Importance of Managing Strategies and Strategic Planning - Coursework Example

Introduction Strategic planning is a very important component of the success of an organization either profit earning or non-profit earning organization. It is a means in which any organization uses as its framework for making decisions (David, 2002). An organization gets a detailed plan to run its activities, it acts as a way of advertising the business to the world for the purposes of informing, involving and motivating both employees, customers, and stakeholders (Thompson & Martin, 2005). It is a way of assisting in performance monitoring and benchmarking, is the means by which the organization stimulates change as well as it is the building block used for initiating the next needed plan for the organization. Managing Strategies and Strategic Planning Strategic planning refers to the process of strategically and systematically planning or rather prospecting where the business will be in a specified period of time (Paauwe, 2009). It involves a number of steps, which are important in identifying the current, as well as the future situation of the business (David, 2002). It clearly defines the business or the organizations objectives as well as the external and the internal situation so that the management of the business can formulate a strategy, implement it, evaluate all the process, as well as make the needed adjustment as far as the success of the business is involved. It is the strategy that the business management uses to allocate resources both the finances and the human resources (Hill & Jones, 2007). Strategic approach introduce frameworks and models such as PEST analysis, STEER analysis, SWOT analysis, and EPISTEL analysis. It is the strategy that answers the following three main questions: what is to be done, whom the work is being done to and how to excel (David, 2002). Strategic planning is a tool that gives the business or the organization an effective direction to follow in order to realize its goals and objectives (Paauwe, 2009). The strategy works hand in hand with the strategic innovation, which enables the business to thrive in the harsh business climatic condition in existence in the world. A there is a very great difference between a strategic plan and a business plan (Paauwe, 2009). A strategic plan is basically very short in terms of the contents it contains as compared to the business plan which is a huge document containing a lot of details like the strategies of pricing, market segmentation, description of the location of the business alongside the disadvantages and advantages of marketing in that place. It also contains the budget of the advertisement and the promotion strategy. Finally, it contains the detailed description of the service and the product including the entire features that are special about it. The strategic plan contains the framework as well as the foundation of the business the organization is to be involved in. it is important to note that the strategic plan is also not the same as the operation plan. The strategic plan is more visionary, directional and conceptual (David, 2002). A good strategic plan should be SMART meaning it should be specific, measurable, attainable and very realistic. This is for enabling the managers or the entrepreneurs to get to think strategically as well as act operationally. In the very competitive environment in terms of business, a business must have a strategic plan so that it can be able to stand in the platform of competition (Paauwe, 2009). The following are the five processes that are involved in the process of formulating a business strategy: objectives and mission formulation, environmental scanning, formulation of the strategy, implementation of the strategy and finally the control and the evaluation of the strategy. It is the mission that describes the vision of the company, values, goals and the objectives in order for the business to pursue its future opportunities in terms of the market share. The environmental scanning entails external analysis and internal analysis helpful in understanding the weaknesses, strength, threats and opportunities of the business. The formulation of the strategy entails the process of matching all the information gotten from the environmental scanning in terms of weakness and strengths as well as the threats and opportunities. The importance for this is to give the business a platform for competition as well as superiority in the area of profitability. The implementation of the strategy refers to the process of putting into actions all the programs, procedures and budgets. It is the process that fully involves the organizations resources like the human resource as well as the finances (Hill & Jones, 2007). Also at this stage, there is the aspect of motivating the staff to ensure they are aggressive in trying to achieve the company’s objectives and goals (Paauwe, 2009). Finally, the control and evaluation stage involves the process of monitoring and adjusting the implemented strategies through defining the parameters that needs to be measured. Defining the values targeted as far as these parameters are concerned, setting the measurement of the performance, comparing the results measured with al predefined standards and finally making any changes that are necessary in the strategy. Porter’s Five Forces Model Threat due to the new competitors is the greater the potential of a market to achieve profit, the more new firms gets attracted to it; this is also a very great disadvantage to all the firms that are in the industry (Paauwe, 2009). This is because the situation leads to a situation of low profit yield for the firms. Some of the barriers include equity of the brand, government policies, requirements in terms of capital, loyalty of the customers and cost advantages. For the Substance products threat, this is whereby a company goes ahead and provides products that are extremely beyond the boundaries of the common products. The intent of the whole issue is to present the customers with an opportunity for variety in the market (David, 2002). This option enables the company to be advantageous in that the buyers opts to switch costs, provide product differentiation, increase the quantity of product in the market available for sales and deal with the depreciation of the products quality. Established rivals threats entail one of the factors that determine the rate of competitiveness within a particular industry and so for any company to counteract this effect it must do a number of things as precaution measures (Paauwe, 2009). It is important to monitor the expenses of advertisement, web mastery, invent some strategies for competition, and come up with better competitive advantages like through innovation (David, 2002). Therefore, the companies must be able to cater for the problem through innovations, price fixation, and quality improvement. Suppliers bargaining power involves suppliers represent the input market. This is because they bring the raw materials, labour, components, and other services like great expertise (Paauwe, 2009). This can be a challenge especially when the supplier causes problems to the firm by refusing to offer their services. This can be overcome by strengthening the distribution channels, creation of labour union and increasing competition in terms of supply by having many suppliers for the same raw material among others. For this company in the industry needs to make it, it can for instance have different suppliers bring the same product to ensure that one supplier does not exploit it (David, 2002). The customers bargaining power is whereby a firm experiences pressure from the customers hence their prices sensitivity gets affected (Paauwe, 2009). This affects the volume of buyers, the availability of knowledge for the buyers. If a company is able to strike a balance of this factor, then it means that it can thrive in the industry despite the challenges (David, 2002). The company has been able to overcome this challenge by ensuring that it has cut short its channels of distribution. The reason being that the loner the chain of distribution the more expensive the product gets hence affecting the power of the customers to bargain. This is because too much bargain may lead the company to a loss. Snows and mile strategy This kind of strategy utilizes the defenders, prospector’s reactors and analyzers to identify the strategies used for organization. There two strategies have been used to show an in-depth and cross industrial study for the large corporation (David, 2002). According to the theory, it has been described that for an organization to get to be superior with comparison with other, then there should be a direct link between an organizational values, mission as well as the organization’s strategies as well as the functional organization’s strategies (Paauwe, 2009). Defenders stands for the organizations with very narrow market domains for their products, the managers have very great expertise and there is a great deal of aggression in the market segment chosen. The major strategies involve penetrating deeper into the markets and ignorance of the developments, which are outside the domain (Paauwe, 2009). This also requires a lot of stable processes and structures, functional structures, very extensive division and specialization of labour, internal promotion and single-handed core technology. The other strategy is the one that describes organizations as being prospectors. These are the organizations, which are very good in searching for the opportunities. They are also risk takers because they even experiment with different emerging environmental trends. These organizations are very good in the creation of change as well as some uncertainties for the competitors to respond towards (David, 2002). Their main strategy involves creation of change, operation in a very broad domain, monitoring of wide ranges of environmental trends, conditions and events. Conclusion Strategic planning is a very important component of the success of any business. It is the process that provides the business or the organization with a direction to which it should go in terms of the vision, mission, objectives, goals, budget, management of the resources ( finances and human resource management). It also the process that enables the business to understand its strengths, weaknesses, threats and opportunities as far as its market share and the issue of competition is concerned. It important for business owners to know that there are pitfalls of strategic planning like the fact that a business will not easily change from the kind of business it deals with easily. Whether the organization uses the Porter’s Five Forces Model or the Snows and mile strategy what matters is the achievements of the organization. Reference David, F. (2002). Strategic management: concepts, 9th Ed. New Jersey: Prentice Hall. Hill, C., & Jones, G. (2007). Strategic management: An integrated approach, 8th Ed. California: Cengage Learning. Paauwe, J. (2009). HRM and performance: Achievements, methodological issues and prospects. Journal of Management Studies, 46(1), 129-142. Thompson, J., & Martin, F. (2005). Strategic management: awareness and change, 5th Ed. California: Cengage Learning EMEA. Read More