Chapter Four covers strategic management and planning processes. How are these u
ID: 406831 • Letter: C
Question
Chapter Four covers strategic management and planning processes. How are these used in your work environment? How are the basic steps of planning utilized? How does the analysis of external and internal environments help management in strategic planning? Finally, how are the six major components of the strategic management process utilized in your work environment?
READING:
PLANNING -
Planning is one of the four functions of management. Every manager does planning to some extent. A manager with ten subordinates may say to them in April, "we need to have everyone submit before May 1st a request for vacation time this summer". This is a human resource planning process to make sure everyone is not gone at the same time in early July. The yearly budget is a fiscal plan. The planning addressed in this week's readings is focused more on organizational planning. As Bateman & Snell point out, organizational planning, which is often referred to today as strategic management, has been much more widely employed in the past three or four decades. As we look at how a strategic management process relates to the day-to-day functioning of an organization, there are at least two major reasons for engaging in this process.
First, as we examined in Week Two, organizations today exist in a very dynamic and complex environment. Actions may need to be taken today for the organization to be successful in the future. Research on future products may need to be undertaken, new employees recruited, and buildings constructed. Herbert Simon once said, "Grisham's Law of Planning is that day-to-day activities drive out planning", meaning that if there is not an explicit attempt to plan, the press of normal routines causes us to keep postponing a look at the future. A small organization headed by an individual entrepreneur may have a very clear plan but not much of a formal planning process as most of the plan may reside in the head of the owner. As organizations grow larger, there is a need for a more formal examination of the future. A strategic management planning process will typically involve many key people in the organization as they make decisions about the future activities of the organization.
Second, formal documents that emerge from a planning process become part of the bureaucratic communication system. As we noted earlier in our discussions about organizations as bureaucracies, it is vital to have rules (or common plans) that can be utilized to guide decision making. A strategic management process produces a strategic plan; in turn, this informs business plans among the organizational subunits. Operational plans within working units are developed based on the relevant business plan. Ideally, consistency of organizational action comes from everyone's awareness of the plan for the future.
Strategic Management Process
In the next few paragraphs, I want to amplify and comment on the nature of the strategic management process as described by Bateman & Snell.
A. Goals and Vision
The authors differentiate among goals, mission, and vision. You should look at their useful distinction, but remember that each refers to a desired future. Sometimes, organizations express these desired futures in such a vague way that whatever someone wants to do can seemingly be accommodated. There is an old saying, "If you don't know where you are going, any route will get you there." A planning process has to begin with a sense of where you are going. Just remember that it is not always easy for members of an organization to agree on the desired future, and that is why such statements are sometimes vague. Unclear language may also be used to hide fundamental disagreements.
B. Scanning the Environment
In the planning process not only does an organization need to have a sense of where they are going, but it also should have a sense of what the future will look like. A five-year plan that just assumes the world in five years will look exactly like the world today is likely to be in trouble from the beginning. In Week Two there was a good deal of discussion about the external environment of organizations. One of the first steps in a five-year plan is to attempt to understand what the environment will be like in five years.
A common approach to this environmental scan is the SWOT analysis. This analyzes the organization's strengths, weakness, opportunities, and threats. Some information for such an analysis is readily available, but some is very difficult to obtain. All things being equal, the past is the single best predictor of the future, but forecasting the environment of the future is always a difficult enterprise.
The conceptual essay on scenario planning emphasizes the importance of taking into account changes in the external environment when engaged in strategic planning.
C. Strategic Alternatives
In writing about approaches to planning, Miles and Snow suggest three basic approaches: stability, retrenchment, or growth. In a large organization different sectors of the organization might be treated differently. One division might grow while another remains stable. The authors also suggest such general strategies as concentration, diversification, and integration. The BCG matrix is a way of looking at different segments of an organization in the planning process. Business strategies might distinguish between low-cost and differentiation on a mass or focused (niche) market basis.
Identifying and evaluating strategic alternatives is a key element of the process. The development and selection of strategic alternatives is decision making. Recall the discussion last week about the difficulties involved in generating alternatives and deciding among them. As we think about planning and strategic decisions, we need to again consider how managers make decisions about the long-term future of the organization.
D. Who and How to Decide
Mintzberg has described strategy as often emerging rather than being decided at a particular point in time. One does not have to fully agree with his formulation to sense that it is not always clear how strategy is decided, and who decides it. A popular vision is one in which the great leader of a corporation sits in her office and selects a strategy that everyone else follows; however, Mintzberg suggests organizational decision making on strategy is complex and involves many people.
Porter and Mintzberg, each in their own way, suggest that the logical and linear process described in Bateman and Snell might not be the best description of how strategy development is and ought to be carried out in organizations. After you have read Porter and Mintzberg, go back to the text description of the strategic management process. Have Bateman and Snell described the strategy forming process in too simple and formalistic a fashion?
E. Putting the Plan in Action.
Everyone seems to agree that, in a large and complex organization, it is easier to write a planning document than to execute it in the real world. No matter how strategy is developed, part of the process needs to be paying close attention to how the strategy is communicated and executed within the organization. In a few weeks, we will take up the function of control. Strategic control consists of trying to make sure that the organizational strategy is actually being pursued in the field.
Christensen, as well as the earlier articles by Friedman and Fallows, reminds us that competition and the environment are not static. A planning process must deal with a moving target.
Conclusion
As we think about organizational planning, the basic strategic management process as described in Bateman and Snell is the obvious beginning point. A student of management needs to understand that basic process and approach because organizations large and small frequently employ some version of strategic management. Remember also that the use of this process is not limited to for-profit businesses. Government agencies and not-for-profit organizations such as hospitals and schools also engage in strategic management. It is a formal process to define and develop a strategy for an organization.
Porter and Mintzberg are both prominent management scholars whose view of strategy and strategic planning is a little more complicated than the Bateman & Snell outline. All the accounts view strategy as important. They just don't necessarily agree on what it is and how to do it.
Explanation / Answer
How are the basic steps of planning utilized?
The basic step of planning are utilized to deliver a project successfully on time. The realistic goals are set by the management and the whole team work to achieve that goal. After that resources are identified by using which we have to deliver the given task. Prioritize Tasks is done to do the urgent task 1st , if 2nd task is dependent on 1st task then the 1st task is completed then move to 2nd task. Evaluation of each task is also done in order to verify that the task done is according to guidelines.
How does the analysis of external and internal environments help management in strategic planning?
The external factors are global economy, culture, legal issues, the labor market, technology. Suppose there is global economic slowdown then the management will plan their funding according to that and how to survive the economic slowdown their goal will be focused on the survival. During planning the companies also take care of labor market and plan according to that the workforce is skilled enough to perform task or not. If not they will have to plan hiring from different market. The government regulations also play a major role in planning ,it is planned in such a way that there is no future conflict between government & company.
The internal factors are workforce plan, labor demand, and recruitment policy. During strategy planning it is taken care that the requirement of labor and what will be the hiring criteria of a proper candidate.