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Sunday, June 14, 2020

What is a Strategic Plan?

A strategic plan lays out its future direction, business model, performance targets, and competitive strategy” (Thompson et al, 2020). In essence a strategic plan is like a battle plan. It lays out the objectives that the organization wants to achieve, how it would achieve them, and at the same time allocate resources to meet those activities. In the process the organization has to understand the terrain that it operates in as well as its opponents so that it is able to set realistic objectives.
However, a multi-business organization is not one that has many branches or is spread all over the world but one that deals in different industries. For example, Starbucks has branches all over the globe, but it remains a Sigle unit business because it sells only coffee. Tesla on the other hand is a multi-business company because it has different business units which includes electric vehicles, Energy storage business and energy generation business. Planning for a multi business organization is more challenging because the plan has to ensure that it balances the objectives of all the businesses with the resources available so that they can be able to gain maximum synergy from their investments. For example going back to Tesla, the company decided to focus resources on their Model 3 vehicles when they were getting into production problems and this meant that the other business units were somewhat set aside for the moment yet it turns out that energy generation and storage may actually be bigger than the automotive unit. But their decision was wise because had the automotive unit failed, the whole company would have failed. Now however they are revamping the other units and with their brand reputation everything is going well.
Thompson, A. A., Peteraf, M. A., Gamble, J., & Strickland, A. J. (2020). Crafting & executing strategy: the quest for competitive advantage: concepts and cases (8th ed.). New York, NY: McGraw-Hill Education.
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