Thursday, May 16, 2019
Strategic Planning Perspectives
Strategic planning is an organizational management activity which is used to set priorities, focus energy and resources, strengthen operations, ensure employees and stakeholders are working towards common goals. It's the set of actions that the managers of a business perform to outperform competitors and to work towards obtaining profitability.
Strategic planning consists of six main components; mission, core values, long-term vision, strategic agenda, project plans and annual budget. A business's mission includes what the business is, why you are a business, the unique niche and what it brings to the competition of businesses. Dictating the behavior of the organization and determining whether the organization is heading in the right direction as far as loyalty, consistency and commitment defines the core values of a company. The specific improvements in competition, technology growth, profitability, investment return, corporate image and employee relations defines the long-term vision of an organization. The leadership of the company communicates the key focus areas for long term when these elements are utilized. A project plan should include; one year target accomplishment, two or three year for those that take more time to implement, metric which shows the intended impact, milestones and accountability. Lastly, the annual budget displays the projected income and expenses for the year, which could include a balance sheet and cash flow statement.
Small and medium businesses hold the key to economic growth, innovation, and employment. Larger businesses see them as their largest competitors. The strategic planning process is still in the early stages compared to larger businesses. Small businesses limit their range of planning tools to include PESTEL, SWOT, financial ration, analysis, and budgeting. Larger firms use more planning tools and techniques such as SWOT, HRM analysis, cost-benefit analysis, organizational culture, scenario construction, and strategic group analysis (Siddique, 2015).
Large businesses have in-house staff to develop strategic planning. Larger businesses often use outside consultants to access and implement a broader set of management tools. Smaller businesses look at their planning process for five years or less while larger businesses cover five years or more. Smaller businesses focus more attention to HRM and organizational culture where larger businesses are more inclined to develop and put down in writing their mission statements and use their core competencies as a vital factor in competitive advantage (Siddique, 2015).
Companies developing in the international marketplace have to wrestle with which direction they want to go. They need to decide whether customizing their products in each market to match local buyer’s tastes and preferences or to pursue a strategy of offering a more standardized product worldwide. Matching a product country by country may raise production and distribution costs. The biggest issue for these companies must resolve is the tension between market pressures to localize with the competitive pressures of lowering costs (Thompson, 2018).
There are five different strategic options a company can use when entering into foreign markets. First, they can maintain a home base and export products. A company can license foreign organization to produce and distribute their products in their geographic location. Third, they can decide to employ franchising strategy. They can establish a subsidiary in a foreign market via acquisition, or they can rely on alliances or joint ventures. These options depend on many factors such as the company’s objectives, the firm’s position, their access to resources, their capabilities, and their financial strength (Thompson, 2018).
Next would be deciding what type of strategy to take: international, multi-domestic, or global. A multi-domestic approach is when a company adjusts its products from country to country to meet buyer’s needs. A global approach in which it takes the same basic approach in all countries where it operates, sells, and coordinates its actions worldwide. Transnational strategy approaches the marketplace with combined global and multi-domestic ideas (Thompson, 2018).
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