managers formulate and implement strategies geared to optimising strategic goal achievement, given available environmental and internal conditions.” Strategic planning is planning for long periods of time for effective and efficient attainment of organisational goals. Meeting society’s needs is less meaningful than providing free education to school children of a specific community. Future can be predicted through strategic planning. The following are the salient features of strategic planning: It answers questions like where we are and where we want to go, what we are and what we want to be. Strategic planning is a … Information is screened and only relevant information is analysed to formulate strategies. Four criteria for evaluating strategies are identified by Richard R Rumelt: (a) Is the strategy consistent with broad objectives of the company? Strategic planning is a coordinated and systematic process for developing a plan for the overall course or direction of the endeavour in order to optimizing the future potential. Strategic planning is a management activity often used by businesses to better focus their energy, establish priorities, and strengthen operations to achieve targeted goals. 3. Strategic development's purpose is to enhance those skills your employees and managers already possess . Strategic planning requires huge amount of time, money and energy. When an American automobile manufacturer stops providing customers with quality cars, customers buy cars elsewhere, perhaps from a Japanese automobile company. (c) Compare resource profile with key success requirements to determine the major strengths on which effective strategy can be based and major weaknesses to be overcome.