Theories and Practices of Organisational Development - Literature review Example

University How Entrepreneurs Make Strategic Planning Submitted to …………. In partial fulfillment Of the requirements for the completion of the course, By Name City, State Date Introduction If someone planted two plants in two different jars, and in one jar there was good manure and watering, but in the other jar only had sand and no watering, the outcome would be one healthy plant thriving and one withering and dying. This is the same case with businesses. I believe that for any business venture to succeed there must be proper prior planning. Entrepreneurs run their businesses differently from how multinational corporations are run. This write up seeks to review on how entrepreneurs make strategic planning. It is also a proposal to interview an entrepreneur in future to understand well how it happens. The entrepreneur to be interviewed is Kathal Spence, founder and owner of DFK Port Accounting and Your Local Finance, in the Finance/ Mortgage Brokerage industry. The choice for this individual follows the fact that his businesses have grown well since inception with DFK Port Accounting now at 18 years and Your Local Finance at 7 years. This means that there are strategies he employs to attain such success. This essay also carries a literature review to show how strategic planning is carried out by entrepreneurs. Literature Review Strategic planning is the most important part of entrepreneurship and offers a business an opportunity for big gains in future. Lepori-Costello (2010, 4) explains that the need for strategic plan is to know where the business is, where it wants to be, and steps that it requires to take to get there. From this explanation, it shows that there are three steps involved in entrepreneurs laying down an effective strategic plan. The three steps include:- 1) Situational analysis which shows where a business is and that includes reviewing its environment, its competitors and basically all factors affecting the business 2) Strategic direction which now tells where a business wants to go. This is done by laying good goals and objectives of a business driven by its mission and vision statements. It is important to note that when entrepreneurs go into business, they are aware about what they want and expect from the market. 3) Implementation plan. This is the last step which entrepreneurs employ to realize success in their plans. It involves developing just the right tactics, measures and using resources well. If the entire strategy framework is well implemented, the success rates of an entrepreneurial business are high. It is important to keep in mind that strategy relies on numbers and figures. It is not enough to state that a business is successful merely by looking at the flow of customers, but by measuring the gains using figures; it is very easy to tell. Strategic planning is a ubiquitous activity which is not only used by entrepreneurs, but even large organizations and governments. There are four major theories of planning which entrepreneurs can use including philosophical synthesis, rationalism, organizational development and empiricism. According to Ferreira, Sykes and Batey (2009, 31), most of these theories coexist and happen concurrently in a business. Philosophical synthesis is wide and comprises of reviewing the social, economic, political, environmental and ethical conditions affecting the business and hence helping the business in coming up with the right mix and model to overcome the challenges present. This involves use of tools such as SWOT analysis, STEEPLE and PEST analysis, and all these help in showing where a business is, and the challenges which need to be overcome to get to where the business intends to be. In business, people are very instrumental. They are the workers in a business and they are also the customers to the business. Rationalism looks at people as utility to the business. Entrepreneurs use rationalism to set goals, set objectives and missions of their business, and to measure the progress. It follows a five-step formula which includes desires, designs, deduction, decision and deeds (Stiftel 2000, 5). It is noteworthy to indicate that according to Keynesian economics, planning helps entrepreneurs to minimize and correct failures in their businesses, and hence deduction of costs and losses. Organizational development theory is one that many entrepreneurs have failed to utilize and for that reason, many businesses collapse when faced with change. One good example is succession failures. In many entrepreneurial businesses, when the owner retires or for some unforeseen circumstances can no longer run the business, many collapse during transition from one leader to the other due to lack of succession plan. The theory focuses mainly on human resource management, employee satisfaction, approach to innovation and change, technological advancements, change in management styles and the general health of the business. Shrewd entrepreneurs will ensure that they have good plans and alternatives when the initial and primary goals fail, but they must prepare all the stakeholders for any shift. Bartunek and Austin (n.d, 312), concurs with Stiftel (2000, 5) on the importance of planning in businesses, but they do not focus on entrepreneurships only as does Lopero-Costello (2010, 4), but all businesses and organizations equally. It has not been indicated by any of these authors apart from Ferreira et.al (2009, 31) on the relationship that each of these theories hold with one another. Even with Ferreira (2009, 31), there is only a brief statement that all these theories are coexistent in any business. Peren(2002, 185) does not discuss strategic planning in depth, but his analysis is also very instrumental in understanding the need for entrepreneurs to conduct strategic planning processes in their businesses because he explains that in this businesses, there are paradigm changes and prejudices which can pose great challenges to businesses. The last theory of planning is empiricism. This theory is concerned with giving knowledge and making a guided decision on a plan of action based on the knowledge in a subject. Kraus and Karaunen (2009, 38) explain that business owners, especially entrepreneurs must not get into business without collecting good knowledge on the business they intend to engage. This echoes a statement made by Creative Business Planning Incorporated (2005, 1) which cautions entrepreneurs about clinging to the traditional notion of “if it ain’t broke, don’t fix it” because that is disastrous to the future of the business. Brickman et.al (2010, 26) is also of the idea that entrepreneurs need to research on issues which affect the business they intend to carry out before engaging. They state that going into the business blindly would result to failure in managing challenges which such a business may encounter. Although not vividly clear, it is easy to tell that Grant and Perren (2002, 185) are in the same school of thought because they have the same concern of how an enterpreneur deals with the challenges faced by their businesses. Brickman et.al (2010, 26) also indicate that the preparation of a business plan is the most important element in enterpreneurship. This is because it also shares the roles of each individual in the business, defines the supply chain management, lays down the quantitative analysis tools relevant in the business and it also possesses the basic alternatives which could be used during the implementation process (Loperi-Costello 2010, 6). As (Stiftel 2000, 6), further indicates, a business plan is not meant to be short time although there is also room for review, but it is expected to be a long term thing, and hence a good business plan will not only comprise the leadership styles, but also have a well documented sucession program. Loperi-Costello (2010, 4) has indicated that in the current world, synergism in business is not clear and thus one must have the right strategies to survive. This has been seconded by Stiftel (2000, 6) who indicates that strategic planning is now a ubiquitous norm even in large organisations and states. It is important to note that the emphasis of these authors is on enterpreneurs because they have carried businesses so casually, unlike large companies who always had a plan. Conclusion Strategic planning can be defined as a tool used by the management to determine future contingencies and forecast the future of a business, and hence come up with an effective model of coping with the challenges. Most multinational corporations which exist today started as simple entrepreneurship businesses, and they have transformed to \the big companies they are today because of entrepreneurs who had clear vision, proper and strategic planning, and good implementation of the plans developed. There is a saying, its better to walk slowly on the path than splinter in the bush, which fits very well in this context. If an entrepreneur gets into business without strategy, his business may fail, but with good strategies and realization that there are many factors which would require dynamism in business, that business could even grow faster than initially projected. Unfortunately, as seen in the literature review, many entrepreneurs do not take strategic planning as important as they do capital, and that is where they err in getting to where they want the business to be. It is also important to understand that total quality management goes hand in hand with strategizing if a business is to grow as intended. Reference List Austin, John R, and M Jean Bartunek. "Theories and Practices of Organisational Development." In Handbook Of Psychology: Industrial and Organisational Psychology Volume 12, by Daniel E Ilgen, C Walter Borman and Richard J Klimoski, 309-334. New York: John Wiley & Sons, 2004 . Brinckmann, Jan, Dietmar Grichnik, and Diana Kapsa. "Should entrepreneurs plan or just storm the castle?A meta-analysis on contextual factors impacting the business planning–performance relationship in smallfirms." Journal of Business Venturing 25 , 2010: 24–40. Creative Business Planning Incorporated . "The Entrepreneur’s Guide to Financial Maturity® StrategicPlanning for the Entrepreneur." 2005. http://creativebusinessplanning.com/pdf/Strategic%20planning%20for%20the%20Entrep%20-1-4.pdf. (accessed September 05, 2013). Ferreira, António, Olivier Sykes, and Peter Batey. "Planning Theory or Planning Theories? The Hydra Model and its Implications for Planning Education." Journal for Education in the Built Environment 4(2), 2009: 29-54. Grant, Paul, and Lew Perren. "Small Business and Entrepreneurial Research:Meta-theories, Paradigms and Prejudices." International Small Business Journal 20(2), 2002: 185-211 . Loperi-Costello, Cleo. "Entrepreneurs And Strategic Planning." Slideshare. Feb 04, 2010. http://www.slideshare.net/cleolc/entrepreneurs-and-strategic-planning (accessed September 05, 2013). Stiftel, Bruce. "Planning Theory." The National AICP Examination Preparation Course Guidebook, 2000: 4-16. Appendix Interview Questions 1. Did you have a business plan for your business before starting it, and if so, how has it been effective in shaping your business to what it is today? 2. Would you say that your business is successful because of strategic planning or are there other factors which have made it successful besides planning? 3. Many entrepreneurs do not take the issue of business planning seriously and some just go into business without even considering the future of the business such as succession. How would you advice them? 4. Your business has been successful under your management; do you think it will still be when you leave your position? How have you planned to release your hold on the company and still leave it successful? 5. I believe good foundation in business determines how long the business can survive challenges; do you think that strategic planning for entrepreneurs could help in forming a good foundation? Read More