Strategic Management: Formulation and Implementation

Planning Process

The planning process combines the planning steps suggested by several writers. These steps are as the following:

  1. Stating organizational objectives.
  2. Listing alternative ways of reaching objectives.
  3. Developing premises upon which alternatives is based.
  4. Choosing the best alternative for reaching objectives.
  5. Developing plans to pursue the chosen alternative.
  6. Putting the plans into action.

Plan

The outcome of the planning function is a plan, a written document that specifies the courses of action the organization will take.

Dimensions of Plans.

Kast and Rosenzweig have indicated that a plan has four major dimensions:

* Repetitiveness. The repetitiveness dimension describes the extent to which plan is used time after time.

* Time. The time dimension of plan is the length of the time period the plan covers.

* Scope. It describes the portion of the total management system at which the plan is aimed. Some plans are designed to cover only a portion of the management system; other plans are developed to cover the entire open the management system: the organizational environment, input, process and outputs.

* Level. The level dimension of a plan indicates the level of the organization at which the plan is aimed.

Types of Plans. In developing plans for attaining objectives, managers have several types at their disposal. The most popular way to describe plans is by their breadth. The are two main types of plans: strategic plans and operational plans. Plans can also classified in terms of their specificity. Specific plans have clearly defined objectives. But sometimes managers prefer to use directional plans to facilitate flexibility.

Strategic versus Operational Plans.

The difference between strategic and operational plans relates to their time frame, scope, and whether or not they include a know set of organizational objectives.

Strategic plan provides direction for an organization's mission, objectives, and strategies. It defines the action steps by which a company intends to attain strategic goals. It also includes decisions that can greatly change the character or direction of the organization.

Tactical planning is short-range planning the emphases the current operations of various part of the organizations.

Tactical plan deals support of strategic plans and implementation a specific part of the company's strategy. Tactical plans usually are developed for organizations in the areas of finance, production, plant facilities, production, and marketing.

Operational plans provide the details of how the strategic plans will strategic plans will be accomplished. They are developed to specify actions steps toward achieving operational goals and to support tactical plans.

The difference between strategic and operational plans relates to their time frame, scope, and whether or not they include a known set of objectives. Operational plans tend to cover shorter periods of time. They also cover narrow area and deal more with specific. Operational plans offer ways for attaining these objectives. They assume these objectives are already known. There are two categories of operational plans: single-uses plans and standing plans.

Single-Use versus Standing Plans. With the repetitiveness dimensions as guide, organizational plans usually divided into two types: single-use plans and standing plans.

Single-Use Plans. Single-use plans are detailed courses of action that probably will not be repeated in the same time in the future. Single-use plans typically include organizational programs, projects, budgets. A program is a single-use plan designed to attain an important, one-time organizational goals. Projects are the smaller and separate portions of programs. Budgets are statements of financial resources set aside for specific activities in a given period of time.

Standing Plans. Standing plans are ongoing plans because they focus on organizational situations that occur repeatedly. Examples of standing plans include policies, standard procedures, and rules. Policy is a general guide to action. Standard procedures are plans that outlines a series of steps for the accomplishment of some specific objectives. A rule is a detailed guide to action. It describes how a specific action is to be performed.

Planning Time Horizon

The time horizons are long term, intermediate term, and short term.

Long-term planning includes strategic goals and plans and may extend as far as five years into the future.

Intermediate-term planning includes tactical objectives and has a time horizon of from one to two years.

Short term planning includes operational objectives for specific departments and individuals and has a time horizon of one year or less.

The problem with these definitions is that they fail to recognize important differences among organizations. We should notice the close relationship between the short-term-long-term categories and previous discussion of the strategic, tactical, and operational plans. Because strategic plans include both long-term and short-term plans.

Contingency Plans

Contingency planning is the development of alternative plans to be placed in effect if certain unexpected events occur. There are four reasons for or advantages to contingency planning:

1) it helps the firm get into a better position to cope with unexpected developments;
2) indecision, uncertainty, and delays are reduced when something unusual happens;
3) the firms's responses are likely to be better thought out and more rational; and
4) managers are forced to think in terms of possible outcomes, rather than just the most likely outcome.